New York Fed Moves Agency MBS Operations to FedTrade Plus

The Federal Reserve Bank of New York has moved its outright agency mortgage-backed securities operations onto FedTrade Plus, extending the Open Market Trading Desk’s phased shift away from its legacy FedTrade system. The cutover took effect on September 15, 2026, one day after the New York Fed announced the change.

The switch is an infrastructure change rather than a shift in monetary policy. The New York Fed said the move does not alter the parameters for outright agency MBS operations and does not affect any other open market operations. That distinction matters because the Desk’s activity in mortgage-backed securities can otherwise be read as a signal about the Federal Reserve’s balance-sheet policy or its stance toward the mortgage market.

September operations are unchanged apart from the platform

In its September 14 operating policy statement, the New York Fed said the Desk would begin conducting outright agency MBS operations through FedTrade Plus on September 15. The statement was narrow by design: it announced the execution-platform change and explicitly left the operating parameters in place.

The timing lines up with a new round of small-value agency MBS purchases. For the monthly period from September 15 through October 14, the Desk plans approximately $150 million of small-value purchase operations. The first published schedule for the period calls for about $71 million of purchases from September 15 through September 28 on FedTrade Plus.

Those amounts should not be confused with a fresh large-scale asset-purchase program. The New York Fed’s agency MBS guidance says small-value purchases and sales are used to test operational readiness, including the systems needed to implement existing or potential Federal Open Market Committee directives. The Desk generally plans such agency MBS exercises about every other month and says they are not intended to signal the future timing or direction of monetary policy.

The current September schedule is therefore useful mainly as the first regular operating window after the platform cutover. It gives the Desk and its counterparties a live production setting for the new system while keeping the scale within the small-value framework already used for readiness exercises.

FedTrade Plus has been rolling out across Desk operations

The New York Fed first announced FedTrade Plus in November 2024 as the replacement for FedTrade, its proprietary trading system for open market operations. At the time, it said the new platform would be introduced in phases and would use modern cloud technology, stronger cybersecurity measures, improved connections with counterparty systems, and a simpler trade-submission interface.

The rollout has taken longer than the original statement’s broad expectation that the transition would continue through 2025, but the Desk has progressively moved major functions onto the platform. Daily domestic repo and reverse repo operations shifted to FedTrade Plus in November 2025. Treasury outright operations moved in March 2026, along with Treasury buybacks when the New York Fed conducts them as fiscal agent for the U.S. Treasury. Securities lending followed in April.

Agency MBS was also tested before the September cutover. The Desk used FedTrade Plus for a small-value agency MBS purchase on June 16 and for a small-value sale on August 14. Those exercises followed the migration approach laid out when FedTrade Plus was introduced: mock auctions and small-value operations would precede each operational move so the Desk and counterparties could test the system before relying on it for routine activity.

With outright agency MBS now moved over, another market listed in the original FedTrade Plus rollout plan has reached production use. The significance is operational rather than directional. The Desk is changing the technology through which it executes these auctions, not using the platform migration itself to alter the size, frequency or policy purpose of agency MBS activity.

Primary dealers still face the same agency MBS operating framework

The New York Fed’s agency MBS operations take place in the secondary market with primary dealers. Eligible securities are agency mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, and small-value exercises may include specified pools or recently produced coupons in 30-year and 15-year fixed-rate To-Be-Announced securities.

The existing operating framework uses multiple-price competitive auctions. Under the New York Fed’s published agency MBS guidance, the minimum auction amount, proposition size and proposition increment are each $1 million, and participating dealers may submit as many as 10 propositions per security. Each proposition includes a price and par amount, and offers are evaluated against prevailing market prices near the auction close.

FedTrade Plus changes the platform through which that process is conducted. Because the September 14 notice says the operating parameters remain unchanged, the cutover should be understood as a technology and execution-system migration rather than a redesign of the auction format. Primary dealers remain the direct counterparties for the Desk’s agency MBS operations and may submit bids or offers for themselves and for customers.

The New York Fed also continues to publish operation results after each auction and releases historical pricing information for agency MBS activity. That reporting provides a way to distinguish the mechanics of the platform change from the economic substance of the operations themselves. Results for the September 15 through October 14 monthly period are scheduled for release at 3 p.m. ET on October 15, 2026.