WASHINGTON — According to a new Federal Reserve survey, financial giants said, over the past three months, "more aggressive" competition led to favorable credit terms being offered on securities and over-the-counter derivatives transactions.
The quarterly Senior Credit Officer Opinion Survey on Dealer Financing Terms consists of data on securities financing and over-the-counter derivatives markets, providing information about the availability and terms of credit.
Securities dealers indicated they "generally loosened credit terms offered to important groups of clients," such as hedge funds, insurance companies and other institutional investors, among others.
"Looking forward over the next three months, more than one-half of survey respondents expected price and non-price terms to remain basically unchanged, with the remainder of dealers anticipating somewhat tighter terms, on net," the survey said.
The central bank's new survey is modeled after the quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices, which gives data about changes in supply and demand for loans to households and businesses at commercial banks.
The credit officer survey was conducted in late May and early June. It includes about 20 dealers but might be expanded to include other firms over time.
"These firms account for almost all of the dealer activity in dollar-denominated securities financing and OTC derivatives markets," the Fed said in its announcement Monday of the new survey.
With regards to over-the-counter derivatives trades, dealers said there's been little change over the past three months in terms for plain vanilla derivatives and those that are more highly customized.
On securities financing, respondents reported an increase in demand for funding high-grade corporate bonds, equities, agency residential mortgage-backed securities, and other asset-backed securities.