–To Exceed 35% Buys In Increments Until Reach 70%

NEW YORK (MNI) – The following updated table was issued by the New
York Federal Reserve Bank Monday morning, detailing how purchase limits
for individual securities have been altered “to help ensure that the
Open Market Desk’s purchases do not impair the liquidity of individual
securities:”

How much will the Desk purchase in each issue?

To provide operational flexibility and to ensure that it is able to
purchase the most attractive securities on a relative-value basis,
effective November 10, 2010, the Desk temporarily relaxed the 35 percent
per-issue limit on System Open Market Account (SOMA) holdings under
which it had been operating. However, SOMA holdings of an individual
security will be allowed to rise above the 35 percent threshold only in
modest increments, as specified in the table below. Subject to market
conditions, the Desk may further limit the size of additional purchases
in certain issues or otherwise change the stated limits as needed.

SOMA Security Ownership Maximum Purchase Amount per Security
Prior to Operation as a in Operation is the Lesser of:
Percentage of Outstanding
Issuance (A) (B)

0-30% N/A (35% of Outstanding
Issuance) minus SOMA
Holdings

30%-47.5% 5% of (50% of Outstanding
Outstanding Issuance) minus
Issuance SOMA Holdings

47.5%-59% 2.5% of (60% of Outstanding
Outstanding Issuance) minus
Issuance SOMA Holdings.

59%-70% 1% of (70% of Outstanding
Outstanding Issuance) minus
Issuance SOMA Holdings

Above 70% Not Eligible for Purchase

As previously announced:

Has the Federal Reserve changed its 35 percent per-issue holding
limit?

Yes, to provide operational flexibility and to ensure that it is
able to purchase the most attractive securities on a relative-value
basis, effective November 10, the Desk is temporarily relaxing the 35
percent per-issue limit on System Open Market Account (SOMA) holdings
under which it has been operating. However, SOMA holdings of an
individual security will be allowed to rise above the 35 percent
threshold only in modest increments.

Specifically, once the SOMA’s holdings of a security reach 30
percent of the outstanding amount, additional purchases of the given
security will generally be capped at 5 percent of the total outstanding
issue size in each subsequent operation. Subject to market conditions,
the Desk may further limit the size of additional purchases of these
issues.

1. Example: If the SOMA holds $3.2 billion of a $10 billion issue
($3.2 billion held by the SOMA, $6.8 billion held by others), given that
the SOMA’s 32 percent holdings exceed 30 percent of the total
outstanding issue size, purchases in each subsequent operation would be
limited to $500 million or less, depending on market conditions.

** Market News International New York Newsroom: 212-669-6430 **

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