We have known for quite some time now that the NY Fed’s market group, aka the Plunge Protection Team, is opening a second office in the HFT-capital, Chicago.
Recall from September:
The Markets Group at the Federal Reserve Bank of New York manages the size and composition of the Federal Reserve System’s balance sheet consistent with the directives and the authorization of the Federal Open Market Committee (FOMC), supports debt issuance and debt management on behalf of the U.S. Treasury, provides foreign exchange services to the U.S. Treasury and provides account services to foreign central banks, international agencies and U.S. government agencies.
Markets Group is establishing a presence at the Federal Reserve Bank of Chicago and has openings for both experienced professionals and recent graduates.
What was not known is what is the official reasoning behind the Fed’s move to be even closer to its Citadel executions arm. Overnight, courtesy of Reuters we found that the “The New York branch of the U.S. Federal Reserve, wary that a natural disaster or other eventuality could shut down its market operations as it approaches an interest rate hike, has added staff and bulked up its satellite office in Chicago.”
Reuters adds some other details we already also know:
Some market technicians have transferred from New York and others were hired at the office housed in the Chicago Fed, according to several people familiar with the build-out that began about two years ago, after Hurricane Sandy struck Manhattan.
Officials believe the Chicago staffers can now handle all of the market operations that are done daily out of the New York Fed, which is the U.S. central bank’s main conduit to Wall Street.
The satellite office in the Midwest readies the New York Fed for perhaps the most delicate U.S. interest-rate hike ever. With rates having been near zero for more than six years, and markets flooded with reserves, the Fed will rely on an array of new tools to help it tighten policy, likely later this year.
Two of the sources, which included market participants and Fed officials and who spoke under condition of anonymity, said the Chicago office was partly protection against a possible cyber attack against the New York Fed. In February, Fed Chair Janet Yellen told a congressional panel the central bank is addressing “ever-escalating (cyber) threats to our operations.”
But the main reason for the build-out 700 miles (1,127 kilometers) to the west appeared to be the need to have staff ready at all times in case of disaster.
A spokeswoman for the New York Fed declined to comment. The Chicago Fed bank deferred to its New York counterpart.
One source estimated there were between 20-30 New York employees at the Chicago Fed, saying more were being recruited.
As we further revealed back in September, the people joining the Chicago buildout of the PPT have very unique skillsets:
As to just what specific skills the NY Fed is seeking as it builds out its HFT practice on the ground in Chicago, here are the two indicated positions with which the expansion is set to start:
Primary Location: IL-Chicago
Full-time / Part-time: Full-time
Employee Status: Regular
Overtime Status: Exempt
Job Type: Recent Graduate
Travel: Yes, 5 % of the Time
Shift: Day Job
Job Sensitivity Not Evaluated
Job Title: Policy & Markets Analysis Associate – Cross Market Monitoring
Group: Markets Group
Location: Chicago, IL
Start Date: Summer 2015
The Markets Group at the Federal Reserve Bank of New York consists of multiple business areas that fulfill a range of responsibilities, from planning and executing open market operations, monitoring and analyzing financial market developments, to managing foreign customer accounts.
Through its analytical and operational areas, the Markets Group:
- Manages the size and composition of the Federal Reserve System’s balance sheet consistent with the directives and the authorization of the Federal Open Market Committee (FOMC);
- Monitors and analyzes financial market developments for key stakeholders and policymakers within the Federal Reserve System;
- Monitors and analyzes developments related to financial stability;
- Supports debt issuance and debt management on behalf of the U.S. Treasury;
- Provides foreign exchange services to the U.S. Treasury; and
- Provides account services to foreign central banks, international agencies, and U.S. government agencies.
- Monitors, analyzes and reports to policy makers on global financial market developments:
- Tracks intra-day and longer-term global asset price movements;
- Interfaces with market participants to obtain context for asset price movements;
- Analyzes findings and identifies themes relevant to the monetary policy process;
- Prepares detailed written analysis and presents oral briefings on market developments to officials in the Federal Reserve, the Treasury, and other institutions;
- Relates developments in financial markets to issues pertaining to financial stability; and
- Assumes responsibility over time as a Markets Group specialist for a specific aspect of financial markets.
- Plans and executes transactions in foreign exchange or fixed income markets on behalf of the U.S. monetary authorities, foreign central banks, and other customers
- Participates in projects within the Markets Group related to increasing the effectiveness and efficiency of transactional business areas
- Performs related duties as required
- Master’s degree in Business Administration, Economics, or Public Policy and a minimum of one year relevant work experience in an analytical capacity related to global financial markets
- We will consider recent graduates/current students and those with up to 5 years of relevant work experience
- Demonstrated analytical skills, including knowledge of financial instruments and financial market structure, macroeconomic theory and monetary policy
- Proven ability to provide concise, articulate and insightful economic analysis in written and verbal form.
- Ability to analyze complex market issues, make sound decisions and respond under pressure
- Ability to work productively in a high-performance team atmosphere and as an independent analyst
- Must adhere to area specific financial disclosure requirements
As well as a European-focused plunge protector:
Primary Location: IL-Chicago
Full-time / Part-time: Full-time
Employee Status: Regular
Overtime Status: Exempt
Job Type: Experienced
Travel: Yes, 10 % of the Time
Shift Day: Job
The Markets Group at the Federal Reserve Bank of New York is responsible for the implementation of monetary and foreign exchange policy, providing payments and custody services to foreign central banks, and auctioning and issuing Treasury debt as the fiscal agent for the U.S. Treasury. As part of these duties, the Market Operations Monitoring and Analysis Function (MOMA) within the Markets Group executes transactions in the open market and conducts detailed analysis of financial market developments in support of the monetary policy decision-making process.
The International Market (IM) Directorate within MOMA is responsible for providing in-depth analysis of global financial market developments and international policy matters that contributes directly to the broader analytical work conducted by the Markets Group specifically and the Federal Reserve System more broadly. The Directorate also has many operational responsibilities, including executing U.S. foreign exchange policy and foreign exchange customer transactions, managing the U.S. foreign exchange reserves, and managing foreign exchange swap lines with foreign central banks.
The IM Directorate is currently seeking a Policy and Markets Associate to produce high quality analysis on global policy and financial market developments that contributes directly to the broader analytical work conducted by the Markets Group specifically and Federal Reserve System more broadly. This position will focus specifically on the euro area, but may include some coverage for other regions. Applicants should be familiar with matters relating to international economic policy frameworks and global financial markets analysis, and should be able to develop and convey their views in a concise manner, both verbally and in writing, to senior policy makers throughout the Federal Reserve System and U.S. Treasury. The candidate will also be expected to participate in the myriad of operations under the Directorate’s purview.
- Prepare analysis of global financial market developments with a focus on the euro area.
- Convey and develop views to senior policy makers on such topics through daily and/or weekly written and/or oral briefings.
- Collaborate with other Groups within the Federal Reserve Bank as well as other Federal Reserve Banks within the system as well as the U.S. Treasury in related areas.
- Collaborate with other central banks on relevant policy initiatives, information exchange on financial markets, domestic policy developments and reserve management.
- Remain current on relevant economic and finance literature and financial markets and developments pertaining to monetary and foreign exchange policy frameworks and approaches.
- Develop contacts within the global financial community, including with investment banks, central banks and other policy institutions such as the U.S. Treasury and IMF.
- Learn and conduct the broad range of the Directorate’s operations, including related to foreign reserves management, foreign exchange transaction and foreign exchange swaps.
- Post-graduate degree in economics, finance or a related field.
- Minimum of 3 years’ experience analyzing financial market developments and/or international policy issues.
- Strong written and oral communication skills that will enable the candidate to convey their views to senior policy makers in a clear, concise and consistent manner.
- Strong interpersonal skills to interact and collaborate effectively with peers, subordinates, senior management and external parties.
- Operational experience not required, but candidate should have strong attention to detail.
- Ability to represent effectively the business area and the Bank, as appropriate, on issues related to global financial markets.
So there it is: if and when there is a “natural disaster or other eventuality” at Liberty 33 (a disaster which will hopefully not leave the several thousand tons of foreign gold located 90 feet below street level at the NY Fed unguarded), or frankly at any other moment as well, the Fed’s grip on the markets will be solidified even more, as the Chicago branch of the NY Fed loops directly into the microwave and laser feeds used by HFTs to break momentum at key selling inflection points (and should selling persist, exchanges will merely shut down).
At this point one wonders why not just have the Fed announce what the closing price for any given day will be and do away with the pretense of “markets” altogether?