Open Market Desk

by Stephan Smith on January 7, 2011

There are many components to the Federal Reserve System that make it capable of effectively conjuring up and implementing monetary policies that achieve set objectives. One such component is called the Open Market Desk. If you aren’t sure what the Open Market Desk is, then I recommend that you read the contents on this page. After you’ve read this page, you should have knowledge as to what the Open Market Desk is and what their responsibilities are. If you have any questions or comments regarding the Open Market Desk, feel free to leave a comment below. I will try to answer any questions you may have or reply to any thoughts you may want to share.

Just what is the Open Market Desk

The Open Market Desk, also known simply as ‘The Desk’, is a trading desk responsible for handling all open market transactions for the entire Federal Reserve System. I bet you’re wondering what open market transactions are. Let me explain. The Federal Reserve is responsible for setting and implementing monetary policy for the United States. One of the ways monetary policy is implemented by a central bank is by adjusting the money supply of an economy.

The primary way the money supply of an economy is adjusted is through purchasing or selling various investment vehicles such as government securities, corporate securities, mortgage-backed securities, et cetera, on the open market; hence the term open market transactions. The term open market is used to describe the ‘openness’ or the opportunity for other investors to buy and sell the securities in question and thus have an impact on the pricing of said securities. Open, meaning open to all. Anyone can go out and buy government securities, corporate securities, et cetera, on the open market; for that is what makes it open.

Located in the Federal Reserve branch in New York, the Open Market Desk is the trading desk of the FED and is managed by the System Open Market Account (SOMA) manager. As you may know, the FED has massive power and influence over the United States economy and it is through the Open Market Desk where that power realized. Why do I believe that? I believe that because it is usually through the Open Market Desk where the money supply of the United States is controlled.

The Open Market Desk is where money is injected into or removed from an economy through the purchasing or selling of securities on the open market. The Open Market Desk is the sword, so to speak, of the Federal Reserve and the person who manages that sword is the SOMA manager.

The people who have authority over the SOMA manager and thus have command over the actions taken by the Open Market Desk itself and is responsible for all monetary policy actions is the Federal Open Market Committee. They are at the top of the pyramid.

I hope you have an understanding of what the Open Market Desk is and what their responsibilities entail. Remember, feel free to leave a comment below if you have any questions or if you want to share any thoughts. Thanks for reading.

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{ 4 comments… read them below or add one }

Steve Kauffman June 24, 2013 at 8:32 PM

Could you please explain the mechanics of money creation. For example, the Fed buys 85B in bonds from the U.S. Treasury. The U.S. Treasury is indebted to the Fed for 85B (plus interest as it accrues), and the Fed creates 85B in base money. Where does the U.S. Treasury deposit the 85B? If it is not deposited into commercial bank accounts, then how does it get from the U.S. Treasury’s account(s) to commercial banks to be loaned out to businesses and consumers?


CHRISTIAN April 27, 2011 at 2:45 PM





Stephan Smith April 28, 2011 at 6:16 PM

Hello Christian,

First off I am happy that you decided to visit my website and leave a comment. I do appreciate it.

I would think the top traders of the Federal Reserve System would be the Chairman and the other FOMC members.

Why is that?

Becauase they are responsible for approving any monetary policy actions such as the buying and selling (trading) financial securities.

It would also apply to other central banking institutions. Whoever the governing consul members are, I would assume they would be responsible for all trading of financial securities through their monetary policy decisions.

I hope that helps. Thanks again for dropping by. Come back soon.

-Stephan Smith


Christian April 28, 2011 at 6:38 PM

Dear Smith:

I heard that there are only 10 Traders powerful in the world.
The rest are in second or third seat (they dont have a lot of power to trade)

How are the bulluet program ?

Who are the best Traders in the world ?
Debenture Programs,Fresh cut,Mtn,Banks Instruments,ect. ?

Who are the best Trading Platform to trade in the world ?

Thanks for answering my questions I hope you can answer these ones.

Best Regards,
Christian Otero

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