FACTBOX - Fed's liquidity tools

(Reuters) - The U.S. Federal Reserve has introduced a raft of measures to enhance liquidity in the money market after a credit crunch surfaced in August last year.

Following are some liquidity tools:

PRIMARY DEALER CREDIT FACILITY (PDCF)

The Fed said that "in light of continued fragile circumstances in financial markets" it would extend this facility until January 30. The measure, dramatically introduced on March 16 for an initial six months, allows investment banks overnight access to the Fed's discount window for lender-of-last-resort cash. This was the first time since the Great Depression that the Fed had lent money directly to investment banks it did not regulate, and the move highlighted the gravity of conditions facing the financial system around the time of the rescue of investment bank Bear Sterns by JPMorgan Chase. Loans under the PDCF are collateralized by investment-grade securities.

TERM SECURITIES LENDING FACILITY OPTIONS PROGRAM (TOP)

The Fed has authorized the Federal Reserve Bank of New York to auction options for primary dealers to borrow securities from the Term Securities Lending Facility (TSLF). The amount will be for up to $50 billion (27 billion pounds) of draws on the TSLF, and will be collateralized by the full range of investment-grade assets that qualify for regular TSLF auctions. The Fed said the options will be for exercise ahead of periods when market conditions have become stressed, like quarter-ends. The $50 billion option draws will be in addition to the $200 billion that may be offered under regular TSLF auctions.

TERM SECURITIES LENDING FACILITY (TSLF)

Under the TSLF, the Federal Reserve Bank of New York conducts weekly auctions of 28-day loans of Treasury securities to primary dealers. Loans under the TSLF are collateralized by a range of government and private securities.

TERM AUCTION FACILITY (TAF)