also to non - price factors like their intra - month cash flow cycles. not surprisingly, participation by banks and primary dealers tends to be more limited, because banks have access to higher - yielding ioer and primary dealers are typically net cash borrowers in the repo market. however, primary dealer take - up does increase when repo rates, particularly in the inter - dealer market, fall below the on rrp rate. take - up data by counterparty type, updated with a quarterly lag, are available under “ historical data ” at http : / / www. newyorkfed. org / markets / omo / dmm / temp. cfm. bis central bankers ’ speeches quarter - end operation. indeed, requested bids in the september 30 operation exceeded the cap by about $ 100 billion, some bids were only partially filled, and on rrps were awarded at a stop - out rate of zero percent. in december 2014 and march 2015, the early provision of additional investment capacity through term rrp operations spanning the quarter - end dates, on top of the $ 300 billion of capacity provided through on rrps, provided confidence to money market counterparties that sufficient investment opportunities would be available. 19 absorbing some investment demand in term operations ahead of those quarter ends likely kept demand for on rrps on the quarter - end dates below the cap and helped to keep money market rates above the on rrp offering rate. given an apparent high degree of substitutability between overnight and term rrps, cumulative take - up in these operations helps us to assess variability in potential demand for safe investments around peak times and to evaluate how much capacity the federal reserve might need to provide in an on rrp facility to satisfy demand sufficiently to maintain interest rate control ( figure 6 ). 20 while our testing suggests that the current parameters of on rrp operations have worked successfully with ioer to control short - term interest rates, there are limits to what we can learn from testing. importantly, we will likely not know the level of support that proximity to the zero lower bound has provided to money market rates until we start to move away from it. demand for on rrps following liftoff could remain relatively steady. but it could conceivably be much greater than what we have seen at higher levels of interest rates or as regulatory and structural changes in money markets boost demand for safe assets, which i will discuss momentarily. additionally, having some excess capacity, also known as headroom, in

the motivation for many fed funds trades. 21 with an abundant supply of reserves available, banks ’ need to borrow funds to meet their reserve requirements or to clear financial transactions has been dramatically reduced. meanwhile, entities that have surplus cash but are not able to earn ioer, such as federal home loan banks, lend funds at sub - ioer levels to banks that borrow them for the purposes of depositing them at the fed to earn ioer. as a result, the size of the fed funds market has declined relative to pre - crisis levels and the nature of most fed funds activity has changed. nevertheless, trading volumes remain reasonably robust. since july 2014, the average overnight borrowing in the fed funds market that banks report to the fed through our fr 2420 reporting form has been roughly $ 50 billion, with an average of about 300 transactions per day ( figure 7 ). 22 moreover, longerterm correlations between fed funds and other money market rates remain robust, with the fed funds rate remaining a suitable measure of banks ’ marginal borrowing costs. a variety of regulatory changes and other developments have also influenced motivations for participating in fed funds and other money markets. liquidity and capital rules affect the management of bank balance sheets and the costs of many money market transactions, affecting banks ’ incentives to engage in short - term borrowing, arbitrage between different money market rates, and provide customers access to their balance sheets. notably, regulatory changes affect different institutions in different ways. for example, changes to the calculation of fdic deposit insurance assessment fees affect primarily domestic banks. the implementation of basel iii banking standards also varies by jurisdiction, so the rules for foreign bank branches operating in the united states are somewhat different than those for domestic institutions. 23 the effects of regulatory requirements on money market dynamics can be seen especially around key financial reporting dates. as many market commentators have noted, some borrowers actively manage their balance sheets on quarter - end dates. the perceived costs associated with new regulatory requirements on capital and liquidity ratios may further incentivize such behavior, particularly by foreign institutions. borrowers ’ responses appear to contribute to the period - end dynamics i described earlier, including declines in money market volumes, increased volatility in money market rates, and elevated participation in the rrp operations as cash investors face temporarily reduced investment options from private counterparties. importantly, the increase in rrp take - up can be understood as a consequence, rather than a cause, of private market balance sheet reductions on quarterend