Posted in Finance, Accounting and Economics Terms, Total Reads: 240
Definition: Go Around
Go Around is used by Federal Reserve in the United States. The strategy is to solicit the bids or offers or both for a security by the primary dealers that are in the market. This strategy is used to obtain the maximum return possible on any given security by the Federal Reserve. The primary dealers help in getting the best deal be it on buying or selling or reversals or repurchase of the particular agreement.
This strategy is applicable to all forms of U.S Treasury bills, Treasury Bonds and all other kinds of Government money market instruments. In soliciting via the main primary dealers (these are the bodies or institutes that are allowed to deal and trade in all kinds of new government issues and bonds and money market papers) the Federal Reserve is able to mop up the highest possible returns in comparison to what it could have got in case of direct market dealing.
This kind of strategy also helps in maintaining a vibrant money market in the US. As the dealings involve the Federal Reserve and the primary dealers, the bonds or bills issued are absorbed easily as primary dealers have a lot more clients to whom these can be sold to. As the mesh of client and primary dealers grows, better is the flow of money in the entire economy.