The New York Fed was forced to extend the opening hours of its Fedwire Securities Service by two hours until 5pm to handle the backlog, reports the newswire, citing traders in the market.

The Federal Reserve has recently intensified oversight of the market in an effort to eliminate intraday credit exposures at JPMorgan Chase and BNY Mellon, the two large custodian banks that handle the settlement of loans and manage collateral between lenders and borrowers in the market.

JPMorgan Chase has recently stopped the daily unwind of non-maturing term repo trades, while BNY Mellon has been rolling out operational and technology changes to eliminate the credit risk against privately-issued, nongovernment securities that settle through the Depository Trust Company. As of Thursday, BNY Mellon dealers will be required to prefund all maturing tri-party repo transactions involving DTC-sourced collateral prior to settlement.

Both clearers will be implementing further changes in their settlement procedures over the next two years in an effort to counteract structural weaknesses in the market that were exposed during the 2008 credit crunch.

The Fed has declined to comment on today's problems, which underline the continued fragility of the market and add urgency to the central bank's reform agenda.