As further explained (confounded) by Bill Dudley as part of his speech earlier today [4], the Fed is pushing on with its Fixed-Rate Reverse Repo test, which while supposedly is meant to assist the Fed in extracting liquidity from the market once the mythical balance sheet unwind begins, what it really does is set a level the playing field for banks and non-banks, by disintermediating their collateral eligibility, and in the process collapsing the spread between the IOER and General Collateral rates. It will likely have many more side effects, now that non-banks can compete with banks for the Fed's IOER, all of which will be largely unexpected and as the impact on collateral bifurcation moves from the purely theoretical to the real world.
As noted below, in the first Fixed-Rate RRP test, the Fed soaked up $11.8 billion in cash in exchange for Treasury collateral at a stop out rate of 0.01%, largely in line with G/C.
[5]
Source: NY Fed [6] [6]