(Reuters) -A largely untested Federal Reserve liquidity facility drew no demand at its first daily auction on Tuesday despite expectations on Wall Street for a scramble by banks to secure funding to cover the often-turbulent quarter-end period.

New York Fed data showed no funds were drawn from its Standing Repo Facility, or SRF, which the Fed created in 2021 and allows eligible firms to quickly convert bonds into cash. A second daily operation is set to close at 1:45 p.m. ET, which could still see a demand surge.

Some market participants had estimated that as much as $50 billion in overnight funds could be withdrawn on Tuesday, which would quickly unwind on Wednesday. Sparsely used in the roughly four years of its existence, the largest draw from the SRF to date had come on June 30, when banks withdrew $11 billion as the second-quarter ended. 

Quarter ends are often choppy as firms temporarily shift their cash management for a variety of purposes. The current turn of the quarter had been expected to be particularly volatile as the Fed has been withdrawing liquidity from the financial system as part of its balance sheet drawdown.

The SRF is intended to serve as a shock absorber for temporary market liquidity shortfalls but there have been long-standing questions about its ability to fulfill that role.