June 25 (Bloomberg) -- The Federal Reserve will let one of its emergency programs expire and trim two others in a sign that improving financial markets allow a first step toward ending its unprecedented interventions. The three programs provide funds or Treasury securities to securities brokers and money-market funds. They are authorized under a provision allowing loans to nonbanks under âunusual and exigent circumstances.â Five other emergency facilities, including foreign currency-swap lines with central banks around the world, will be extended by three months through Feb. 1, the Fed said in a statement in Washington. They would have expired Oct. 30. âConditions in financial markets have improved in recent months, but market functioning in many areas remains impaired and seems likely to be strained for some time,â the Fed said in its statement. The Fed didnât announce the changes yesterday following the Federal Open Market Committee meeting because it needed to coordinate the extension of the currency swap lines with other central banks, a Fed official told reporters on a conference call. Liquidity Returns Reflecting easing funding pressures among the nationâs banks, the Fed will cut the size of credit auctioned under the Term Auction Facility, which was set up in 2007 and designed to provide cash to commercial lenders. âThe amount of credit extended under that facility has been well below the offered amount,â the Fed said. Biweekly TAF auctions will be reduced to $125 billion from $150 billion, effective July 13. If market conditions continue to improve, âTAF funding will be reduced gradually further,â the Fed said. The TAF doesnât have an expiration date. Auctions under the Term Security Lending Facility, which makes funds available to primary bond dealers, will also be scaled back to a maximum of $500 billion from the previous $600 billion. So-called Schedule 1 TSLF auctions will be suspended effective July 1. That part of the program loaned out Treasuries in return for collateral including federal agency debt and agency-guaranteed mortgage-backed securities. TSLF Shrinks TSLF Schedule 2 auctions, where collateral accepted also includes investment-grade corporate, municipal, mortgage-backed debt and asset-backed securities, will be conducted every four weeks, instead of every two weeks, and the total amount offered will be reduced to $75 billion. The TSLF Options Program will be suspended effective with the maturity of outstanding June TOP options, the Fed said. Again, the Fed is prepared to scale back the program further as market conditions improve, the statement said. While there are no outstanding loans under the Primary Dealer Credit Facility, the Fed extended that resource through Feb. 1. The PDCF was set up in March last year at the time of the collapse of Bear Stearns Cos. to provide direct loans to securities dealers. The PDCF will remain âin the near term, while financial market conditions remain somewhat fragile,â the Fed said. The central bank official told reporters that one concern is possible funding strains that can typically arise at the end of the calendar year. http://www.bloomberg.com/apps/news?pid=20601087&sid=adnPkNhlJaSs Is that good news or bad news ?