By Lindsay Dunsmuir

AMELIA ISLAND, Fla (Reuters) - The U.S. Federal Reserve may need more powers to provide emergency funding to securities firms in times of extreme stress in order to deal with a liquidity crunch, New York Federal Reserve President William Dudley said on Sunday.

"Providing these firms with access to the discount window might be worth exploring," Dudley said in prepared remarks at a financial markets conference in Amelia Island, Florida organized by the Atlanta Fed.

The discount window is a credit facility through which banks borrow directly from the U.S. central bank in order to cope with liquidity shortages.

The Fed currently has limited ability to provide funding to securities firms in such situations, with the discount window only available to depository institutions.

But the transformation of securities firms since the financial crisis, Dudley said, with the major ones now part of bank holding companies and subject to capital and liquidity stress tests, meant the environment has now changed.

"To me, this is a more reasonable proposition now than it was prior to the crisis when the major dealers weren't subject to those safeguards," he said.

Dudley did not mention monetary policy or the U.S. economic outlook in his remarks.

Other "significant gaps" remain in the lender-of-last-resort function, Dudley added.

On this, he cited work being done on a global level by the Bank of International Settlements, known as the central banks' central bank, which is studying deficiencies with respect to systemically important firms that operate across countries.

Dudley called for greater attention in order to determine which country would be the lender-of-last-resort for such companies during another crisis.

"Expectations about who will be the lender-of-last-resort need to be well understood in both the home and host countries," he said.

(Reporting by Lindsay Dunsmuir; Editing by Diane Craft)