Banque de France to trial PSPP sec lending auction
28 June 2017 Paris
Image: Shutterstock
Banque de France is preparing to test a daily auction system under its public sector purchase programme (PSPP) securities lending facility, beginning 4 July 2017.
The French central bank, in partnership the eurosystem, will trial a daily auction scheme to lend its PSPP holdings of French government bonds, known as Obligations Assimilables du Trésor (OATs), against cash collateral.
Trial auctions will be open at least one month to all eligible counterparties that signed the relevant contracts.
According to the Banque de France, the objective of the trial is to gain experience with the use of auctions in carrying out, streamlining, and enhancing the access to its securities lending activities, thereby further supporting the French repo market functioning.
Banque de France stated that it did not want to “prejudge” whether it would consider applying auctions more systematically in PSPP securities lending in the future.
Securities loans will have a one-week standard maturity. Bids in the auction will be collected and results allotted using the Bloomberg auction tool.
The competitive bids are to be placed in borrowing rate terms, and can be placed for all nominal French OATs held by Banque de France under the PSPP.
The allotted amounts will be subject to the €50 billion overall limit shared among eurosystem central banks accepting cash as collateral.
Bilateral operations will remain in place in particular for bonds and maturities that are not included in the Banque de France’s auction framework.
The French central bank, in partnership the eurosystem, will trial a daily auction scheme to lend its PSPP holdings of French government bonds, known as Obligations Assimilables du Trésor (OATs), against cash collateral.
Trial auctions will be open at least one month to all eligible counterparties that signed the relevant contracts.
According to the Banque de France, the objective of the trial is to gain experience with the use of auctions in carrying out, streamlining, and enhancing the access to its securities lending activities, thereby further supporting the French repo market functioning.
Banque de France stated that it did not want to “prejudge” whether it would consider applying auctions more systematically in PSPP securities lending in the future.
Securities loans will have a one-week standard maturity. Bids in the auction will be collected and results allotted using the Bloomberg auction tool.
The competitive bids are to be placed in borrowing rate terms, and can be placed for all nominal French OATs held by Banque de France under the PSPP.
The allotted amounts will be subject to the €50 billion overall limit shared among eurosystem central banks accepting cash as collateral.
Bilateral operations will remain in place in particular for bonds and maturities that are not included in the Banque de France’s auction framework.
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