Bank of Canada to re-introduce securities lending programme
26 April 2024 Canada
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The Bank of Canada (BoC) plans to restart its securities lending programme later this year, which is designed to support the liquidity of Government of Canada (GoC) securities markets.
Once the securities lending programme restarts, the current daily securities repo operations (SRO) will be discontinued.
The SRO came into effect on 27 July 2020 with the suspension of the bank’s securities lending programme, and aimed to provide a temporary source of GoC nominal bonds and treasury bills to primary dealers to support liquidity in the securities financing market.
Over the course of the summer, the bank will engage with primary dealers on an operational on-boarding process to ensure their readiness to participate in the programme.
The start date for the programme is unconfirmed and dependent on the completion of this operational on-boarding process.
Since the BoC was acquiring a large amount of GoC securities under the government bond purchase programme, “it was important to support a well-functioning securities financing market by making a portion of these securities available to the market in an expedient manner”, and in higher volumes than the securities lending programme was designed for, the bank confirms.
It adds: “The bank has made significant investments in the systems supporting its market operations. Over the course of this summer, the bank will engage with its primary dealer counterparties on technical aspects of these system enhancements to facilitate the primary dealers’ operational readiness ahead of restarting the SLP.”
Once the securities lending programme restarts, the current daily securities repo operations (SRO) will be discontinued.
The SRO came into effect on 27 July 2020 with the suspension of the bank’s securities lending programme, and aimed to provide a temporary source of GoC nominal bonds and treasury bills to primary dealers to support liquidity in the securities financing market.
Over the course of the summer, the bank will engage with primary dealers on an operational on-boarding process to ensure their readiness to participate in the programme.
The start date for the programme is unconfirmed and dependent on the completion of this operational on-boarding process.
Since the BoC was acquiring a large amount of GoC securities under the government bond purchase programme, “it was important to support a well-functioning securities financing market by making a portion of these securities available to the market in an expedient manner”, and in higher volumes than the securities lending programme was designed for, the bank confirms.
It adds: “The bank has made significant investments in the systems supporting its market operations. Over the course of this summer, the bank will engage with its primary dealer counterparties on technical aspects of these system enhancements to facilitate the primary dealers’ operational readiness ahead of restarting the SLP.”
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