Bank of Canada announces new securities repo operations
22 July 2020 Canada
Image: GagliardiPhotography/Shutterstock.com
The Bank of Canada is introducing new securities repo operations (SROs) beginning on 27 July, at which point it will suspend the current securities lending programme.
The current standard terms for auctions to primary dealers under the Bank of Canada securities lending program can be found via this link.
The SROs will provide a temporary source of Government of Canada nominal bonds and treasury bills to primary dealers to support liquidity in the securities financing market. The repo operations will also make a portion of its holdings of these securities available on an overnight basis through repurchase operations.
The central bank says the SROs are consistent with best practices at other central banks and with recommendations from the Bank for International Settlements. Although, in a statement, the bank has revealed that ‘at its discretion, it may adjust the size, pricing and other parameters of the program to achieve its objectives’.
Elsewhere, the Bank of Canada began winding down its enhanced liquidity provisions for the country’s financial markets after concluding that the impact of the pandemic-fuelled disruption “appears to have peaked”.
“After significant strains in March, short-term funding conditions have improved,” the bank has declared, and as such it will now reduce the frequency of its term repo operations to once per week, and its programme to purchase bankers’ acceptances to bi-weekly operations.
The central bank adds that it stands ready to “adjust” these programmes if market conditions warrant.
The current standard terms for auctions to primary dealers under the Bank of Canada securities lending program can be found via this link.
The SROs will provide a temporary source of Government of Canada nominal bonds and treasury bills to primary dealers to support liquidity in the securities financing market. The repo operations will also make a portion of its holdings of these securities available on an overnight basis through repurchase operations.
The central bank says the SROs are consistent with best practices at other central banks and with recommendations from the Bank for International Settlements. Although, in a statement, the bank has revealed that ‘at its discretion, it may adjust the size, pricing and other parameters of the program to achieve its objectives’.
Elsewhere, the Bank of Canada began winding down its enhanced liquidity provisions for the country’s financial markets after concluding that the impact of the pandemic-fuelled disruption “appears to have peaked”.
“After significant strains in March, short-term funding conditions have improved,” the bank has declared, and as such it will now reduce the frequency of its term repo operations to once per week, and its programme to purchase bankers’ acceptances to bi-weekly operations.
The central bank adds that it stands ready to “adjust” these programmes if market conditions warrant.
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