Effective Friday, October 25, 2024, the aggregate cash value amount offered in each Overnight Repo (OR) operation will change to a minimum of $8 billion. The exact amount of each OR operation will be based on the prevailing conditions in the overnight funding market and communicated to eligible participants through the Bank of Canada Auction System at the time of the auction. Individual dealer limits for each OR operation will remain at $3 billion. All other terms and conditions for ORs will also remain the same.
The Bank is implementing this change to enhance the effectiveness of the ORs as its regular tool to reinforce the target for the overnight rate, in view of the structural changes in the overnight funding market after the industry-wide transition to T+1 settlement. The transition has led to a substantial and persistent increase in CORRA-eligible repo volumes and upward pressure on the overnight rate. Having the flexibility to set an OR operation’s size to address periods of higher funding demand will increase the efficiency of OR operations and facilitate trading at rates closer to the Bank’s target.
The Bank monitors conditions in the overnight funding market on an ongoing basis and conducts ORs as needed to support the implementation of monetary policy.
Director
Financial Markets Department
Director
Financial Markets Department
Source(s):
Overnight repo operations