As announced on June 11, 2024, the Bank of Canada made Secured General Collateral (SGC) Notes eligible as collateral under the Standing Liquidity Facility (SLF), pending necessary system enhancements. Today, the Bank is announcing that it has completed these system updates and is operationally ready to accept SGC notes as collateral once they are issued. This milestone marks a significant step in supporting the development of this new market.
The Bank is also updating the policy to streamline Lynx participants’ access to liquidity for exceptional cases. Specifically, it will now agree to accept requests to increase a participant’s non-mortgage loan portfolio (NMLP) concentration limit on a same day basis in exceptional cases, for a very limited period, to accommodate the liquidity needs of individual Lynx participants when there are extremely large FMI critical payment flows. This change is reflected in the concentration limits condition of the policy and is being implemented to better support Lynx participants in managing their liquidity needs.
Further, the Bank has reviewed the margin requirements that apply to NMLP collateral. Margin requirements for two categories have been updated: The haircut for secured consumer loans decreased by 5 percentage points to 65% and the haircut for unsecured business loans decreased by 10 percentage points to 40%. The updated margin requirements will apply as per the table below. The overall haircut for NMLP continues to be the weighted average margin for these categories.
| Non-mortgage loan category | Margin Requirement |
|---|---|
| Unsecured consumer loans | 85% |
| Secured consumer loans | 65% |
| Unsecured business loans | 40% |
| Secured business loans | 30% |
The list of Assets Eligible as Collateral under the Bank of Canada’s Standing Liquidity Facility has been updated to reflect these changes. For further information, please contact:
Director
Financial Markets Department
Bank of Canada
Source(s):
Standing Liquidity Facility