The Bank of Canada is announcing changes to the eligibility criteria and review process for applications for its Contingent Term Repo Facility (CTRF). As non-bank financial institutions (NBFIs)1 play an increasingly important role in fixed-income markets and in the global financial system, these changes provide greater clarity on the eligibility of NBFIs and define more precise criteria to guide the Bank’s review of applications for eligible counterparties. These changes will inform the Bank’s decision on whether to grant individual applicants access to the CTRF.

The Bank will also make operational changes to enhance the efficiency of the CTRF. These changes include onboarding eligible counterparties prior to activation of the CTRF, conducting occasional readiness testing, and enhancing existing systems and processes that support the CTRF when the facility is used.

CTRF eligibility criteria2

To ensure the CTRF remains an effective liquidity tool to address market disruptions in times of severe market stress, eligible counterparties will be subject to the following criteria:

  1. Significant activity: Eligible counterparties must demonstrate, to the satisfaction of the Bank, significant activity in Canadian-dollar money markets and/or fixed-income markets, either through the size of their CTRF eligible assets and/or level of repo activity.
  2. Regulation: The scope of the Bank’s review of eligible counterparties will depend on the extent to which they are subject to federal or provincial financial and/or market regulation.
  3. Risk assessment: Eligible counterparties that demonstrate significant activity and that are subject to federal or provincial regulation will undergo a standard risk assessment, while those that demonstrate significant activity but that are unregulated will be subject to a more comprehensive risk assessment.

To better delineate the Bank’s liquidity facilities, any deposit-taking institutions currently eligible for the Bank’s Standing Term Liquidity Facility (STLF) will no longer be eligible for the CTRF.

Additionally, to enhance efficiency and improve operational readiness, the Bank plans to transition CTRF operations from a bilateral standing facility to a fixed-rate, full allotment auction that uses the Bank of Canada Auction System (BCAS) to conduct the Bank’s other overnight and term repo operations. Under this new format, if the CTRF is activated, the auction will be conducted daily at a specified time and will include multiple predetermined tenors (up to a maximum of 30 days). Further details and implementation of these policy changes will occur later this year, at which point onboarding of new CTRF-eligible participants will commence.

For further information, please contact:


Director
Financial Markets Department
Bank of Canada


Policy and Operations Advisor
Financial Markets Department
Bank of Canada

Content Type(s): Press, Market notices
Source(s): Contingent Term Repo Facility
  1. 1. Asset managers and other financial intermediaries are collectively referred to as NBFIs in the context of the CTRF. For additional context and details about asset managers, see D. A. Cimon, J.-P. Dion, J.-S. Fontaine and J. Sandhu, “Will Asset Managers Dash for Cash? Implications for Central Banks,” Bank of Canada Staff Discussion Paper No. 2025-5 (March 2025).[←]
  2. 2. For additional context and details about the design of the revised CTRF policy, see J. Z. Chen, P. Chu and S. Kinnear, “The Contingent Term Repo Facility: Lessons learned and an update,” Bank of Canada Staff Analytical Note No. 2025-12 (March 2025).[←]