Following a review of the Government of Canada’s Debt Distribution Framework (DDF) in 2024, the Bank of Canada and the Government of Canada (GoC) are announcing upcoming adjustments to the DDF. These changes will take effect in fiscal year 2025–26. A subsequent market notice will announce the effective implementation date, which will reflect a three-month period to allow market participants time to review and adapt to these changes.
- All government securities distributors (GSDs) will be required to each achieve one winning competitive or non-competitive bid each month on behalf of either itself or its customers. Further, all GSDs must each achieve allocations of at least $50 million of GoC securities, on behalf of itself or its customers, every calendar quarter.
- GSDs that are not primary dealers (PDs) will no longer be required to have their core Canadian fixed-income operations located within Canada or to be members of the Canadian Investment Regulatory Organization (CIRO). However, prospective GSDs will need to demonstrate that they are regulated to a standard equivalent to CIRO and to submit reports on their Canadian fixed-income trading to CIRO.
- The use of calculated values for the purposes of determining bidding limits and PD minimum bidding requirements (MBRs) will be discontinued. PDs may submit competitive bids for up to 25% of the total auctioned amount for their own account and customer accounts for both bond and treasury bill auctions; the remaining GSDs will have a maximum competitive bidding limit of 10% for their own account and customer accounts for both bond and treasury bill auctions. PD MBRs will be calculated on a pro rata basis, where each PD must bid competitively for its equivalent share of an auction’s amount (e.g., 10 PDs for bonds would each have a MBR for 10% of a bond auction; 8 PDs for treasury bills would each have a MBR of 12.5% of a treasury bill auction).
- Each PD’s aggregate bidding limit, meaning the cumulative amount of bids a PD can submit for its own account and on behalf of its customers, will be increased to 50% of the auction amount for both bond and treasury bill auctions, from the current 40%.
- Non-competitive bidding limits will be changed to 0.5% of the auction amount per auction bidder. All bidders may submit only one non-competitive bid per auction. Customers may not submit competitive bids at an auction if they submit a non-competitive bid, and vice versa.
- The Bank of Canada Auction System (BCAS) has been upgraded, and once the DDF changes are effective, BCAS users will be divided into either those who can see and enter bids for only the GSD’s own account or those who can see and enter bids for only the GSD’s customers.
- A new facility will be created for reopening off-the-run GoC securities which the Bank of Canada and the Government of Canada view as requiring additional supply for markets to function well. This facility will be operationalized by the Bank of Canada, have publicly available Terms and Conditions, and be implemented with the same auction rules as nominal bond auctions. Details of the facility will be announced in a subsequent market notice that will also announce the facility’s effective date.
- PDs will be subject to MBRs for non-fungible as well as fungible Cash Management Bill auctions.
- Individual persons will not be eligible to apply for Bidder Identification Numbers.
- New information for the results of the auctions of GoC securities will be made available on the Bank of Canada’s website following every auction. Namely, the percentage of the auctioned amount allocated between customers and GSDs, as well as between Canadian accounts and foreign accounts, will be included in auction result data.
The Bank of Canada and the Government of Canada will coordinate with the GSDs over the coming months to implement these updates to the DDF in an orderly manner.
For further information, please contact:
Director
Financial Markets Department
Bank of Canada
343‑573‑4846
Director
Funds Management Division
Department of Finance Canada
343‑549‑3651