The Bank of Canada will launch its Securities Lending Program (SLP) on 2 October 2024. As previously announced, the current daily Securities Repo Operation (SRO) will be discontinued, with the final SRO to occur on 1 October 2024. The SLP is designed to support the liquidity of Government of Canada (GoC) securities markets. The SLP website and Terms and Conditions have been updated on the Bank’s website to reflect the operational details and objectives of the program. Under the SLP, the Bank will lend specific GoC securities that are in high demand and receive other GoC securities or fixed-rate Canada Mortgage Bonds as collateral, instead of making its holdings of GoC securities available against cash through repurchase agreements in the case of the SRO.
The minimum bid fee for tenders in the SLP will be set at 15 basis points. This pricing is in line with the maximum bid rate previously set for the SRO which was 15 basis points below the Bank’s target for the overnight rate. Prior to the launch of the SLP, the Bank of Canada will conduct some small value SLP trades with Primary Dealers to test the operation.
At the same time, the Terms and Conditions for the Overnight Reverse Repo (ORR) have been updated as a counterparty’s limit in the ORR operation will no longer take their usage of the SRO into account.
The Bank, at its discretion, may adjust the size, pricing and other parameters of the program to achieve its objectives. The Bank has made significant investments in its systems to improve the efficiency of its operations and will collaborate with Primary Dealers to further enhance functionality and alignment with market standards. The Bank continuously monitors market conditions and remains committed to providing the required support for the well-functioning of the Canadian securities financing market.
Director
Financial Market Department
Bank of Canada
Director
Financial Market Department
Bank of Canada
Assistant Director
Financial Market Department
Bank of Canada