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| Operational details: | Auction date, amount, term to maturity and other information will be announced by the Bank of Canada ahead of each auction. |
| Eligible counterparties: | Direct Participants in the Large Value Transfer System (LVTS) |
| Type of auction: | Single-price auction for a fixed quantity of Canadian dollars. All winning bids will pay the rate at the cut-off yield (minimum accepted yield). |
| Minimum bid rate and amount: | The minimum bid rate is 25 basis points above the overnight target rate (Bank Rate). The minimum bid amount is $5 million, with increments of $1 million. |
| Bidding process: | Maximum number of bids per participant is two. Bids must be submitted on a yield basis, up to 2 decimal places. Additional details to be announced with each operation. |
| Maximum allocation: | Each bidder has a bidding limit based on its credit rating: for LVTS participants with a credit rating of A or higher, the bidding limit is 25 per cent of the amount auctioned; for LVTS participants with a credit rating of BBB or lower, or for those LVTS participants without a credit rating, the bidding limit is 12.5 per cent of the amount auctioned. |
| Allocation mechanism: | Funds are allocated to all bids at or above the cut-off yield (minimum accepted yield). Bids at the cut-off yield will be pro-rated and allocated to $ thousands. All winning bids per participant will be combined into a single transaction for purposes of final settlement. |
| Timing of results: | Winning bidders will be notified by phone following the allotment. Summary results will be published on the Bank of Canada website on the auction date. |
| Eligible collateral: | The non-mortgage loan portfolio, as accepted temporarily in the Standing Liquidity Facility (SLF). For more information, see http://www.bankofcanada.ca/en/notices_fmd/2008/not171008_doc.html Only the portion of the non-mortgage loan portfolio value that is not included in the High Availability Banking System (HABS) collateral pool is eligible. If sufficient non-mortgage loan portfolio value is not available outside the HABS collateral pool, the successful bidder must submit a request to the Bank for a release of value from the collateral pool no later than the day prior to the settlement date. |
| Collateral margin : | The Bank will assign a collateral value of 60 per cent of the reported value of the non-mortgage loan portfolio, implying a margin requirement of 40 per cent. |
| Collateral requirements: | Collateral must be sufficient to cover the principal value of the term loan, plus the accrued interest over the term. |
| Settlement: | One business day following the auction (T+1).
Before funds are advanced to winning bidders, they must submit a term loan application to the Bank. The application must be received before noon on the settlement date. Settlement of funds will be via a credit into the LVTS participant's General Sub-account. Funds will be released from the General Sub-account upon receipt of payment instructions. |
| Maturity date: | The term loan must be repaid in full (principal and interest) to the Bank of Canada by 12:00 ET on the maturity date of the loan.
Settlement instructions for repayment of the term loan to the Bank: |
| Legal arrangements: | Eligible counterparties must have made the appropriate legal arrangements with the Bank of Canada, including those necessary for the Bank to take an assignment of the non-mortgage loan portfolio and amendments to the existing Loan Facility Agreement. |
| Interest calculation: | Interest on the funds will be calculated on a fixed, non-compounded rate on an actual/365-day basis. |
| Right of refusal: | The Bank of Canada reserves the right to accept or reject any or all bids, in whole or in part. |
| Amendments: | The Bank of Canada reserves the right to change the terms of subsequent TLF auctions by posting a revised version of these Terms and Conditions. |