Terms and Conditions

Operation details

Overnight Repo and Overnight Reverse Repo operations are offered to eligible participants at the Bank of Canada’s discretion to reinforce the target for the overnight rate. Offerings by the Bank of Canada are subject to pre-specified limits for each eligible participant, as well as an aggregate limit per offering on any single day.

Type of auction

Uniform price auction for a fixed Canadian dollar (Can$) cash-value amount.

Eligible counterparties

Canadian Primary Dealers in Government of Canada securities.

Terms

Transactions are for a term of 1 business day.

Tender process

Overnight Repo and Overnight Reverse Repo operations will normally be conducted at 11:45 a.m. (Ottawa time) with a deadline of 12 noon for participants to submit tenders. The Bank of Canada reserves the right to conduct these operations earlier or later in the day—with an approximate 15-minute tender submission deadline to be set by the Bank of Canada—and to conduct multiple operations in a given day, if necessary.

Tenders must specify a bid or offer rate and an amount on a cash-value basis. Each counterparty can submit a maximum of two tenders.

The minimum bid rate on cash for Overnight Repo operations is equal to the Bank of Canada target for the overnight rate.

The maximum offer rate on cash for Overnight Reverse Repo operations is equal to the Bank of Canada target for the overnight rate.

Bid and offer rates must be submitted on a yield basis, up to two decimal places.

Tender amounts are subject to maximum allocation limits. The minimum tender amount is $10 million, with minimum increments of $1 million.

Verbal tenders must be confirmed in writing by sending an email to .

The Bank of Canada reserves the right to accept or reject any or all bids, in whole or in part, including, without limitation, the right to accept less than the total amount specified ahead of the auction.

Allocation mechanism

Overnight Repo operations: Tenders with the highest bid rate will be accepted and allocated first. Tenders with successively lower bid rates will continue to be accepted until the total amount of cash to be provided by the Bank of Canada reaches the amount on offer and the auction is completely allocated. The lowest accepted bid rate is the allocation rate, which is the rate applied to all accepted tenders. If the sum of tender amounts at the allocation rate exceeds the amount available to allocate, these tenders will be allocated on a pro-rated basis and rounded to the nearest $1 million.

Overnight Reverse Repo operations: Tenders with the lowest offer rate will be accepted and allocated first. Tenders with successively higher offer rates will continue to be accepted until the total amount of cash to be received by the Bank of Canada reaches the amount on offer and the auction is completely allocated. The highest accepted offer rate is the allocation rate, which is the rate applied to all accepted tenders. If the sum of tender amounts at the allocation rate exceeds the amount available to allocate, these tenders will be allocated on a pro-rated basis and rounded to the nearest $1 million.

Maximum allocation

Winning participants will be awarded an amount of each offering up to limits of either $500 million or $150 million. Limits are based on each institution’s annual average market share in the primary, secondary and repo markets for Government of Canada bonds and treasury bills, as determined by the Bank of Canada. Limits will be communicated directly to each eligible participant and will be reviewed at least annually.

The maximum cash-value amount of Overnight Repo or Overnight Reverse Repos that will be auctioned per offering is $1.5 billion.

Timing of results

Winning counterparties will be notified by telephone of their amount awarded and the allocation rate following the allotment of the auction. The Bank of Canada will email or fax the counterparty confirmations, setting out the specific terms of the transaction, including the securities.

The total cash provided by the Bank of Canada through Overnight Repos or received by the Bank of Canada through Overnight Reverse Repos, as well as the allocation rate, will be announced on the Bank of Canada's website as soon as possible following the auction. The securities bought or sold in transactions will also be reflected on the Bank of Canada’s balance sheet.

Eligible securities

Directly-issued Government of Canada marketable securities denominated in Canadian dollars are eligible for these transactions. The securities must not mature on the date of maturity of the Overnight Repo or Overnight Reverse Repo operation.

Notification of securities to be used

Overnight Repo operations: Within 15 minutes of the release of the results, counterparties must notify the Bank of Canada, in the form instructed, of the securities that will be used.

Overnight Reverse Repo operations: Within 15 minutes of the release of the results, the Bank of Canada will notify counterparties of the securities that will be used.

Margins

Overnight Repo operations: Eligible securities are subject to the same margin requirements as those applicable in the Standing Liquidity Facility (See Margin Requirements).

Interest calculation

Interest on the funds will be calculated on an actual/365-day basis.

Coupon payments

All coupon payments received by the Bank of Canada or by the eligible counterparty on the securities during the term of the transaction will be kept by the holder of the securities. The final settlement amount will be adjusted, as required, to account for these receipts in accordance with the Bank of Canada’s Master Repurchase Agreement.

Counterparty settlement instructions

Securities shall be delivered to or received from the Bank of Canada by 4:00 p.m. (Ottawa time) through CDSX on the settlement day of the offering, on a delivery-of-securities versus payment-of-funds basis. Securities to be delivered or received shall be confirmed between the Bank of Canada and the eligible counterparty and priced by the Bank of Canada after the offer and before delivery.

The Bank of Canada’s CDS settlement customer unit identifier (CUID) is BOCB.

Legal arrangements

Eligible counterparties must have made the appropriate legal arrangements with the Bank of Canada.

The Bank of Canada reserves the right to change the terms of subsequent Overnight Repo or Overnight Reverse Repo transactions by posting a revised version of these terms and conditions.

Each tender shall be unconditional and irrevocable after the submission deadline.

The Bank of Canada may, in addition to and without prejudice to any rights under the Bank of Canada’s Master Repurchase Agreement, sanction a Primary Dealer if the Bank of Canada is of the view that the Dealer breached any of the terms, including, failing to return cash or securities on the maturity date. The sanctions that the Bank of Canada may impose include, without limitation, suspending the Primary Dealer from participating in one or more future auctions and changing, on a temporary basis, the bidding limit applicable to the Dealer.