Securities Purchased Under Resale Agreements Bank Of Canada

The list of securities eligible for these transactions includes marketable securities accepted for the Permanent Cash Facility (SLF), with the exception of the following: To explain further the BoC`s wish to introduce short-term liquidity into the market, it does so by purchasing assets from a commercial bank in exchange for bank reserves. These assets are acquired with the agreement that, in the near future, commercial banks will repurchase these assets at a known price and on a date set by the BoC. These «buy-back contracts» are referred to as SPRAs in the BoC`s balance sheet, but are more often referred to as «rest.» Transactions are subject to marginal calls when the value of eligible securities issued falls below an acceptable threshold for the Bank of Canada. The bank limits the potential market distortions of its investment activities by acting in the broadest and most neutral manner possible. The bank`s balance sheet should be structured so that the impact on market prices of these assets from routine purchases of certain securities is minimal. The Bank generally conducts these transactions at 11:45 a.m.m. (ET), but is prepared, if necessary, to conduct several transactions and to conduct these transactions outside normal time. While these repurchase transactions generally include, overnight, the purchase of securities by the Government of Canada, the bank has discretion to expand the list of eligible securities during market loads. The Canadian government`s cash and cash management payments are also acquired on a non-competitive basis, but for a variable amount, depending on the bank`s specific balance sheet needs at the time of each auction. These amounts are based on the bank`s staff forecasts of future demand for notes and other commitments, as well as the amount of treasury bills and bonds that will mature in the coming weeks. The amount actually acquired is disclosed in the results of each Treasury auction, which is consistent with the Bank`s principle of transparency. The typical practice is to distribute the total amount of treasury bills acquired by the Bank over the various proposed maturities, so that the bank`s purchases broadly reflect the same government issuance units over the three maturity tranches.

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