The Bank of Canada (BoC) will launch its Securities Lending Program (SLP) on 2 October 2024. 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.
Under the SLP, the BoC 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 BoC will conduct some small value SLP trades with Primary Dealers to test the operation.
The BoC 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.