The Bank of England (the Bank) announced its intention to launch a new Short-Term Repo (STR) in a Market Notice on 4 August 2022. The STR will sit alongside the Indexed Long-Term Repo (ILTR) as an Open Market Operation (OMO) under the Bank’s Sterling Monetary Framework (SMF).
As set out in the 4 August STR Market Notice, because the STR will provide access to reserves against Level A collateral, at Bank Rate and in unlimited quantities for a 7-day term, the Bank judges it appropriate to adjust the minimum spread for bids against Level A collateral for a 6-month term in the ILTR.
In an update to the Market Notice published on 16 January 2014, the minimum spread to Bank Rate on bids against Level A collateral in the ILTR will change from 0 basis points to 3 basis points.
The date at which this change will take effect will be confirmed in due course. It will be no earlier than the first ILTR operation following the commencement of STR operations.
All other ILTR operation parameters remain unchanged.
The Bank will continue to offer ILTR operations on a weekly basis until further notice. A schedule of ILTR operations is available on the Information for participants page.
The Bank will continue to monitor market conditions carefully and stands ready to make additional changes to the ILTR if necessary.
Live test trades
The Bank will implement a routine test trade program for all OMO participants to ensure ongoing operational readiness. This may require Participants to submit STR and ILTR trades periodically in live operations, at the Bank’s request. Details will be communicated to relevant firms later in the year.
Other than as amended by this Market Notice, the SMF Terms and Conditions, SMF Operating Procedures, any applicable Market Notice and any other Documentation (as such term is defined in the SMF Terms and Conditions) continue to apply to ILTR operations. Where there is any conflict between the terms of such Documentation and this notice, the terms of this notice shall prevail.
The SMF Terms and Conditions and SMF Operating Procedures can be found on the Documentation page.