Operational Notice - South African Reserve Bank

SA RESERVE BANKvary or omit any of the procedures described on any particular day, ifdeemed necessary.1.7 In addition to various types of repurchase transactions, the Reserve Bank’srefinancing system also provides for the averaging of cash reserves and amarginal lending facility. These facilities are available to banks to bridgetemporary liquidity needs.2. Types of open-market operations2.1 Repurchase transactions2.1.1 The Reserve Bank, as part of its monetary operations, conducts fixed-ratemain repurchase auctions with one-week maturities. These auctions arenormally conducted at 12:00 on Wednesdays. If, for whatever reason, thetender cannot be conducted at 12:00, it will be postponed until 15:00. Ifnecessary, a final square-off auction (see point 2.2 below) with a one-daymaturity (except weekends and public holidays) is held just prior to the endof the day cycle as prescribed by the South African Multiple OptionSettlement System (SAMOS System).2.1.2 The rate at which the main repurchase auctions are conducted isdetermined by the Monetary Policy Committee (MPC).2.1.3 Holders of eligible assets as defined in Section 3 of this Notice, should havefull title of the assets offered for the repurchase transaction and theseassets may not become redeemable during the life of the repurchasetransaction for which they are used. Securities offered for repurchaseshould not mature on or before the maturity date of the specific repurchasetransaction.2.1.4 The Reserve Bank at 12:00 provides yields on its wire services pages 1 forthe valuation of securities acceptable in the repurchase transactions.2.1.5 As mentioned in paragraph 1.3 coupon payments received on securitiesthat are sold in terms of a repurchase agreement would be paid over to thesupplier/seller of the securities (cash taker) on the interest payment date.1 Reuters, Bloomberg,InetBridge (Telerate) andinternet. See Annexure IIfor more detail2.2 Final square-off auctions2.2.1 The Reserve Bank may, at its discretion, conduct final square-off auctions whena liquidity imbalance exists in the market towards the end of the settlementcycle. The same eligible securities as listed in Section 3 are acceptable.2.2.2 The final square-off auction can either be in the form of a liquidity-providingrepurchase transaction or a reverse repurchase transaction where surplusliquidity is drained from the market.2.2.3 The rates applicable to final square-off repurchase transactions and reverserepurchase transactions can, at the discretion of the Reserve Bank, eitherbe equal to the prevailing repurchase rate (supplementary auction) or 150basis points above or below the prevailing repurchase rate (final clearingauction). The Reserve Bank also reserves the right to change this spread.OPERATIONAL NOTICE3