Operational Notice - South African Reserve Bank

SA RESERVE BANKAfrica. The issuing of Treasury bills is governed by the Public FinanceManagement Act (No. 1 of 1999). Treasury bills are issued at a discount totheir face value.3.2.3 Reserve Bank debentures are issued by the Reserve Bank in terms of theReserve Bank Act for monetary control purposes. The yield on debenturesis calculated on an interest add-on basis and subsequently the maturityvalue includes interest. At this stage, the Reserve Bank issues debentureswith maturities of up to 91 days by means of a weekly tender. The ReserveBank has the discretion to either change the maturities or redeem the billsprior to maturity.3.2.4 Land Bank bills are issued at a discount to their face value by the LandBank under the Land Bank Act, (No. 13 of 1944), and represents a liabilityof the Land Bank.3.2.5 Separate Trading of Registered Interest and Principal of Securities(STRIPS), issued in terms of the Public Finance Management Act, No. 1 of1999. The Act provides the Minister of Finance with the authority to borrowmoney and to convert such loans into any other loan with the concurrenceof the lender. These strips trade as zero coupon instruments.4. Tender procedures for repurchase transactions4.1 Announcement of auction and invitation for bids4.1.1 In its invitation to participate in the repurchase auctions, the Reserve Bankannounces the rate but not the estimated amount of liquidity required bythe market on its wire services pages (see Appendix II for examples). Finalsquare-off repurchase or reverse repurchase auctions could also beannounced towards the end of the day cycle. Depending on the marketposition immediately before the final window of the day, the Reserve Bankcan either provide liquidity to the market via a repurchase transaction ordrain excess liquidity via a reverse repurchase transaction. The final squareoffauction(s) can either be conducted at the level of the prevailingrepurchase rate (supplementary tender) and/or at 150 basis points aboveor below the prevailing repurchase rate (final clearing tender). The type offinal square-off facilities that the banks will be allowed to use aredetermined by the Reserve Bank at its discretion.4.1.2 The Reserve Bank could postpone the 12:00 main repurchase auction until15:00 if, for whatever reason, the Bank is unable to conduct the mainauction at 12:00. The market would be informed by the Bank of anydecision in this regard on its wire services pages.4.1.3 The Reserve Bank normally conducts the weekly main repo auction at 12:00on a Wednesday. The Reserve Bank publishes a screen announcement inthe form of Appendix II. This announcement will state, among other things:- the maturity date;- the fixed repurchase rate; and- the closing time of the tender.4.1.4 The Reserve Bank also publishes invitations to participate in the final6 OPERATIONAL NOTICE