On FX Repos

The Bank of Russia decided to introduce a new instrument — 12-month FX repo — starting from 5 November 2014. The purpose of this instrument is to ensure the stable functioning of the Russian banking sector and to ease the pressure on the ruble exchange rate caused by the market participants’ need in foreign currency amid a restricted access to international capital markets for Russian companies.

The aggregate maximum amount outstanding of credit institutions set earlier applies to FX repos for all terms and equals, as before, USD50 billion till the end of 2016. In case of need this amount may be raised.

The Bank of Russia also decided to set starting from 5 November 2014 the minimum interest rates on FX repos for all terms (one-week, 28-day, and 12-month) equal to LIBOR rates in corresponding currencies and for comparable terms plus 1.5 percentage points.

FX repos will be held generally every month at the MICEX Stock Exchange in the form of 12-month auctions. Settlements will be carried out on the second business day following the date of transaction.

Only securities included in the Bank of Russia Lombard List, excluding equities and securities issued by financial organisations, will be accepted as collateral for 12-month FX repos. The said transactions will be carried out with eligible Russian credit institutions belonging to the 1 and 2 classification groups [1] and having concluded with the Bank of Russia a supplementary agreement to the General Agreement on General Conditions of Repo Transactions between the Bank of Russia and a Credit Institution at the MICEX Stock Exchange.

The Bank of Russia intends to conduct the first 12-month US dollar repo auction in the second decade of November 2014. The potential auction amount is up to USD10 billion.

Until the end of 2014, the potential amount for US dollar repo auctions will be USD2.0 billion for one-week auctions and USD1.5 billion for 28-day auctions.

Due to the introduction of 12-month FX repos, the schedule of FX repos will be updated and published shortly on the Bank of Russia website.

^[1] In accordance with Bank of Russia regulations setting the criteria for assessing the financial standing of credit institutions.

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