On the Bank of Russia auction operations in 2014 (Unofficial translation)

According to the Bank of Russia Board of Directors decision dated 13, September 2013, the Bank of Russia decided to conduct the auction operations in 2014 as a part of its effort to enhance a system of instruments for banking sector liquidity management.

In January, 2014, the Bank of Russia will conduct the overnight REPO auctions on a daily basis and either one-week REPO or one-week deposit auctions on a weekly basis. In addition, the Bank of Russia will conduct one REPO auction and one Lombard loan action for 3-months term and 12-months term respectively, as well as one auction for provision of loans secured by non-marketable assets for 3-month term with floating interest rate.

Starting from February, 2014, the Bank of Russia will change its operational procedure. The Bank of Russia will abolish daily overnight REPO auctions and suspend REPO auctions for 3-month and 12-month terms, as well as Lombard loan auctions for 1 week, 3-month and 12-month term. At the same time in the case of abrupt changes in banking sector liquidity, the Bank of Russia will conduct REPO auctions for terms from 1 to 6 days as fine-tuning operations.

Starting from 2014 the Bank of Russia will also conduct the auctions for provision of loans secured by non-marketable assets for 3-month term with floating interest rate on a monthly basis. While being more convenient for credit institutions, more frequent auctions will enhance the Bank of Russia’s ability to manage banking sector liquidity. Wider use of this instrument will eventually contribute to the better money-market functioning and credit institutions’ liquidity management.

The information on one-week auctions to provide or absorb liquidity will be posted at the Bank of Russia website for information of credit institutions and the Bank of Russia regional branches on the same day as a decision is made.

Information on auctions to be conducted from 28 April to 11 May 2014, from 31 October 2014 to 9 November 2014, and 22 to 31 December 2014 will be announced later.

1. On REPO auctions

According to the Bank of Russia Monetary Policy Committee decision (minutes № 27, dated 2 December 2013), in 2014 the Bank of Russia will conduct REPO auctions for 1 week, 3-month and 12-month terms under the following conditions.

The frequency of auctions, as well as the auction, settlement and maturity dates are set as follows:

for REPO auctions for 1 week term (if conducted) — according to Table 1;

for REPO auctions for 3-month term — according to Table 2;

for REPO auctions for 12-month term — according to Table 3.

Table 1

REPO auctions for 1 week term

Table 2

REPO auctions for 3-month term

Table 3

REPO auctions for 12-month term

2. On Lombard loan auctions

According to the decision of the Bank of Russia Monetary Policy Committee (minutes № 27, dated 2 December 2013) and the Bank of Russia Regulation No. 236-P, dated 4 August 2003, “On the Procedure for Extending Bank of Russia Loans on securities to Credit Institutions” (with changes) in 2014, the Bank of Russia conducts Lombard loan auctions for 1 week, 3-month and 12-month terms with credit institutions — residents of the Russian Federation on the following conditions.

The frequency of Lombard loan auctions, as well as auction, settlement dates and maturity dates are set as follows:

for Lombard loan auctions for 1 week term (if conducted) — according to Table 4

for Lombard loan auctions for 3-month term — according to Table 5

for Lombard loan auctions for 12-month term— according to Table 6

Table 4

Lombard loan auctions for 1 week term

Table 5

Lombard loan auctions for 3-month term

Table 6

Lombard loan auctions for 12-month term

Auction type — American auction.

Maximum share of non-competitive bids — 50%. Collateral adequacy on non-competitive bid for Lombard loan auction is calculated based on the overnight credit rate on the day of a bid acceptance.

Minimum interest rate set in the bid for Lombard loan action is equal to minimum interest rate on Lombard loan auction, set by the Bank of Russia Board of Directors on the corresponding term.

If the Bank of Russia Board of Directors takes a decision to change minimum interest rate on Lombard loan auction, a new minimum interest rate is applied starting from the date specified at the Bank of Russia Board of Directors’ decision about a minimum interest rate change on Lombard loan auction.

3. On deposit auctions

According to the Bank of Russia Monetary Policy Committee decision (minutes № 27, dated 2 December 2013), the Bank of Russia Regulation № 203-P, dated 5 November 2002 “On the Procedure for Conducting Deposit Operations by the Central Bank of the Russian Federation with Credit Institutions in the Currency of the Russian Federation” (with amendments) and the Bank of Russia Regulation № 404-P, dated 9 August 2013 “On Conducting Deposit Operations by the Central Bank of the Russian Federation with Credit Institutions”, in 2014 the Bank of Russia conducts deposit auctions with credit institutions — residents of the Russian Federation on the following conditions.

The frequency of deposit auctions, as well as auction, settlement, maturity and interest payment dates on deposits for 1 week term (if conducted) are set according to Table 7.

Table 7

Deposit auctions for 1 week term

Auction type — American auction.

Maximum share of non-competitive bids — 50%.

Minimum amount of one bid in the deposit auction equal:

• 10 million rubles for bids of the credit institutions participating in the deposit auctions conducted via the Reuters Dealing System;
• 10 million rubles for bilateral tender agreements-bids of the credit institutions of Moscow region participating in the deposit auctions;
• 3 million rubles for bilateral tender agreements-bids of the regional credit institutions participating in the deposit auctions;
• 1 million rubles for bids of the credit institutions participating in the deposit auctions conducted via the Moscow Interbank Currency Exchange Electronic Trading System.

Maximum interest rate set in a bid for deposit auction is equal to maximum interest rate on deposit auction for the respective term set by the Bank of Russia Board of Directors.

If the Bank of Russia Board of Directors takes a decision to change maximum interest rate on deposit auction, a new maximum interest rate is applied starting from the date specified at the Bank of Russia Board of Directors’ decision about a minimum interest rate change on deposit auction.

In case of the proportional reduction of the bids of the credit institutions at depletion of maximum amount of deposit, the amount of bid is rounded to the amount multiple of 10 thousands rubles.

4. On auctions for the provision of the Bank of Russia loans secured by non-marketable assets with floating interest rate

According to the Bank of Russia Monetary Policy Committee decision (protocol № 27, dated 2 December 2013) and Regulation No. 312-P, dated 12 November 2007, “On the Provision of Loans Secured by Non-marketable Assets and Guarantees by the Bank of Russia to Credit Institutions”, in 2014 the Bank of Russia conducts auctions for the provision of loans secured by non-marketable assets, for 3-month term with floating interest rate, with credit institutions — residents of the Russian Federation on the following conditions.

The frequency of auctions for the provision of loans secured by non-marketable assets for 3-month term with floating interest rate, as well as auction, settlement, maturity and interest payment dates are set according to Table 8.

Table 8

Auctions for the provision of loans secured by non-marketable assets for 3-month term with floating interest rate

The parameters of the auction, planned on 13 January, 2014, are presented in the Bank of Russia information notice “On auction for the provision of the Bank of Russia loans secured by non-marketable assets with floating interest rate” dated 13 December 2013.

The parameters of the auctions planned on 10 February, 6 March, 14 April, 12 May, 9 June, 14 July, 11 August, 8 September, 13 October, 10 November and 8 December 2014 (auction type, minimum interest rate, minimum bid, maximum number of bids of a single credit institution, maximum allotment) will be set by the Bank of Russia Monetary Policy Committee for each auction.

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