Monetary Operations under the Interest Rate Corridor Framework
Overnight RRP Facility
In a repurchase transaction, the BSP buys government securities (GS) from a bank with a commitment to sell them back at a specified future date at a predetermined rate, resulting in an expansionary effect on liquidity. Conversely, in a reverse repurchase (RRP) operation, the BSP also acts as the seller of GS and the bank’s payment to the BSP has a contractionary effect on liquidity.
The existing RRP facility is an overnight facility and will be offered using a fixed-rate and full-allotment method, where individual bidders are awarded a portion of the total offer depending on their bid size. Fixed-rate, full allotment method will help ensure that the overnight rate sits close to the BSP policy rate.
The table below presents the features of the O/N RRP facility.
|
Feature |
Details |
| Frequency of operations | Daily (5 days a week)
|
| Maturity | Overnight |
Auction type
| Fixed-rate, full allotment
|
Auction size
| Based on BSP liquidity forecast
|
Announcement of auction size
| Weekly |
Auction time
| 5:00 PM (Open); participants can start submitting bids at 4:30 PM |
Auction time window
| 30 minutes |
Eligible counterparties
| Banks and NBQBs |
Type of allocation
| Pro rate based on bid size
|
Minimum bid amount
| P10 million
|
Maximum bid amount
| 20% of auction size
|
Maximum no. of bids
| One (1)
|
Announcement of results/settlements
| Same day
|
Auction Schedule
