Monetary Operations - Term Deposit Auction Facility (TDF)
Monetary Operations under the Interest Rate Corridor Framework
Term Deposit Facility (TDF)
The TDF is a key liquidity absorption facility, commonly used by CBs for liquidity management. Due to the BSP’s inability to issue its own debt instruments except in cases of extraordinary movement in price levels under R.A. 7653, the TDF is tasked to withdraw a large part of the structural liquidity surplus from the financial system to bring market rates closer to the BSP policy rate.
The BSP offers three tenors— 7 days, 14 days and 28 days—in its weekly term deposit auction. However, the 28-day TDF has not been offered starting the 14 October 2020 TDF auction, reflecting the full migration of auction volumes to the 28-day BSP Bills.
The TDF is operated using a variable-rate, multiple-price tender (English auction).
The table below presents the features of the TDF.
|Frequency of operations
|Once a week
|7 days, 14 days, 28 days
|Variable-rate tender, multiple price (English) auction
|Based on bids
|Determined by liquidity forecast
|Announcement of auction size
|Indicative calendar released quarterly; auction offer released two (2) business days ahead
|10:00 AM (Open); participants can start submitting bids at 9:30 AM
|Auction time window
|Banks and non-bank with quasi-banking functions (NBQBs)
|Minimum bid amount
|Maximum bid amount
|20% of auction size per tenor
|Maximum no. of bids
|Two (2) bid amounts per tenor at different rates
|Not allowed for 7-day TDF, allowed for 14-day and 28-day TDF after suitable holding period 7 days at the appropriate price