The Reserve Bank today announced it will hold an Open Market Operation (OMO) each Tuesday where just Corporate and Asset-Backed eligible securities will be acceptable as collateral on a two name basis. This follows the Reserve Bank's announcement on 12 December 2008 that it was extending the range of securities that are acceptable in its Domestic Market Operations. The new securities are eligible for the Reserve Bank's Overnight and Term Reverse Repo Facility, and for its other liquidity operations at the Reserve Bank's discretion. Tuesday's OMO will give the market certainty around the ability to use Corporate and Asset-Backed securities to obtain liquidity at a time when markets remain disrupted. Details of Tuesday's OMO are:
Repo eligible securities and haircuts
Operating rules and guidelines for domestic markets
This Tuesday OMO is seen as temporary, to be kept in place while global markets remain unsettled. The Reserve Bank will review this operation after one year.
The Term Auction Facility (TAF) and Reserve Bank bill tenders are unaffected by this announcement, although the list of eligible securities for the TAF will change slightly with the removal of AAA corporate paper.
Te Okeroa
Manager, Market Operations
[email protected]