The oral agreement — the Central Bank, which typically injects liquidity into the banking sector with a week of auctions , said the longer-term auctions will take place on a monthly basis. Pension or retirement transactions are carried out to increase the ability of credit institutions to manage their liquidity. Effective January 1, 2017, bank of Russia has introduced a new standard form of universal master contract to carry out repo transactions with the Bank of Russia with a basket of RUB/USD securities. On 19 June 2017, the Bank of Russia`s reseal operations, which used NSD`s guarantee management services, were launched on the Moscow Stock Exchange. The MICEX TRADE SE terminal can also be used by merchants to trade and give instructions. The Bank of Russia stated that the current level of liquidity in the banking sector was sufficient to function properly. (Report by Gabrielle Tétrault-Farber; Writing by Andrey Ostroukh and Catherine Evans) Repo transactions with the Bank of Russia are carried out in the form of auctions or fixed-rate deposits. The Bank of Russia only makes deposits with Russian credit institutions. The requirements for deposit-eligible credit institutions are defined in Bank of Russia Regulation 2936-U of 13 December 2012 “Regarding the requirements for credit institutions with which the Bank of Russia conducts REPO transactions.” The Bank of Russia sets the following terms for deposits: transaction date, repurchase deadline, securities sale and subsequent purchase date, as well as interest rates.
The service is intended to provide liquidity to Russian commercial banks through tripartite repurchase operations with the Bank of Russia, in which the NSD`s collateral management system (CMS) participates. The objective of the service is to provide market participants with more trading and billing opportunities and to help them reduce their costs. The service has also helped to improve collateral management processes in the repo trade. In order to manage the risks associated with rest, the Bank of Russia sets discounts for each eligible security. Haircuts are based on credit quality, liquidity and other specific characteristics of eligible assets. The Bank of Russia sets the initial, upper and lower discounts and calculates the current haircut for deposits lasting more than one day on a daily basis. In the event of a structural liquidity deficit, the Bank of Russia relies on regular weekly auctions as the main liquidity management instrument. In the event of a structural liquidity surplus, there are no major auctions.
In the event of both a structural liquidity deficit and a structural liquidity surplus, the Bank of Russia can hold auctions of one to six days of auctioning and long-term auctions and allow banks to use permanent facilities.