Canadian primary dealers (DPs) in Government of Canada securities and direct participants in the Large Value Transfer System (LVTS). Bidders will be informed by telephone after the auction has been awarded. The Bank of Canada faxes confirmations to each bidder indicating the specific terms of the transaction, including securities. All coupon and principal payments (for NHA MBS) that the Bank of Canada receives on the securities for the duration of the transaction are held by the Bank of Canada. The final settlement amount will be adjusted as necessary to reflect such revenues in accordance with the Bank of Canada`s purchase and resale agreement. Interest on reverse retirement transactions and interest on repo transactions are recognised as interest or interest charges. The conditions of use of eligible securities are the same as those applicable to SLF securities, with the exception of: counterparties must communicate to the Bank of Canada, in their formal form, the securities used as securities on the day of trading. Securities acquired under resale agreements (“reverse retirement transactions”) and securities sold in repo transactions (“repurchase transactions”) are treated as secured loan transactions and are initially invested at fair value, i.e. the amount of cash paid or received. The cash payment is supported by the securities that serve as a guarantee of financing and which have a market value equal to or greater than the amount of the borrowed capital. Securities received in reverse retirement transactions and securities delivered in repo transactions are not recognised in the balance sheet or withdrawn from the balance sheet unless the risks and opportunities of ownership are acquired or abandoned.

Securities are delivered to the Bank of Canada up to 3 p.m (Ottawa time) through CDSX on the auction settlement date, based on delivery of securities against payment of funds. The securities to be provided will be confirmed and evaluated by the Bank of Canada after the auction and before delivery. The list of transferable securities admitted for these transactions includes marketable securities accepted for the Standing Liquidity Facility (SLF), with the exception of central bank funds sold and securities purchased under resale agreements Substitution is permitted on a bi-daily basis. The dates of representation are announced by the Bank. On the day of replacement, participants have the right to replace a maximum of three (3) securities at the basis of all known transactions until noon two working days before the date of substitution and in accordance with the bank`s purchase and resale contract. As a general rule, in the case of a repurchase agreement, two counterparties enter into an agreement where one sells securities to the other, while agreeing to repurchase them at a later date at a fixed price. Securities can therefore effectively be considered as collateral for a cash loan. The securities concerned are generally fixed-income securities and pricing is agreed with regard to interest rates. This agreed interest rate is called the repo rate. While many market participants carry out such operations, central banks, when they do, are usually carried out only with certain banks on their short-term national money markets and implemented for the purpose of implementing monetary policy.

A reverse repurchase agreement or “Reverse Repo” is the purchase of securities with the agreement to sell them at a higher price on a given future date. . . .