Repo main and fine-tuning auctions

One-week repo auctions are the Bank of Russia’s main operations held on a weekly basis to manage the aggregate liquidity of the banking sector and provide necessary cash to credit institutions under a structural liquidity deficit. Operations are carried out in accordance with the Bank of Russian Operations Schedule.

Furthermore, in case of both structural liquidity deficit and structural liquidity surplus, the Bank of Russia may decide to hold a one- to six-day fine-tuning repo auction if the need arises to increase bank liquidity supply considerably and promptly.

The date of the auction and further information are announced through the What’s New section on the Bank of Russia website no later than one day before a one-week auction, on the current business day of a fine-tuning auction, and communicated to market participants via a notice on the Moscow Exchange website. Historical information on the auction announcements is available in Statistics: Banking Sector Liquidity, Monetary Policy Instruments and Other Operations of the Bank of Russia (Repo Auction Announcements).

Repo auctions are usually variable price auctions with a set maximum allotment amount conducted in the American manner (bids are closed at indicated prices). Only competitive bids with indicated repo rate (in % p.a.) are accepted for the auction. Non-competitive bids are not accepted. The minimum acceptable bid rate is set by the Bank of Russia Board of Directors and equals the key rate. The Bank of Russia uses the banking sector liquidity forecast to set the maximum allotment amount at repo auctions.

After the bidding at the repo auction is completed, the Bank of Russia determines the cut-off rate for the set allotment amount or recognises the repo auction as invalid. If there is only one bidder, the repo auction is recognised as invalid.

A valid repo auction results in the execution of all bids at the rate that is equal to or higher than the cut-off rate. Should the demand indicated in the cut-off rate bids exceed the available funds, these bids are executed pro rata.