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Principal Terms and Conditions for U.S. Dollar Funds-Supplying Operations against Pooled Collateral (Invalid)

日本語

September 18, 2008
Revision: September 29, 2008
October 14, 2008
December 19, 2008
February 19, 2009
May 22, 2009
July 15, 2009

1. Purpose

These Terms and Conditions prescribe the principles for the Bank of Japan's U.S. Dollar (USD) funds-supplying operations against pooled collateral (USD denominated loans that are made against pooled eligible collateral by way of open market operations) introduced with the aim of further facilitating money market operations and maintaining the smooth functioning of the money market as well as ensuring stability in financial markets in view of the possible impact of recent liquidity pressures in the USD money market on liquidity in the Yen money market.

2. Location of Operations

At the Head Office (International Department) of the Bank.

3. Eligible Counterparties

Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Law, Law No.89, 1997, excluding the Resolution and Collection Corporation and bridge banks [as defined in Article 2, Paragraph 13 of the Deposit Insurance Law, Law No.34, 1971]), financial instruments firms (Article 10, Paragraph 1, Clause 2 of the Bank of Japan Law Enforcement Order [Order No. 385 of 1997]) that conduct the first financial instruments business (Article 28, Paragraph 1 of the Financial Instruments and Exchange Law, Law No. 25, 1948), securities finance companies (Article 10, Paragraph 1, Clause 3 of the Order), and tanshi companies (Article 10, Paragraph 1, Clause 4 of the Order).

4. Form of Loans

Loans shall be provided in the form of electronic lending.

5. Duration of Loans

Taking account of conditions in financial markets, the Bank shall determine the duration of each loan and the duration shall not exceed three months.

6. Loan Rates and Collection of Interest

(1) Interest rates on the loans

Interest rates shall be determined by one of the following methods.

  • (a) Interest rates on the loans shall be determined by multiple-rate competitive auctions. The rate shall not fall below the rate set by the Federal Reserve Bank of New York (FRBNY) as a prevailing USD Overnight Indexed Swap market rate that corresponds to the duration of the loan.
  • (b) Interest rates on the loans shall be set by the Federal Reserve Bank of New York taking account of a prevailing USD Overnight Indexed Swap market rate that corresponds to the duration of the loan.

(2) Collection of Interest

The interest on a loan shall be calculated based on the rate determined by the method described in (1) for the number of days from the first day after the disbursement of the loan up to the maturity date, and the interest shall be collected after the loan reaches maturity.

7. Date of Loan Disbursement, Amount of Loans, etc.

Taking account of conditions in financial markets, the Bank shall determine specifications necessary for lending, including the date of loan disbursement, the amount, and the counterparties for each loan.

8. Collateral

  1. (1) The standing pool of eligible collateral pledged by an eligible counterparty to the Bank shall secure the loans made to the counterparty.
  2. (2) "Guidelines on Eligible Collateral" (Policy Board Decision on October 13, 2000) and "Collateral Guidelines on Eligible Foreign Bonds" (Policy Board Decision on May 22, 2009) shall apply to the collateral for the loans.
  3. (3) The Yen denominated amount for which the counterparty shall pledge eligible collateral shall be obtained by multiplying a yen-denominated loan value based on the USD/Yen spot exchange rate prevailing in the market by 1.13 for the loan with a duration of up to one month and by 1.25 for the loan with a duration of more than one month and up to three months respectively.

9. Settlement

The payment and receipt of USD between the Bank and the counterparties shall be made through the accounts at the FRBNY which each party shall specify in advance.

Supplementary Provision

These terms and conditions shall become effective today and shall be valid through February 1, 2010. To the loans that are disbursed on or before February 1, 2010, these terms and conditions shall be applied until the maturity of the loans.