Lending of holdings purchased under the public sector purchase programme (PSPP)

As of 2 April 2015, the securities purchased under the public sector purchase programme (PSPP) are made available for securities lending in a decentralised manner by a number of Eurosystem central banks. Further national central banks will follow soon. The aim of securities lending is to support bond and repo market liquidity without unduly curtailing normal repo market activity. The Eurosystem is primarily targeting market participants with market making obligations.

The Eurosystem central banks will use various channels taking into account not only the diversity of the existing securities lending arrangements and market characteristics across jurisdictions, but also the goal of starting securities lending without undue delay. The Eurosystem will endeavour to attain a further convergence of lending arrangements over time. Each Eurosystem central bank provides more detailed information on its own securities lending arrangements.

General PSPP securities lending framework

Lending channels

Eurosystem central banks will make their PSPP holdings available via effective lending channels, depending on their current practices. These channels may include bilateral securities lending and lending relying on specialised securities lending agents or on the lending infrastructure of international central securities depositories (ICSDs).

Furthermore, Eurosystem central banks will, in principle, also make their PSPP holdings available for so-called fails mitigation lending programmes of international or domestic central securities depositories or ensure that comparable arrangements are in place in their jurisdiction.

Cash neutrality

Lending of PSPP-securities holdings is to take place on a cash neutral basis. This means that repo transactions against cash collateral shall be accompanied by a fully offsetting reverse repo transaction for the same value date, and typically with the same counterparty.

Operational and risk parameters

The individual Eurosystem central banks determine the securities lending modalities of their respective PSPP holdings, including collateral eligibility, pricing, haircut, term and counterparty eligibility, so as to achieve the objective of supporting market liquidity. This allows Eurosystem central banks to reflect domestic infrastructures and market practices.

Effectiveness of operations

The Eurosystem PSPP securities lending activities will be monitored closely so as to ensure the ongoing effectiveness of the arrangements.

PSPP holdings of securities issued by supranational institutions

Securities issued by supranational institutions and purchased under the PSPP by Eurosystem central banks will be made available for securities lending under the coordination of Banque de France and Banco de España.

Securities lending arrangements of Eurosystem members

Further details on the securities lending arrangements of both the ECB and the Eurosystem national central banks can be found on their respective websites:

European Central Bank (EN)  
Nationale Bank van België/Banque Nationale de Belgique (EN)  
Deutsche Bundesbank (EN)  
Eesti Pank (EN)  
Central Bank of Ireland (EN)  
Banco de España (EN) (ES)
Banque de France (EN) (FR)
Banca d'Italia (EN) (IT)
Central Bank of Cyprus (EN) (EL)
Latvijas Banka (EN)  
Lietuvos bankas (EN) (LT)
Central Bank of Malta (EN)  
De Nederlandsche Bank (EN)  
Oesterreichische Nationalbank (EN) (DE)
Banco de Portugal (EN) (PT)
Banka Slovenije (EN)  
Národná banka Slovenska (EN)  
Suomen Pankki (EN)