BOJ removes restriction price on US$20 billion B-FXITT auction
Resale recipients limited to end-usersFriday, April 10, 2020
BY DURRANT PATE
The Bank of Jamaica (BOJ) has removed the restriction on the price at which B-FXITT participants can resell the US$20-million intervention funds, which was auctioned on Wednesday.
While the restriction has been removed on the resale price, the BOJ has imposed a new restriction for this auction, whereby the resale recipients are limited to end-users as defined by the central bank. End-users are defined as non-financial commercial client entities that are funding obligation for goods and services acquired.
The settlement date for the auction was yesterday.
What is unique about this auction is that it allows BFXITT participants, who are all authorised dealers and cambios to sell to end-users at a price that is not be restricted by the BOJ.
In regular BFXITT auctions, the resale price is restricted. B-FXITT, which means the BOJ Foreign Exchange Intervention & Trading Tool, is intended to facilitate buying as well as selling foreign exchange.
The minimum bid size for the auction was US$100, 000. Bids above this amount should be rounded to the nearest US$25,000. Each entity may submit up to three bids in the operation.
Bids in excess of this limit will be rejected on the basis of the bid price ranked from highest to lowest. The total value of all bids submitted by each entity must not exceed 20 per cent of the auction offer size.
Bids in excess of the 20 per cent limit will be rejected on the basis of bid exchange rate ranked from the highest rate to lowest rate. The maximum bid size of a single bid must not exceed 10 per cent of the operation amount, which in this case is US$20 million.
Bids in excess of the 10 per cent limit will not be accepted and the bid price should not exceed two decimal places. The allocation of bids will start at the highest bid price to the lowest bid price, until the operation amount is fully allotted or all bids are fully allocated.
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