The Bank of England has opened the Contingent Non-Bank Financial Institution Repo Facility (CNRF) for applications, creating a contingent repo-based liquidity backstop that will only be activated during episodes of severe gilt market dysfunction that threaten UK financial stability. When activated, the facility will lend to participating insurance companies, defined benefit pension schemes and liability-driven investment (LDI) funds, following the Bank’s publication of the CNRF’s initial design in July 2024. The CNRF will operate as a collateralised lending facility, providing cash in return for gilts, with pricing determined at the point of activation and use of the tool at the Bank’s sole discretion. Eligibility is targeted at major gilt holders that may face a material risk of gilt sales during shocks, with an effectiveness threshold that firms must hold more than GBP 2 billion of gilts alongside meeting other eligibility criteria. Participating firms must be onboarded in advance under the Bank’s requirements, can access the facility directly or via an appointed representative, and will pay an annual fee of GBP 8,000 to recover the Bank’s ongoing operating costs. Applications are now being accepted, and firms need to complete onboarding to be able to participate if the facility is activated.
Bank of England 2025-01-28
Bank of England opens Contingent Non-Bank Financial Institution Repo Facility for applications to backstop liquidity in severe gilt market stress
The Bank of England has opened applications for the Contingent Non-Bank Financial Institution Repo Facility (CNRF), a liquidity backstop for severe gilt market dysfunctions threatening UK financial stability. The CNRF will provide collateralised lending to major gilt holders, such as insurance companies and pension schemes, with eligibility requiring over GBP 2 billion in gilts and an annual fee of GBP 8,000. Activation and pricing are at the Bank's discretion, and firms must complete onboarding to participate.