Ministry's operations 2023

Ministry's operations on the secondary market

The long-term objectives for operations on the secondary market contribute to re-financing risk management and support liquidity and effectiveness of the secondary market functioning. An effective secondary market in terms of minimising transaction costs and maintaining market depth and price stability is a necessary condition for the issuing activity of the state and smooth and cost-effective funding over the long term. The Ministry of Finance has been operating actively on the secondary market, primarily through the MTS Czech Republic electronic trading platform. The MTS Czech Republic enables carrying out buy-backs, tap sales and exchanges of government bonds from the Ministry's own portfolio.

According to the Primary Dealer Agreement for Czech Government Securities and Recognized Dealer Agreement for Czech Government Securities the Ministry of Finance may execute tap sales and exchanges any trading day 10:00 a.m. – 12:00 p.m. and 2:00 p.m. – 4:00 p.m. CET when there is no auction executed. The Ministry of Finance may execute buy-backs on any trading day 10:00 a.m. – 12:00 p.m. and 2:00 p.m. – 4:00 p.m. CET.

Buy-backs, tap sales and exchanges on the secondary market occur in a transparent manner. As a matter of practice, the Ministry of Finance will inform all Primary Dealers and Recognized Dealers about the intention to conduct a transaction one business day prior to the date on which the transaction is to occur. The Primary Dealers and Recognized Dealers will be notified about:

1. the type of transaction (buy-back, tap sale or exchange),
2. the particular government bond (auctioned bond or buy back bond) ,
3. the maximum total volume of the transaction with particular government bonds,
4. the time when bid or offers from Primary dealers and Recognized Dealers can be submitted via the system,
5. the date of settlement,
6. the contact person at the Ministry.

At the time offers are accepted, the Primary Dealers and Recognized Dealers may enter into the system their prices and the volume of each buy-backs, tap sales or exchanges. Afterward, depending on the price and the volume, the Ministry will either accept or reject the offer. The Ministry may accept offers from more than one Primary Dealer or Recognized Dealer, but is not obligated to accept any Primary Dealer's or Recognized Dealer´s offer.

The Ministry of Finance may execute lending facilities on the secondary market. The lending facilities are available as repo transactions and as loans of securities. Primary Dealers and Recognized Dealers borrow the Czech Government Bonds and the Ministry of Finance borrows CZK liquidity, Czech Government Bonds, Treasury Bills or Czech National Bank Bills. Transactions may be made on trading days between 8:00 a.m. and 4:00 p.m. CET.

Reverse repo operations are the most common instrument used for the purposes of cash management of the treasury single account. Reverse repo operations are short-term collateralized investments with Czech Government Bonds, T-bills or Czech National Bank bills used as collateral.

Operations with T-Bonds and T-Bills on the Secondary Market