MNI BRIEF: RBA Says CLF, TFF Wind-down To Affect RMBS

The winding down of the Committed Liquidity Facility (CLF) and Term Funding Facility (TFF) will impact banks' securitisation activities, said Jonathan Kearns, the Reserve Bank of Australia's head of domestic markets in a speech Wednesday.

The CLF is set to close by the end of the year as the increase in government debt has provided banks with high-quality liquidity assets (HQLAs), but they may choose to issue residential-backed mortgage securities to purchase additional HQLAs or refinance TFF funding. The first tranche of TFF repayment is due next year. He said banks hold a small amount of marketed RMBS as collateral for repos under the CLF and TFF facilities. As both are wound down, banks may have less need to hold these securities he said.

Collateral scarcity across global financial markets has been the overriding issue for other central banks including the Federal Reserve, the ECB and the Bank of England, with various steps taken to remedy the situation. (MNI INTERVIEW2:ECB Has Done Enough For Collateral Squeeze-Lane)