What happens if the Participant cannot meet a collateralization requirement?
A Participant that wins a TAF Advance is required to maintain sufficient collateral to cover the advance, as well as meet the collateralization requirement for advances with remaining term to maturity of more than 28 days. If the Participant, at any time, fails to meet any collateralization requirement, it will need to pledge additional collateral to cover the shortfall or the Reserve Bank may exercise its remedial rights under OC-10. (The same remedial actions available for other discount window loans would be applicable to a TAF Advance). In the event the full amount of the TAF Advance is not posted to a winning Participant’s account because it does not satisfy a collateralization requirement, the amount by which the TAF Advance would be reduced would not be reallocated to other Participants and the affected Participant would not be eligible to receive the balance of that TAF award on a subsequent day.
