Update to Discount Window Facility Pricing – Market Notice 27 March 2026

The Bank is today announcing a simplification and reduction in the Discount Window Facility (DWF) pricing, as part of its previously announced review of the DWF.

Published on
27 March 2026

The Bank is today announcing a simplification and reduction in the Discount Window Facility (DWF) pricing, as part of its previously announced review of the DWF. This represents a second step in strengthening the provision of reserves through our on-demand bilateral facilities, following the reduction in the spread to Bank Rate of the Operational Standing Facility (OSF) in December. This Market Notice confirms lower and fixed pricing for DWF drawings against each collateral set, which will be set at 15bps for Level A collateral, 25bps for Level B collateral and 50bps for Level C collateral.

Market Notice

The Bank of England (the Bank) is today announcing a simplification and reduction in the pricing of the Discount Window Facility (DWF). This is the outcome of a previously announced review of the DWF, where the Bank stated it would publish any changes to the facility in the first part of 2026. This represents a second step in strengthening the provision of reserves through our on-demand bilateral facilities, following the recalibration of the Operational Standing Facility (OSF) in December 2025 . This change to DWF pricing ensures it is appropriately aligned with the calibration of other Sterling Monetary Framework (SMF) facilities, as the Bank continues to transition to a repo-led, demand-driven framework for supplying reserves .

The DWF is a bilateral facility that allows firms to borrow highly liquid assets (gilts and reserves) on demand for up to 30 days, against the full range of SMF collateral. As with all SMF facilities, the DWF is ‘open for business’ and should be used by SMF participants for the purposes of liquidity management. It is intended for SMF participants who anticipate or experience a previously unexpected liquidity need, complementing our regular market‑wide operations. The amount available to borrow from the facility is dependent on the amount of eligible collateral and the firm’s liquidity need.

Pricing for the DWF will be lowered for drawings against each collateral set. In contrast to the previous pricing schedule, pricing will also be fixed, rather than increasing with the size of the drawing. The new lower, fixed pricing will be set at 15bps for drawings against Level A collateral, 25bps for drawings against Level B collateral, and 50bps for drawings against Level C collateral. This pricing change takes effect immediately and applies to all new DWF activity. The new DWF pricing applies to both drawings of gilts and reserves. For drawings of reserves, the new DWF pricing will continue to be indexed to Bank Rate .

Table 1: Updated DWF pricing approach

Collateral

Level A

Level B

Level C

New DWF pricing

+15bps

+25bps

+50bps

This change to simplify and reduce DWF pricing will improve the usability of the DWF, whilst maintaining incentives for prudent day-to-day liquidity management and avoiding private market disintermediation.

To facilitate same day settlement of the DWF, participants should contact the Bank before 12pm on the day of the request. We encourage firms to discuss their use of the facility with us at an early stage so that we can facilitate timely access. Participants should deliver sufficient collateral to the Bank ahead of any request to use the DWF and must ensure any Level C collateral they intend to use is pre-positioned well ahead of any request . The Bank continues to require firms to complete regular small-scale (£100k) DWF test trades and can facilitate additional test trades if participants want to improve their operational preparedness following this change.

All other DWF operation parameters remain unchanged.

This DWF recalibration is in line with the PRA’s Consultation Paper on Modernising the liquidity policy framework , published on 17 March 2026. This includes proposed updates to the PRA’s view of firms’ use of SMF facilities in Supervisory Statement 24/15 .

As with all SMF facilities, the Bank will keep the calibration of the DWF under review and may periodically update its parameters. Decisions regarding changes to the DWF will be taken to ensure that its terms remain robust to structural changes in market conditions and continue to meet the Bank’s policy objectives.

Other than as amended by this Market Notice, the Terms and Conditions and Operating Procedures for participation in the Bank’s Sterling Monetary Framework will continue to apply to DWF operations.

Update to lending and deposit spread of the Operational Standing Facility – Market Notice 8 December 2025 2 The 27 March Bank Insights article - ‘ Resilience and Readiness Across the Sterling Monetary Framework ’, and the 11 June 2025 discussion paper feedback statement

• ‘Transitioning to a repo-led operating framework’.
  3 For example, reserves drawings against Level A collateral will be priced at Bank Rate + 15bps, reserves drawings against Level B collateral will be priced at Bank Rate + 25bps, and reserves drawings against Level C collateral will be priced at Bank Rate + 50bps. 4 For further details, see the DWF Live trade quick reference guide .

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