FACTBOX - Banks money market reforms

LONDON (Reuters) - The Bank of England will launch a discount window facility and a new operational standing facility on Monday, in a major shake-up of its money market operations.

The Bank's objectives for the reforms are maintaining overnight interest rates in line with the main Bank Rate set by the Monetary Policy Committee so there is very little volatility and to reduce the cost of disruption to liquidity and payment services.

Below are key points on the new structure.

OPERATIONAL STANDING FACILITY

- The OSF replaces the existing standing facility arrangement and is intended help banks manage technical glitches in their day-to-day operations.

- Banks will be charged 25 basis points above or below Bank Rate for using the OSF. The previous overnight facility charged a penalty of 100 basis points.

- To avoid a stigma being attached to using the OSF, details of its average usage will be published once a month. Currently, the Bank publishes a daily update.

- The eligible collateral will be the same as the Bank's short-term repo open market operations i.e. high quality industrialised country sovereign bonds.

DISCOUNT WINDOW FACILITY