Minutes of the UK Money Markets Code Sub-Committee – November 2021

Time: 2pm – 3.30pm 16 November 2021 | Location: Bank of England, Moorgate Offices

Minutes

Item 1 – Introduction and welcome to new members

The Co-Chairs welcomed everyone to the Bank, in particular, the new members of the Committee: Malvi Ruparelia (Barclays Capital), John Edwards (CME Group), Antony Baldwin (LCH), Andrew Welch (LGIM), Bola Tobun (London Borough of Enfield) and James McKerrow (Insight Investment).

Item 2 – Terms of Reference

The Committee agreed the draft Terms of Reference (ToR) with one exception. One member noted that the draft ToR did not include wording on Diversity and Inclusion. It was agreed that the final (published) version should include wording on the Diversity and Inclusion. For consistency it was agreed that the wording could be taken from the ToR of the Securities Lending Committee.

Item 3 – Objectives and aims of the UK Money Market Code Sub-Committee

The Co-Chairs set out their objectives for the Code Sub-Committee stating that they wanted it to be inclusive and dynamic. The Co-Chairs also stated their preference for keeping the Code up-to date against the backdrop of the rapid pace of change in sterling money markets. This could take the form of regular (informal) reviews and updates to the Code via the Explanatory Note of the Code and citing examples of best and poor practice. The Code could then be revised formally at the 3 year point as stated in the Terms of Reference. The Co-Chairs were also open to the idea of experts being invited to speak to the Code Sub-Committee for example about new products. There was a question about whether the Code should include in scope retail investors. It was noted that the Code is aimed at wholesale activity and so captures retail brokers but not the underlying customer.

Item 4 – Initiatives for promoting the UK Money Market Code – Local Authorities, Corporates and Hedge Funds through the Alternative Investment Management Association (AIMA)

The Committee was provided with an update on some of the activities that have been undertaken to promote that Code since the last Sub-Committee meeting. Presentations on the Code have been given at fora held by the London Borough of Treasurers and the Chartered Institute of Public Finance and Accountancy (CIPFA). CIPFA asked for a one-page summary of the Code to circulate to their members. The Committee thought that having a one-page summary of the Code would be a good way to promote the Code more widely. With regards to promotion of the Code, the Committee queried why the treasury advisors of Local Authorities were not promoting the Code amongst their clients. The Committee also queried whether, as an alternative to signing the Statement of Commitment to the Code, Local Authorities could demonstrate adherence to the Code. It was noted by a member of the Committee that Local Authorities could potentially include a reference in their policies that shows their compliance to the Code.

The Committee noted that the Alternative Investment Management Association (AIMA), have suggested that Hedge Funds have historically been reluctant to sign the Code, as they felt it was not applicable to them. The Committee felt it was appropriate to revisit the issue of engagement with this sector. The production of a one page summary of the Code was seen as a first step in engaging with Hedge Funds. There was also a discussion about the promotion of the Code through the work that AIMA does. The Committee felt that any promotion strategy should revolve around demonstrating how AIMA members benefit from signing the Code. In terms of promoting the Code more widely, the Committee suggested promoting the Code at conferences, pushing the one-pager out through social media and blogs and writing an article in the Association of Corporate Treasurer (ACT) magazine. It was also noted that the International Securities Lending Association had started a process of mapping best practice in their guides to elements of the Code.

Item 5 – Engagement with ACI Training

The Committee were asked whether there were any objections to engaging more with the ACI in regard to training (currently the only body that provides training on the Code). The Committee would like to see other companies provide training on the Code. The Committee agreed to engage with the ACI; one member of the Committee suggested they could provide the name of an additional training supplier. It was noted that the Chartered Institute for Securities and Investment (CISI) had referenced the UK Money Market Code in their curriculum.

Item 6 – Update on the Global Foreign Exchange Code

The Committee was updated on the three-year review of the Global Foreign Exchange Code (GFXC) which was launched in December 2019 and completed in August 2021. Of particular note to the Committee was the publication of Guidance papers on ‘Last Look’ and ‘Pre-Hedging’. It was agreed that the UK Money Market could benefit from guidance on issues such as settlement efficiency and good settlement practice as detailed in the GFXC. This could be addressed in the Explanatory Note.

Item 7 – Diversity and Inclusion

Following the publication of the UK Money Market Code which highlighted the importance and benefits of diverse and inclusive money market participants’ teams, members of the Committee were encouraged to invite diverse members of their respective teams to Sub-Committee meetings. These had been held virtually due to the COVID-19 crisis. Given the transition to in-person meetings and the capacity constraints that this brings, the Committee was asked whether the aforementioned practice should be continued. It was suggested that the Secretariat ask members to bring their colleagues to Committee meetings on a rotational basis. One member of the Committee suggested sending a member of their team to the meeting if they are unable to attend. The Committee agreed with the proposal.

Item 8 – Environmental, Social and Governance (ESG)

Given the complexities around ESG issues, members felt the Code should be looking to provide more guidance in this space in the not too distant future.

Item 9 – AOB

Committee attendees

Attendees (in person)

Malvi Ruparelia – Barclays Capital

Ina Budh-Raja (Co-Chair) – BNY Mellon

Glenn Handley (Co-Chair) – HSBC

Veronica Iommi – IMMFA

James McKerrow – Insight Investment

Andy Dyson – ISLA

Antony Baldwin – LCH

Mark Thomasson – Natwest

Attendees (remotely)

Gordon Lowson – Aberdeen Standard Investments

James Winterton – ACT

Alessandro Cozzani – BOFA Merrill Lynch

Tim McLeod – Blackrock

John Edwards – CME Group

Jessica Pulay – DMO (Observer)

James Eldridge – FCA (Observer)

Oliver Clark – FMSB MTS (Observer)

Vicky Worsfield – Guildford Borough Council

Andrew Welch – LGIM

Terry Barton – Nationwide

Nic Erevik – Newcastle Building Society

Philip Chilvers – TP ICAP

Apologies

Bola Tobun – London Borough of Enfield

Jennifer Keser – Tradeweb

Bank of England

Jon Pyzer

Edward Kent

Kpakpo Brown (Secretary)

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Bank of England to publish results of Market Participants Survey

News release

The Bank of England announces today that it will begin publishing aggregate results of a new Market Participants Survey from February 2022 onwards. The survey, which is formulated by Bank of England staff, has previously been run in pilot form as a quantitative complement to the Bank’s routine market intelligence gathering functions. The survey will collect information on market participants’ expectations about monetary policy and financial markets. It will run eight times a year, aligned with the six-week schedule of the monetary policy meetings of the MPC.

The Bank will publish the survey results in aggregate form for each round on the Friday following the release of the MPC Minutes. The first survey results to be published will be those for the February round, on 4 February 2022.

Survey respondents comprise a broad set of market participants and have been selected by the Bank based on a number of criteria, including: (i) relevant market activity in UK rates or money markets, (ii) external market committee membership, (iii) expertise in UK rates markets and/or UK monetary policy, and (iv) willingness to participate regularly in the survey and in the Bank’s market intelligence activity.

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Transforming data collection – Reporting and Data Standards Transformation Board meeting minutes – November 2021

Date of meeting: 2 November 2021
Location: This meeting took place via Microsoft teams

The joint transformation programme is publishing its committee minutes. These materials are published in the interests of transparency. Any opinions, proposals or policies contained in them are those of the joint transformation programme or, as the case may be, its groups, committees or individual members. They do not represent the opinions, proposals or policies of the Bank of England, the FCA or other participants and they should not be taken as an indication of future policy. Information that is confidential or commercially sensitive has been omitted.

Minutes

Introduction

AM opened the meeting and gave apologies for Gareth Ramsay who was unable to attend. IP explained the agenda.

Terms of Reference

IP invited the Board to review the TDC programme’s Terms of Reference, which apply to the Board. IP invited members with comments to send them to the Secretariat.

Action: Members to send comments on the ToR to Secretariat by 16 November 2021.

Vision for Transforming Data Collection and Board

IP asked the Board to consider what the ideal reporting process would look like in ten years’ time, the benefits this would deliver and the role of the Board in that transformation.

Key Discussion Points/Comments:

  • Members emphasised that reporting is just a process aimed at producing an outcome – delivering data for users at firms and regulators that are gathering information. Members said any changes to the reporting process must improve that outcome.
  • Some members emphasised the need for a paradigm shift in how reporting happens. They felt this paradigm shift should allow far greater flexibility in collections. SC described the future reporting process allowing authorities to answer ‘the unexpected question’. Some members described what that future state might look like. They described a world of data residing in curated datasets rather than in reports, with authorities allowed to access that data under specified conditions.
  • Other members focussed on the need to streamline what data is collected. PB thought that regulators need to overcome the mindset that there is always benefit from additional data. He felt reporting should be more coherent but more streamlined.
  • Members discussed who might be the beneficiaries of a transformation of data collection. SOM stated the importance of considering all relevant stakeholders, particularly market participants, who stand to benefit from increased data transparency.
  • Members agreed that a key function of the Board will be holding the Joint Transformation Programme accountable – ensuring it has a clear purpose, achieving its objectives etc.
  • Members agreed that the programme needs a clear approach to transforming data collection, based on a set of defined principles. They felt the board had a role to play in defining and publicising these principles. SS mentioned the FAIR Guiding Principles for scientific data management and stewardship as a useful comparison.
  • Members commented that the Bank/FCA should further clarify the Board’s remit. They also thought the Board should articulate a vision for the project.
  • AM summarised the actions for the programme.

Action: Secretariat to develop a framework for measuring the progress/benefits of the programme.

Action: Secretariat to produce an initial draft of design principles for the programme’s outputs, for the Board’s consideration.

Pre-mortem for Transforming Data Collection and Board

IP asked the Board to imagine that in ten years’ time the programme had failed to achieve a transformation, and suggest what would be likely to have caused this.

Key Discussion Points/Comments:

  • Members reiterated their view that work on transforming data collection should have a set of well-defined objectives. They felt these objectives should be measurable and that tracking the programme’s progress against its goals should be based on evidence. They felt a key role of the Board is to define and track these measures. CR2 suggested that the programme could express its objectives as a granular set of goals, rather than as one big ambition. RK suggested that the Board repeatedly redefine these objectives in response to developments.
  • Members discussed how to ensure that the scope of the work is both clear and manageable. CR2 suggested that a goal of ‘transforming data collection’ is too broad. He suggested that the programme participants will need to decide on the extent of their ambition for the different elements of the programme. For instance, he felt the Board will need a strong sense of which goals will need ‘transformation’, and which will just need ‘improvements’.
  • Members agreed the programme’s focus should be on removing the elements of data collection that create inefficiency, rather than building new collections intended to be more efficient.
  • Some members emphasised the need to get firms to ‘buy-in’ and show benefits to firms beyond regulatory reporting. For instance, RA spoke about the need to produce and show benefits to firms beyond regulatory compliance. He felt there are group-wide technology and data benefits from the transformation programme. He felt that excessive focus on regulation would risk isolating the programme from relevant stakeholders.
  • AA warned of the costs of regulation and the risk that industry passes this on to customers. He also proposed that the project tracks ongoing developments in relevant technology.

Joint Transformation Programme update

RD1 presented the programme’s conceptual view of how transformation should work – ‘pipeline management’ first, then ‘discovery and design’, ‘decision and challenge’ etc. She explained the different elements of the programme structure, including the roles of the different governance and delivery groups.

AM gave an update on the project plan, including the status of the discovery and design work. He explained that a key element of the plan is work aimed at scaling-up the solutions e.g. when tackling CRE issues, considering whether the solutions emerging may also apply to mortgages.

LA asked for clarification about the relationship between the Board and the rest of the programme. IP suggested that the programme could make this clearer and that the Terms of Reference may be the best way to do this.

Action: Secretariat to consider need for clarification of the ToR and confirm next steps.

Chair nomination process

AM explained that over the longer term, the Board will have a Chair from industry. He explained the process for choosing the Chair. If participants wish to be the Chair, they should nominate themselves. The Board will then vote on the nominees.

Action: Participants who wish to nominate themselves should send a short statement to the Secretariat explaining their suitability by 16 November 2021.

Attendees

Ankur Agrawal (AA), AXA

Luke Ashton (LA), Barclays

Roshan Awatar (RA), Lloyds Banking Group

Paul Barrett (PB), AIG

Andy Beale (AB), Financial Conduct Authority (Interim TDC Programme Manager)

Paul Chambers (PC), Standard Chartered

Samik Chandarana (SC), JP Morgan

Charlotte Clark (CC), Association of British Insurers

Graham Cohen (GC), BNY Mellon

Rebecca Ding (RD1), Financial Conduct Authority (Transformation Programme Lead)

Richard Dunne (RD2), RSA Group

Lee Fulmer (LF), UBS

Alastair Hall (AH), Legal & General

Rakshit Kapoor (RK), Santander

Shane Kingston (SK), Brit Insurance

Angus Moir (AM), Bank of England (Transformation Programme Lead)

Scott O’Malia (SOM), International Swaps and Derivatives Association

Adrian Pearce (AP), Credit Suisse

Ian Phoenix (IP), Financial Conduct Authority (Director of Intelligence & Digital)

Corinne Powley (CP), Phoenix Group

Elaine Priest (EP), NatWest

Charles Reindorf (CR1), Bank of America

Charles Resnick (CR2), ClearBank

Aaron Shiret (AS), Bank of England (TDC Secretariat)

Simone Steel (SS), Nationwide Building Society

John Tierney (JT), Nomura

Matthew Tyrrell (MT), Financial Conduct Authority (Senior Manager, Central Data Services)

Apologies

Gareth Ramsay, Bank of England (Executive Director of Data & Analytics)

David Palmer-Lewis, Principality Building Society

Andy Parsons, Just Group

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Transforming data collection – Data Standards Committee meeting minutes – November 2021

Date of meeting: 30 November 2021
Location: This meeting took place via Microsoft teams

The joint transformation programme is publishing its committee minutes. These materials are published in the interests of transparency. Any opinions, proposals or policies contained in them are those of the joint transformation programme or, as the case may be, its groups, committees or individual members. They do not represent the opinions, proposals or policies of the Bank of England, the FCA or other participants and they should not be taken as an indication of future policy. Information that is confidential or commercially sensitive has been omitted.

Minutes

Item 1 – Introduction

AD welcomed all to the meeting. AS recapped the actions from the previous meeting (approval of the October minutes; Secretariat to circulate use case details; DSC members to provide details of their use case experience; Secretariat to circulate of firms interviewed for CRE workstream).

The Committee confirmed its approval of the minutes. AS committed to circulate the list of firms interviewed for CRE.

Action: Secretariat to circulate list of CRE workstream interviewees.

Item 2 – Form DQ deep dive – counterparty classification

EM presented the problem statements that the Form DQ discovery process has created. These explain what the delivery group has diagnosed as the problems with the current process. These included costly processes of maintaining multiple data mappings to satisfy the requirements and quality assurance checks in order to meet regulatory expectations.

EM introduced the delivery group’s proposed solutions. MB presented detail on some specific proposals, relating to counterparty classification. Firms must classify counterparties to report Form DQ, using a taxonomy specific to UK statistical reporting. Firms have to apply the classifications themselves, resulting in duplication of effort and variations in classification.

The delivery group proposes that the Bank and FCA standardise the counterparty category definitions. A regulator could maintain a central mapping matrix that could potentially map from entities using LEI to the relevant ONS counterparty classifications.

Members agreed that this was a useful proposal, and mentioned that this offered a solution to a problem the industry had been raising with regulators for some time. Counterparty classification can involve lots of work e.g. bilaterally contacting counterparties to gather information. Members agreed that this sort of system could be beneficial to various reporting and therefore could be scaled.

Members queried what a new standard system would add when there are existing initiatives for classifying counterparties such as NACE. MB explained that NACE codes do not explain ownership considerations for example, and only tell you at a high level what industry an entity operates in, rather than detailed information like whether it is a Major Financial Institution.

Members suggested that regulators consider what level of coverage firms should achieve over their derivative portfolio, and whether any materiality threshold would apply.

Members discussed various ways this could work and who could have ownership. Members thought the Bank, FCA and even Companies House were all appropriate hosts. Some members did not think that an existing source would fulfil the function described, but mentioned the DALI system as a good example – parties submit data anonymously, forming a data pool, where matching submissions serve as validation. Members agreed that any solution would need to overcome issues around data sharing and confidentiality.

Item 3 – Form DQ deep dive – quality assurance

EM presented a deep dive on another problem identified by discovery. Quality assurance around Form DQ reporting is not standardised and is a repetitive process. This is time-consuming for firms and the Bank, involving cross-validation, variation analysis and plausibility checks. The delivery groups proposed development of a centralised tool with controls and validations built in. This could save the Bank time spent on checking submissions and save firms cost spent on implementing bespoke procedures.

Members supported the idea of a tool that performed standardised variance analysis. They added that it would be helpful if it was integrated into submission systems like BEEDS / RegData, rather than housed separately.

Item 4 – CRE use case – problem statement

SH presented the results of discovery work for CRE. The discovery work has identified several problems including inconsistent scope and coverage, ambiguous reporting instructions requiring interpretation work, inconsistent requirements across returns and underlying data quality issues.

PT presented a deep dive on one particular issue – the definition of loan-to-value. There is no clear and specific data definition for LTV. Reporting instructions allow flexibility in how firms define this. Discovery has shown that the Bank and firms would consider differing LTV definitions as the standard.

Some members suggested that loan-level data collected by the Bank could solve this issue, if there were additional fields explaining when properties were last valued etc. This would give greater transparency around the LTV numbers.

Other members thought that it was not a case of adding additional data points in this way but ensuring comparability of data through greater standardisation. They wanted to avoid a situation where the Bank was extrapolating figures on valuation based on past data.

Members also supported solutions that could be extended to residential mortgages. They thought it made sense to devise lasting solutions now than return to it later.

Item 5 – Data standards review

AM presented a proposal to commission an external review on data standards. This would analyse the value and opportunity provided by data standards, how standards can be developed and the circumstances that lead to successful adoption.

Members agreed to commission such a review. They asked that the review contain an element of public consultation, so that it can gather input from small firms. Members requested that both the derivatives and CRE use cases were considered in the review.

Action: Secretariat to commission data standards review and report back to DSC as necessary.

Item 6 – Forward agenda / AOB

AS presented the group’s forward agenda, with the next meeting scheduled for early February. There will be further discussions on use case solutions.

AD suggested that Secretariat add an item to the forward agenda to explain the role of the Board and its relationship with DSC. He also suggested that all future meetings last two hours in order to allow the necessary detailed discussions.

Action: Secretariat to add item on the Board’s role to the next meeting agenda.

Attendees

Ffion Acland (FA), Goldman Sachs
Stephen Anderson (SA), Lloyds Banking Group (TDC Delivery Group)
Miles Barker (MB), Credit Suisse (TDC Delivery Group)
Julian Batt (JB), Bank of America
Andy Beale (AB), Financial Conduct Authority (Interim TDC Programme Manager)
Gabriel Callsen (GC), International Capital Market Association
Andrew Douglas (AD, Chair), Depository Trust and Clearing Corporation
Dayo Forster (DF), Bank of England (Product Owner)
Lee Fulmer (LF), UBS
Dawd Haque (DH1), Deutsche Bank
Dave Holland (DH2), Coventry Building Society
Sharon Howells (SH), NatWest (TDC Project Manager)
Caroline Lewis (CL), Lloyds Banking Group
Elizabeth Maloney (EM), JP Morgan (TDC Project Manager)
Angus Moir (AM), Bank of England (Transformation Programme Lead)
Corinne Powley (CP), Phoenix Group
Aaron Shiret (AS), Bank of England (TDC Secretariat)
Ian Sloyan (IS), International Swaps and Derivatives Association
Nicholas Steel (NS), Barclays Group
Paul Thirtle (PT), NatWest (TDC Delivery Group)
Andrew Turvey (AT), Belmont Green
Rebecca Whitwam (RW1), Bank of England (TDC Secretariat)
Rumeet Wadhwa (RW2), Santander (TDC Delivery Group)
Richard Young (RY), Bloomberg

Apologies

Rebecca Ding, Financial Conduct Authority (Transformation Programme Lead)
Lewis Reeder, BNY Mellon
David Shone, International Securities Lending Association
Tammy Solomon, Investec

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Minutes of the CBDC Technology Forum – November 2021

Minutes

Item 1: Welcome

Tom Mutton (Chair) welcomed the Members to the second CBDC Technology Forum meeting. He noted the recent announcement made by the Bank and HM Treasury on next steps for the exploration of a UK Central Bank Digital Currency (CBDC).

Item 2: Debrief on the first Engagement Forum

The Bank provided a short readout of the first Engagement Forum meeting on 2 November in line with the published minutes.

Item 3: Models of CBDC Provision

The Bank briefly introduced the topic providing an overview of the main models of CBDC and the public and private sector roles in its provision. Models discussed were a platform model, a pooled account model, an intermediated token model, and a bearer instrument model. The Bank explained that the aim of the discussion was to seek Members’ views on some of the technology implications of these models.

One Forum Member presented a comparative examination of the ecosystem complexity associated with two of the models presented by the Bank at the first Technology Forum, namely the platform model and the pooled model. The presentation did not make any assumptions on whether the two models were account or token-based. The presentation compared the mechanics of both models for generic processes such as registering or on-boarding of users to the CBDC system, adding or withdrawing money to and from a CBDC account, and paying with CBDC; and then outlined the differences in data transfers and processing. The presentation concluded with a comparison of the non-functional characteristics of both models, and whilst the two models were largely similar, it was noted that the platform model potentially placed increased technical requirements on the core ledger, particularly in terms of availability and latency, which could have a negative effect on resiliency, compared to the pooled model. However, this point was challenged by some Members, who did not think the platform model was necessarily less resilient than the pooled model.

Some Members thought a pooled model could offer some advantages in terms of privacy, given the core ledger would only hold the balances of Payment Interface Providers (PIPs) as opposed to the balances of end users in the case of the platform model. On the other hand, it was argued that generating sufficient visibility of PIPs activities could make the pooled model fragile to PIP failure and loss of customer data and balances. Some Members thought that the pooled model could be detrimental to competition by making it more difficult for end users to change PIPs.

A second Member then presented on a “cash-like”, bearer instrument model. The model presented assumed a hierarchical model of cash-like CBDC, with centralized minting and issuance by the Central Bank and decentralized distribution, transactions and settlement by PIPs. The presentation noted that this model could be beneficial for privacy, by separating the identity of the holder of the instrument from the transactions. The presenter also noted a set of challenges within this model, including counterfeiting risk, interoperability across wallets and devices, and offline capabilities.

Some Members thought that this model implied PIPs would need to be custodians of users’ tokens, and argued that users should be given the possibility of self-custody. Extensibility was also mentioned as a potential challenge for this model, given the complexity associated with updating or modifying the cryptography supporting the system.

Forum Members also discussed the benefits and challenges of an account versus a token based CBDC, and suggested this could be a topic to further explore in future meetings. The token based model was noted to have challenges with extensibility, whilst the account based model might present additional considerations with regard to privacy.

As an overarching point, Members thought that it was necessary to further understand the objectives being pursued and the potential use cases for an eventual CBDC to facilitate more detailed technical discussions in the Forum. They suggested that this could be achieved by developing a standard set of architecturally-significant use cases and customer personas, which could be used to evaluate different models and clarify how they may meet customer needs.

Item 4: Privacy in a CBDC system

One Member gave a presentation on the privacy and identity considerations for a CBDC with a range of purposes, noting that the technical requirements would vary significantly depending on the policy objectives pursued by the authorities when designing it. The presentation focused on a (hypothetical) cash-like CBDC and how it might seek to replicate traits of physical cash such as censorship and confiscation resistance, privacy and inclusivity. The presentation outlined the possible role of restrictions, such as wallet size or transaction size, and therefore the need for some degree of identity verification (for Sybil-resistance, AML, CFT) in order to enforce those. This in turn could be detrimental to inclusion.

Forum Members expressed diverging opinions on some of the issues raised in the presentation. Overall, Members assumed that some actor in the CBDC system would need to know with an appropriate degree of confidence who controls a CBDC wallet in order to comply with regulations. Some Members thought that delivering a guarantee of privacy for a non-anonymous CBDC would be technically challenging and require advanced cryptography.

Members pointed out that it would be useful to lay down the policy expectations on privacy to facilitate more in-depth discussions around the potential technology solutions.

Closing remarks.

Annex: Meeting documents

Meeting slides

Attendees

Tom Mutton (Chair), Bank of England
Will Lovell, Bank of England
Simon Scorer, Bank of England
Katie Fortune, Bank of England
Danny Russell, Bank of England
April Baracho, Bank of England
Ben Dovey, Bank of England
Guillermo Pons, Bank of England

Member

Alan Ainsworth, Open Banking Implementation Entity
Andrew Flatt, Archax
Ashley Lannquist, IMF
Bejoy Das Gupta, eCurrency
David MacKeith, AWS
Dominic Black, Monzo
Edwin Aoki, PayPal
Geoff Goodell, UCL
Inga Mullins, Fluency
James Whittle, PayUK
Joshua Jeeson Daniel, SETL
Keith Bear, Cambridge Centre for Alternative Finance
Lauren Del Giudice, Idemia
Lee Braine, Barclays
Mark Shaw, Spotify
Matthieu Saint Olive, Consensy
Max Malcolm, Visa
Michael Adams, Quali-Sign
Patrick O’Donnell, Mastercard
Paul Lucas, IBM
Richard Brown, R3
Sarah Meiklejohn, IC3
Sean Mullaney, Stripe
Simon Bray Shaw, ASOS
Vikram Kimyani, Oracle
Will Drewry, Google

Observers

HM Treasury
National Cyber Security Centre

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Minutes of the Standards Advisory Panel – December 2021

Minutes

Item 1 – Welcome and introductions

The Chair welcomed members to the Panel and provided an overview of the agenda for the meeting.

The Chair noted that the Secretariat will be sending a request for Panel members’ biographies and asked members to submit them ahead of the next meeting.

Item 2 – Future of Standards Strategy

Pay.UK recapped the UK Finance presentation from the previous SAP meeting. The Panel was updated on developments with the Standards Engagement Forum (SEF) since the last meeting, including on funding and that James Whittle had taken on the role of Chair.

The Panel discussed the future of Standards strategy in the UK payments industry and how SAP could assist the SEF and vice versa. It was noted that SAP has a range of expertise, which could be used to inform, assist and evidence support for broader initiatives beyond interbank payments. Together, with clear communication, the cross-industry standards expertise could act as a strong source of industry demand and contribution.

The Panel noted that the active involvement of end users and stakeholders In SAP is hugely beneficial to ensure a cross-industry perspective on issues being considered and that would also be the case with SEF, as well as increasing value for money.

The Secretariat referenced the work on identifying opportunities for fraud prevention using enhanced data undertaken recently, noting having a joint approach with all the parties would hold value and benefit to the industry.

Pay.UK will continue to work with the Bank and other industry stakeholders and come back to SAP at an appropriate point in the new year.

Item 3 – Review of 2021 and Outlook

Pay.UK and the Bank of England highlighted some of the 2021 achievements throughout the year.

Engaging end users and having active conversations was important this year and will be even more so next year. The Panel queried if there exists a defined comprehensive list of end users within the sector to consider when evaluating the end-user impact of issues considered at SAP. The Secretariat confirmed there was no single codified list of end-users but was supportive of having some level of mapping based on outcomes.

Action: The Secretariat will consider an approach to end user mapping for use in end-user outcomes going forward.

Looking forward to 2022, the Bank and Pay.UK will continue to develop our technical standards materials closely to ensure there is alignment between the high value and retail payments infrastructures, working closely with SAP and industry more broadly.

The Panel agreed on a focus on enabling benefits and clear end user outcomes through the use of enhanced data, including a focus on fraud and other specific use cases. Action: The Secretariat to create a draft plan and narrative for SAP in 2022.

Item 4 – Any other business

Following a question from the Panel, the Bank gave a brief status update on RTGS Renewal Programme.

Close of meeting.

Attendees

[NB all by Zoom videoconference]

Members

Karen Braithwaite, Chair (Barclays)
James Whittle, member (Pay.UK)
James Southgate, member (Bank of England)
Margaret Walsh, member (Oracle)
Ralf Ohlhausen, member (PPRO)
Caroline Stockmann, member (Association of Corporate Treasurers)
Domenico Scaffidi, member (Volante)
Mike Walters, member (Form3)
James Barclay, member (JP Morgan)
Robert White, member (Santander UK)
David Heron, secretariat (Pay.UK)
Kira Marwaha, secretariat (Pay.UK)
Mark Streather, secretariat (Bank of England)
Elizabeth Leather, secretariat (Bank of England)

Apologies

Jo Oxley, member (Government Banking Service)
Toby Young, member (Ebury)
Ian Ellis, observer (PSR)
Oli Bogaerts, observer (FCA)

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Minutes of the Standards Advisory Panel – September 2021

Minutes

Item 1 – Welcome and introductions

The Chair welcomed members, and new members to the Panel and provided an overview of the agenda for the meeting.

The new members provided a brief introduction on their background and what they will look to contribute to the Panel.

Act: Secretariat to collate and share with new members the bios of current Panel members.

Item 2 – UK Finance Payments Standards Strategy Group (PSSG) Final Report and Recommendations – update and discussion

(Jana MacKintosh and Austin Elwood of UK Finance joined the meeting for this item)

UK Finance provided an overview of the scope and recommendations in the Final PSSG report, and noted the driver for UK Finance is to ensure a collaborative standards environment in the UK. UK Finance noted it is working closely with Pay.UK on the Enhanced Fraud Data use case. The proposed Payments Standards Engagement Forum (PSEF) will be a strategic and forward-looking body not just about ISO 20022, but will look a wider range of topics including Digital Identification and CBDC.

UK Finance note the feedback from its members has been a need for a formation of a central standards body, but without replacing the existing governance and approval on standards. Members thought UK Finance is best placed to be this central body, to move the standards dialogue forward and drive the benefits of standards and additional data. UK Finance mentioned it is not looking to enforce or set standards but would like to convene a group with the right representation from industry to solve current issues, such as Economic Crime.

The Panel opined that the right experts e.g. Financial Crime experts, need to lead and help this work to drive and support it going forward.

A member of the Panel raised concerns on whether too much time is spent on use cases at the risk of postponing development for current programmes such as the Bank’s RT2, or the NPA. Some Panel members were also concerned about the risk that the Bank may be ready for additional data but Pay.UK will not. The Panel advised there needs to be the right balance and a pragmatic approach taken. It was agreed roles for the Panel and the SEF need to be defined and coordinated, and scope of each group determined. Act: Further discussion on the roles, scope and terms of reference of the SEF and the Panel, Secretariat to schedule a further discussion on this as early as possible to continue dialogue.

UK Finance noted the fraud use case is undergoing a Proof of Concept taking historical data (based on five existing data points) and seeking to understand, through data analytics, how much fraud could have been mitigated if this data had been available. They are looking to have this completed by year end. In the coming months, Pay.UK will work with industry to determine the standardisation process and work towards developing a pragmatic solution.

The Panel also noted it would be beneficial to map the terms of reference of the SAP to that of the PSEF, and understand the difference between the two and whether there is any duplication. UK Finance noted it is working through the terms of reference for the PSEF over the coming months.

The Bank noted the strength of the Panel is its end user representation, an important consideration for the setup of the PSEF. Pay.UK noted there are two things we need the Panel’s help with: 1. Standardisation work – are we using the right data; 2. What degree will it help in the implementation of both the RT2 and NPA Programmes, how do we as an enabler help the industry utilise these standards – what can be done now?

The Panel noted we need to challenge ourselves on the need for a standard, or whether it is best to leave it to industry to innovate and provide competitive solutions. The right balance needs to be found in maximising competition but not to stifle innovation in the industry.

Item 3 – Pay.UK Standards End-to-End Use Cases for the NPA – update and discussion

Pay.UK provided an update on the work progressing on its standards end-to-end uses, noting this is an important piece of work that Pay.UK is working on with HMRC, the Bank and Open Banking. Pay.UK noted it has identified c.30 use cases the NPA can enable, and additional resources will help drive this work forward. However, the three primary use cases presented will be run now for the current services, but with a clear adoption lens to the NPA. Pay.UK noted it would like the Panel to help and challenge the detail and requirements of this work.

The Panel was asked for views on how far out in the ecosystem could Pay.UK be in terms of setting effective standards, noting Pay.UK does not currently have the powers to set standards outside of the Clearing and Settlement layer. The Panel noted it had understood that Pay.UK did have enforcement powers as retail operator in the UK (above and beyond Clearing and Settlement) and queried where this would reside in the ecosystem otherwise. Pay.UK noted it is more about influencing the end user, and would like to work with the Panel to get this right to avoid what happened in Europe with SEPA.

Pay.UK mentioned the first use case will test commitment from industry to play its part in ensuring standards beyond Clearing and Settlement can be effective, as well as help determine requirements. Pay.UK requested the Panel’s commitment to help shape this work going forward, whether it is the right approach, or if there are alternatives.

Item 4 – Any other business

The Panel Chair gave a special thanks to a member of the Panel Secretariat who will be leaving the Secretariat to a new role. Act: Due to the meeting running overtime, the last agenda item on the ‘Forward Direction of the Panel’ will be added as the first agenda item at the next Panel meeting.

Close of meeting.

Attendees

[NB all by Zoom videoconference]

Members

Karen Braithwaite, Chair (Barclays)
Robert White, Santander
Brendan Reilly, Silicon Valley Bank
James Barclay, JP Morgan
Domenico Scaffidi, Volante
Ralf Ohlhausen, PPRO
James Whittle, Pay.UK
James Southgate, Bank of England
Jo Oxley, Government Banking Service
Toby Young, Ebury
Margaret Walsh, Oracle
Caroline Stockmann, Association of Corporate Treasurers
Mike Walters, Form3

Observers

Ian Ellis, Payment Systems Regulator

Other attendees

Bank of England & Pay.UK Secretariat
Bank of England & Pay.UK Presenters
Jana MacKintosh (Item 2), UK Finance
Austin Elwood (Item 2), UK Finance

Apologies

Oli Bogaerts, FCA

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Bank of England’s new economics book to be published

News release

‘Can’t we just print more money?’ is a new pop-economics book, written by the Bank of England, which will be published this May in partnership with Cornerstone Press. The book addresses ten economic questions, from, ‘Why are all my clothes made in Asia?’ to ‘What actually is money?’ Along the way, it offers idiosyncratic examples of economics in action: from the City of London to Springfield Power Plant; from Babylonian gold lending 4,000 years ago, to the economic effects of the Covid pandemic.

The book, which will be published on 19 May, is part of the Bank’s work to increase public understanding about the economy and the Bank’s role in it. The Bank’s advance and future royalties will be used to buy copies of the book for thousands of state school libraries and support the Bank’s wider education programme.

‘Can’t We Just Print More Money?’ has been written by Rupal Patel, an economist who works in the Bank’s Financial Stability directorate, and Jack Meaning, who works in the Chief Economist’s office. It includes a foreword from the Governor, Andrew Bailey.

Andrew Bailey said: ‘The economy – and economics – is all around us, in the decisions we all make every day at home, at work, or in the shops. Despite this, economics is generally not well understood, and nor are economists. We hope that, as well as being an entertaining and informative read, ‘Can’t We Just Print More Money?’ will help demystify economics and encourage people to learn how we can use it to tackle some of the biggest challenges facing the world today.’

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Bank of England’s new economics book to be published

News release

‘Can’t we just print more money?’ is a new pop-economics book, written by the Bank of England, which will be published this May in partnership with Cornerstone Press. The book addresses ten economic questions, from, ‘Why are all my clothes made in Asia?’ to ‘What actually is money?’ Along the way, it offers idiosyncratic examples of economics in action: from the City of London to Springfield Power Plant; from Babylonian gold lending 4,000 years ago, to the economic effects of the Covid pandemic.

The book, which will be published on 19 May, is part of the Bank’s work to increase public understanding about the economy and the Bank’s role in it. The Bank’s advance and future royalties will be used to buy copies of the book for thousands of state school libraries and support the Bank’s wider education programme.

‘Can’t We Just Print More Money?’ has been written by Rupal Patel, an economist who works in the Bank’s Financial Stability directorate, and Jack Meaning, who works in the Chief Economist’s office. It includes a foreword from the Governor, Andrew Bailey.

Andrew Bailey said: ‘The economy – and economics – is all around us, in the decisions we all make every day at home, at work, or in the shops. Despite this, economics is generally not well understood, and nor are economists. We hope that, as well as being an entertaining and informative read, ‘Can’t We Just Print More Money?’ will help demystify economics and encourage people to learn how we can use it to tackle some of the biggest challenges facing the world today.’

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Minutes of Money Markets Committee meeting – December 2021

Minutes

Time: 2pm – 3.30pm 13 December 2021 | Location: Teleconference

Item 1 – Welcome

The Chair thanked members for attending, and also welcomed John Wherton from LGIM and Nick Webb from Goldman Sachs to the Committee.

It was confirmed that the minutes of the previous meeting had been published on the Bank’s website.

Item 2 – Update from the UK Money Market Code Sub-committee

The Sub-Committee Co-Chair provided an update on the recent meeting which was held on the 16 November 2021.

The main topics discussed were:

a. Sub-Committee members had agreed that the Code should continue to be dynamic, against the backdrop of a continuously changing environment in the sterling money markets. This would be achieved through any necessary changes initially being made within the Explanatory Notes rather than revisions to the full Code text prior to the three year review.

b. The Sub-Committee would continue to promote the Code widely, with a focus on those market sectors where there had not yet been wide adoption, such as hedge funds.

c. The Sub-Committee had also discussed diversity and inclusion, highlighting the importance of this topic. Members would be encouraged to invite diverse colleagues to their meetings on a rotational basis.

Item 3 – Update from Securities Lending Committee (SLC)

A member of the SLC updated the Committee on discussions at the November meeting.

a. The Sub-Committee had discussed general market trends as well as the need for further clarity on ESG requirements. The Sub-Committee had supported the work that has been ongoing into producing a best practice for inclusion of ESG policies.

b. The Sub-Committee had discussed hybrid working in the context of Diversity & Inclusion.

Item 4 – Future Central Bank Digital Currency (CBDC)

The Bank provided a summary of ongoing work in relation to CBDC. It was noted that there had been no decision yet to introduce a CBDC, but the Bank was carefully considering the possibility.

There was discussion amongst the Committee members on the technology that could be used to implement a CBDC, as well as its delivery method.

The Chair suggested that, given the level of interest and questions, the discussion around CBDC should be continued at future MMC meetings.

Item 5 – Diversity and Inclusion

The Committee discussed the impact of hybrid working on the diversity and inclusivity agenda.

Members raised a range of topics, including the risk of creating bias disadvantaging those not working in the office, and the wide variety of approaches being adopted across different firms. It was noted that the hybrid model of working was still in its early stages of development and it was yet to be seen if perceived stigmas increased or subsided over time.

Item 6 – Discussion on market conditions

A broad update of global markets was presented by a member of the Committee, highlighting recent moves in interest rate markets. It was noted that repo markets had richened in the run-up to year-end, reflecting a wide range of factors including: bank balance sheet constraints for certain types of business; scarcity in some types of collateral; temporarily lighter gilt issuance by the DMO; the cross-currency basis; speculation about the near-term path of monetary policy; and uncertainty over the impact of the Omicron variant.

Against this backdrop, members reported that overnight markets were generally functioning satisfactorily (though at lower rates than seen earlier in the year). But it was more challenging to place cash over the year-end – and some suspected that rates on such trades might worsen further as the year-end approached. Some of the drivers of low rates were expected to ease when the New Year arrived – but others, for example, the high demand for collateral, were not.

Not all members reported difficulties accessing markets. It was noted, for example, that LDI investors were typically not finding capacity constraints when seeking funding. And balance sheet remained available for other activities, such as underwriting corporate issuance.

Members noted a number of key dates ahead of year-end including the LCH LIBOR transition due to take place over the weekend of 18-19 December.

The Bank thanked members for the detailed update and asked members to feed in any further material updates as the year-end approached.

Item 7 – AOB

The Chair confirmed that the next MMC was scheduled for 2 March 2022, to be held in person if feasible to do so.

The Chair also noted that the Secretariat would be in contact with Committee members seeking suggestions for future agenda items for MMC meetings.

Committee attendees

Gordon Lowson – Abrdn

Stephen Grainger – Aldermore

James Winterton – Association of Corporate Treasurers

Michael Manna – Barclays Bank UK

Emma Cooper – BlackRock

Ina Budh-Raja – BNY Mellon

Romain Dumas – Credit Suisse

Marije Verhelst – Euroclear

Nick Webb – Goldman Sachs (alternate)

Vicky Worsfold – Guildford Borough Council

James Murphy – HSBC

Chris Brown – Insight Investment

Olivia Maguire – J.P. Morgan Asset Management

Ben Challice – J.P. Morgan

Tony Baldwin – LCH

John Wherton – Legal & General Investment Management

Peter Left – Lloyds

Robert Thurlow – Mizuho

Rachel Lane – Natwest

Nic Erevik – Newcastle Building Society

Chirag Patel – Rabobank

Paul Barnes – Santander UK

Romain Sinclair – Société Générale

John Argent – Tradition

Jessica Pulay – DMO (Observer)

Alan Barnes – FCA (Observer)

Bank of England

Jon Pyzer (Chair for items 1-5)

Andrew Hauser (Chair for Item 6)

Nicole Webster

David Glanville

Francine Robb

Bhavin Patel

Apologies

Rhys Phillips – Bank of England

Inna Shaykevich – Goldman Sachs

Nina Moylett – M&G

Lynda Heywood – Tesco PLC

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