Gilt Market Operations – Market Notice 3 October 2022

Market Notice

This Market Notice supplements the Bank’s Market Notice and Press Release of 28 September setting out the details of its temporary purchases of long-dated UK government bonds. 

As those publications explained, the purpose of these operations is to act as a backstop to restore orderly market conditions and reduce any risks from contagion to credit conditions for UK households and businesses.

Following the first four auctions, and in line with its financial stability objective, the Bank of England is re-confirming that it will carry out temporary purchases of long-dated UK government bonds until 14 October 2022.

The Bank stands ready to purchase up to £5 billion of long-dated conventional gilts in each auction, and reserves the right to set a maximum price / minimum yield that will be applied to auctions. These reserve prices / yields are reviewed ahead of each auction to ensure consistency with the backstop nature of the scheme. 

The Bank is studying patterns of demand and will continue to use reserve pricing in order to ensure the backstop objective of the tool is delivered. In addition, the Bank stands ready to adjust any of the other parameters of the auction in order to secure that objective.

Finally, from Tuesday 4 October, the Bank is asking GEMMs to identify offers made on behalf of themselves or clients. Details of this – which are in line with the approach set out in the Bank’s Market Notice on gilt sales on 1 September 2022 – are contained in the annex.

Annex: Collection of information on end-user participation

In line with the approach to the Bank’s future Asset Purchase Facility (APF) gilt sales, and as covered in the 1 September 2022 Market Notice and the APF Operating Procedures, the Bank is asking GEMMs to identify offers made on behalf of themselves or clients in its temporary purchases of UK government bonds. 

Starting from 4 October 2022, GEMMs participating in these operations will be required to identify whether offers in the auctions are being made on behalf of themselves, their clients, or any other non-GEMM dealer(s) in their group(s) via a set of unique identifiers. Unique identifiers will be allocated and maintained by the Bank to be used for this purpose. 

All GEMMs, any non-GEMM dealer(s) in their group(s), and end-users intending to participate in the Bank’s auctions should apply directly to the Bank for the allocation of a unique identifier. 

Applications for unique identifiers should be made directly to the Bank by each relevant firm, by email to Applicants will be required to provide the Bank with the participant entity name and its legal entity identifier (LEI), where an LEI is available.

Applications for unique identifiers should be made to the Bank as soon as possible.  End-users will be responsible for sharing their unique identifier with relevant GEMMs.

In exceptional circumstances, GEMMs may submit offers from non-registered clients under the code ‘NEWC’. This will be permitted once for each new client. In the event this process is used, GEMMs should contact the Bank immediately via email to to identify the new client and its offers. GEMMs should also request that the relevant end-user client applies directly to the Bank for a unique identifier, as outlined above. 

The Bank is collecting this information to get a better understanding of the effect of its operations on the broader market and the financial stability objective of these purchases. It remains the responsibility of the GEMM to conduct appropriate due diligence on their clients and GEMMs are responsible for the legal and regulatory compliance of each transaction entered into on behalf of themselves, any non-GEMM dealer(s) in their group(s), or their clients. The Bank does not accept responsibility nor liability for undertaking any related due diligence on GEMMs’ clients. 

The details of this collection of end user information will be incorporated in the APF Operating Procedures for purchase operations in due course.


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