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Minutes of Money Market Committee meeting – December 2023
Minutes
Item 1 – Welcome
The Chair thanked members for attending and confirmed that the Minutes of the September 2023 meeting had been published on the Bank’s website.footnote [1]
The Chair welcomed new members and those who were attending as part of the Bank’s Meeting Varied People (MVP) initiative.
The Chair thanked Jon Pyzer (Bank of England) for his work with the Committee over the past years following the announcement of his retirement.
Item 2 – A possible new Bank of England lending tool for Non-Bank Financial Institutions
Colleagues from the Bank of England presented a summary of Andrew Hauser’s speech on the Bank’s work to develop a new lending tool for Non-Bank Financial Institutions (NBFIs)footnote [2]. The purpose of the tool is to address dysfunction in core sterling markets in the exceptional circumstances where there is a threat to UK financial stability. It will do so by channelling liquidity directly to eligible NBFIs when capacity constraints prevent banks from lending in sufficient size and speed. The tool is not intended to provide bilateral liquidity support to individual NBFIs.
Committee members discussed the potential vulnerabilities in the gilt market, how the Bank can design the NBFI lending tool so that it works effectively alongside existing SMF facilities, and ways in which the Bank could address the scaling up challenges faced in potentially expanding access to the tool to a broad range of NBFIs.
Members shared their thoughts on these issues, in particular on the challenges associated with the large size of the NBFI universe and posed the question of whether the tool should be accessible to all NBFIs or a subset.
Item 3 – Discussion on market conditions
A high-level update on market developments was presented by a member of the Committee which covered recent moves in the UK curve; money market fund flows; and the impact of non-remuneration of ECB reserves on the cross-currency basis.
Several members noted that there a marginal increase in MMF WAMs recently, and that this is likely due to the expectation that the next move in global policy rates is more likely to be down as opposed to up, as well as positioning around the year-end.
Short-end repo market conditions were stated as being benign, with a steady supply and generally healthier repo rates. The increased usage of the STR has been encouraging also as it suggests there is no stigma associated with its use.
Committee members further discussed the level of the Preferred Minimum Range of Reserves (PMRR) and noted that it would be helpful to hear more from the Bank of England on this topic.
Item 4 – Diversity & Inclusion
The Committee had an open discussion on what members’ firms are doing to improve D&I, and whether there are any lessons that can be learnt for the Committee itself. This was led by a D&I lead from one of the member firms.
Members noted how helpful in some circumstances ‘reverse mentoring’ can be to help senior, non-diverse colleagues understand the perspectives and difficulties of others. Several members also suggested that pushing more junior colleagues to speak at relevant forums would also be beneficial.
The Bank of England consultation regarding regulation around diversity metrics was noted as being a potential aid in improving industry-wide D&I.
Item 5 – Money Markets Code Review Update
A representative of the Money Markets Code sub-committee provided and update on the ongoing Money Markets Code review working groups which have been meeting in recent weeks, as well as setting out the review’s next steps and governance ahead of the March MMC meeting.
It was noted that the review will not be a complete rewrite, instead reflecting changes to market approaches and practices since the current document was publishing in 2021.
Draft changes to the Code will be circulated to all MMC members and the relevant trade associations and other stakeholders before publication, and will require MMC sign-off, which is expected to be in the first half of 2024.
Item 6 – Any other business
The Committee discussed HMT’s Autumn Statement regarding the UK short selling regime work following HM Treasury’s consultation paper on its Short Selling Regulation Review.
A Bank of England representative provided a brief update on the Bank and the FCA’s joint CP on Money Market Fund Resilience which was published earlier in the day.
The Chair thanked members for their time and welcomed any suggestions for future agenda items to be sent to the Secretariat in due course.
Committee attendees
James Winterton – Association of Corporate Treasurers
Emma Cooper – BlackRock
Niamh Staunton – BP
Romain Dumas – Credit Suisse
Inna Shaykevich – Goldman Sachs
Evelyn Liang – Goldman Sachs (MVP Invitee)
Victoria Worsfold – Guildford Borough Council
Chris Brown – Insight Investment
Olivia Maguire – J.P. Morgan Asset Management
Wael Damiati – LCH (Alternate)
John Wherton – Legal & General Investment Management
Scott Creed – Lloyds Bank
Natasha Mirchandani – Lloyds Bank (MVP Invitee)
Joanne Gaskin – Lloyds Bank (MVP Invitee)
Nina Moylett – M&G
Oliver Butcher – NatWest
Sunil Kumar – NatWest (Presenter)
Nic Erevik – Newcastle Building Society
Chirag Patel – Rabobank
Alan Williams – Santander UK
Romain Sinclair – Société Générale
Kokou Agbo-Bloua – Société Générale (Presenter)
John Argent – Tradition
Jessica Pulay – DMO (Observer)
Alan Barnes – FCA (Observer)
Bank of England
Andrea Rosen (Chair)
Jon Pyzer
Simon Dolan
David Glanville
Grace Greer
Tom Archer
Clare Macallan (Presenter)
Nick Butt (Presenter)
Steven Dodkins (Presenter)
Apologies
Gordon Lowson – Abrdn
Ina Budh-Raja – BNY Mellon
Marije Verhelst – Euroclear
James Murphy – HSBC
Tony Baldwin – LCH
Avi Tillu – PIMCO
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