Sterling Money
Market Operations

The Future of Money Market Instruments

Non-material equivalents of money market instruments (known as "eligible debt securities") began to be issued into CREST on 15 September 2003, the final instruments migrated to CREST on 13 October 2003 and on 16 October 2003 the CMO system was shut down. The successful transfer of money market settlement arrangements to CREST completes the consolidation of the settlement arrangements for UK securities begun after the Securities Settlement Priorities Review in September 1998.

MMI Migration Marks Completion of UK Securities Settlement Consolidation

Information on the preliminary work and other useful information relating to the issuance of non-material money market securities can be accessed from this page below.

Factsheet for issuers

Euroclear UK & Ireland Limited (formerly CRESTCo) have recently published a practical guide for all prospective issuers of EDSs. The Bank and Euroclear UK & Ireland Limited (formerly CRESTCo) have also published guides specifically for "acceptors" and "drawers" of bankers' acceptances.

Pro forma terms for the issuance of EDS

As explained in the guides above it will be necessary for issuers of EDSs to issue terms of issuance in order to constitute the securities and to enable them to be issued into CREST. The Money Market Liaison Group (MMLG), chaired by the Bank, thought it desirable that standard terms be devised. Following extensive consultation with the market (see consultation documents below) the finalised terms can be accessed below:

These have been drafted in consultation with a sub-group of the MMLG. The Bank published in November 2002 a Consultation on Pro forma Terms of Issuance for Eligible Debt Securities (224k) including draft pro forma terms of issuance and draft explanatory notes. The Bank published a response to this consultation and revised pro forma terms and explanatory notes in A Second Consultation on Pro forma Terms of Issuance for Eligible Debt Securities (408k). The Bank has subsequently published a Response to the Second Consultation (103k).

Note on preparations for CD migration

The Bank has produced a brief note on preparations agreed between market practitioners for the migration of CDs to CREST.

Migration of CDs - Note of meeting held at Bank of England on 9 July 2003

Euroclear UK & Ireland Limited (formerly CRESTCo) have also published a number of documents relating to the issuance and settlement of EDSs in CREST including details of the trialling and migration strategies; standard issuer application forms; pro forma legal opinions. These publications and other resources are available on Euroclear UK & Ireland Limited's website

Work on MMI Reform has been discussed by a sub-group of the MMLG. Minutes from the latest MMLG Next Steps Working Group.

Background to this work

In summer 1999 the Bank of England's MMLG, commissioned a Working Group of market participants to prepare a Report on the future of money market instruments. The Report was discussed, and endorsed by the MMLG, and it was agreed that its proposals should be put out to wider consultation. The proposals cover dematerialisation, settlement in CREST, and associated legal and other changes to money market instruments.

The consultation paper The Future of Money Market Instruments (157k) was issued on 4 November 1999 and given extensive circulation, including to the main market associations, all authorised banks in the United Kingdom, all EEA passported banks with a deposit-taking branch in the United Kingdom, and all members of CMO, CGO and CREST.

A further paper The Future of Money Market Instruments: Next Steps (61k), summarising the responses to the consultation and the way forward, was issued on 17 March 2000.

As the next step the Bank, together with Euroclear UK & Ireland Limited (formerly CRESTCo) convened a further Working Group of market participants to consider issues relating to preparation and the timetable for implementation. The Working Group also established three sub-groups chaired by Euroclear UK & Ireland Limited (formerly CRESTCo) (Operational Issues, Valuation & Grouping of Collateral, and Transition) to consider further the detailed issues relating to the settlement of money market instruments in CREST.

As the next step the Bank, together with Euroclear UK & Ireland Limited (formerly CRESTCo), convened a further Working Group of market participants to consider issues relating to preparation and the timetable for implementation. The Working Group also established three sub-groups chaired by Euroclear UK & Ireland Limited (formerly CRESTCo) (Operational Issues, Valuation & Grouping of Collateral, and Transition) to consider further the detailed issues relating to the settlement of money market instruments in CREST.

An interim report by the Bank of England, Progress Towards Dematerialisation and Settlement in CREST

(94k), was published in January 2001 along with Euroclear UK & Ireland Limited's (formerly CRESTCo) consultative document Money Market Instruments in CREST. These papers outline the proposed legislative solution for dematerialising Money Market instruments (MMIs); how MMI settlement through CREST will operate; and the likely impact that these new arrangements will have on market practice.