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