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