The Bank routinely makes a proportion of the gilts purchased via the APF available to the DMO for on-lending to the market.1 To ensure this supply of gilts remains sufficient to accommodate greater demand from the DMO or from market participants, the Bank will more than double the total percentage of the APF’s gilt holdings available each day. When combined with the current ongoing expansion of gilt holdings this will mean the DMO can access in excess of £30 billion of the APF’s gilt holdings for on-lending to the market. There will be no specific limit on particular stocks.
These gilts will continue to be available to the DMO to support its routine gilt repo operations as well its Standing Repo Facility and any relevant DMO Special Repo Facility in specific stocks as described in the DMO’s GEMM guidebook2 and Operational Notice.3
The purpose of this action is to mitigate operational frictions and ensure that gilt collateral absorbed by the APF continues to be available to support the DMO’s normal channels. We will keep this arrangement under review and stand ready to take further actions as needed to support market functioning.
1 Joint Bank-DMO statement on gilt lending.
3 Official Operations in the Gilt Market: Operational Notice.
