This article describes the role of broking firms in the London markets through which banks and other financial institutions conduct their money-market operations. It draws on the Bank of England's longstanding and close relationship with these firms, which now forms the basis of a supervisory framework appropriate for providers of a specialised service to an exclusively professional customer base.
Turnover through the money-market brokers supervised by the Bank has been growing quite steadily during the past two years, with a particularly marked increase in business in forward rate agreements, over-the-counter options and swaps. During the last six months total daily turnover averaged over £115 billion. Competitive pressures are strong in this market, and traditional money-market braking will face new challenges over the next few years.
The role of brokers in the London money markets