By John Townend, Head of the Banks' Gilt-edged and Money Markets Division
The Head of the Banks' Gilt-edged and Money Markets Division, Mr John Townend, reviews the changes that have occurred in the gilt market over the last six years. He describes the new market structure that accompanied Big Bang in 1986; the introduction of a variety of new issuing techniques, including auctions and reverse auctions; and explains the Bank's use of tap sales. Mr Townend also discusses a number of further innovations which have been mooted, such as a fixed auction calendar, the establishment of a repo market, and facilities for offshore settlement for foreign investors, explaining some of the difficulties involved. Finally he examines some of the issues surrounding innovations in the derivative markets and current tax arrangements.