Minutes of Money Market Committee meeting – December 2024

Minutes

Item 1 – Welcome

The Chair thanked members for attending and confirmed that the Minutes of the September 2024 meeting had been published on the Bank’s website.^{footnote [1]}

The Chair welcomed those who were attending as part of the Bank’s Meeting Varied People (MVP) initiative.

The Chair signposted the Committee to the Bank's planned Discussion Paper 'Transitioning to a repo-led operating framework', which includes detail on the recalibration of the Indexed Long-Term Repo Facility (ILTR). This is due to be published on 9 December 2024.^{footnote [2]}

Item 2 - Discussion on Market Conditions

A member of the UK Money Market Committee (MMC) provided an overview of current market conditions. The presentation covered: (1) how market pricing of central bank policy rates across the UK, US and Euro Area have evolved; (2) reflected on how macroeconomic and market risk stemming from both the 30 October 2024 UK Budget and 2024 US election have contributed towards broader uncertainty; (3) conditions in the gilt market; (4) broader financial conditions; and (5) market preparedness for year-end.

In the discussion, the committee conferred on the benign money market conditions in the context of year-end positioning and highlighted good planning by market participants relative to previous years. One member emphasised that the year-end leverage ratio snapshot remains important to banks and could still be a constraining factor.

The committee discussed collateral supply as a factor in market dynamics, which have led to a longer-term cheapening in repo rates; they noted how Quantitative Tightening (QT) and inflows from US Money Market Funds (MMFs) were impacting markets. Members agreed that central bank facilities (for example, the Bank's Short-Term Repo (STR)) are helping to cap moves in short-term rates.

Item 3 - Securities Lending Sub-Committee update

The Chair of the Securities Lending Sub-Committee provided an update on the sub-committee's recent meeting, specifically covering work on the interoperability of securities lending platforms.

The committee discussed the need to consider interoperability of platforms from a third-party risk management perspective, in particular with regard for vendor resilience. The UK Money Markets Code was discussed in this context and whether future updates might reflect the committee's expectations for the management of these risks.

Item 4 - Diversity, Equity and Inclusion (DEI)

Two members of the MMC provided updates on what actions their respective organisations were taking with respect to DEI within the workplace. Members' presentations covered several firm-level initiatives, including use of staff objectives, employee networks and career returners' programmes, for example.

The committee discussed two themes in response: (1) the risk of over-reliance on taking a 'data-led' approach to identifying areas for improvement within DEI; and (2) how very-recent trends within the industry, with regards to ways of working standard practices, were running counter to their DEI objectives, including female representation. The committee expressed interest in furthering the discussion around female representation in particular and look to learn from examples of successful initiatives at future meetings so the workplace can be made more inclusive.

Item 5 - SIMEX exercise recap

Representatives of the MMC participated in the biennial UK market-wide simulation exercise, SIMEX 24, in October 2024.^{footnote [3]} This year's simulation was based on a national power outage with a walkthrough of the playbook on how the private and public sectors would collaborate to re-open financial markets in an orderly way. Participants in the exercise included the public sector bodies (HMT, UK Finance, the DMO, the Bank of England, the PRA and the FCA) and many private financial institutions. The MMC was present on the basis of its role in the Sector Response Framework.

The committee discussed its role in such a scenario, noting the importance of close coordination cross-industry, and the need to act promptly. The committee were cognisant of their responsibility to convene at short notice under these circumstances and the need to ensure there are capabilities in place to do so.

Committee Attendees

Committee members

James Winterton – Association of Corporate Treasurers

Ina Budh-Raja – Bank of New York Mellon

Emma Cooper – BlackRock

Marije Verhelst – Euroclear

Inna Shaykevich – Goldman Sachs

James Murphy – HSBC

Chris Brown – Insight Investment

Tony Baldwin – LCH

John Wherton – LGIM

Scott Creed – Lloyds Bank

Nina Moylett – M&G

Nic Erevik – Newcastle Building Society

Avi Tillu – PIMCO

Chirag Patel – Rabobank

Victoria Worsfold – Surrey Heath Council

John Argent – Tradition

MVP attendees and Observers

Grant Mansfield – Bank of New York Mellon

Lauren Baer – BlackRock

Sami Siddik – HSBC

Duygu Beylan – HSBC

Chris Yurek – HSBC

Jacquline Alcindor – LGIM

Chris Ryan – DMO

Sarah Hyland – DMO

Alan Barnes – FCA

Bank of England

Matt Roberts-Sklar (Chair)

Grace Greer

Tom Archer

Simon Dolan

Jack Welling

Kirstine Macmillan

Apologies

Gordon Lowson – Abrdn

Jo Wheelan – DMO

Edward Bond – J.P. Morgan

Alan Williams – Santander UK

Romain Sinclair – Société Générale