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The Bank of England (BoE) has outlined an action plan for the review of the UK Money Market Code, which falls due in April 2024.
The BoE’s Money Markets Code subcommittee is required to review this Code every three years. It aims to have a draft Code in place by the year end, giving time for this draft document to be circulated for comment from all members of the Bank's Money Markets Committee, Money Markets Code subcommittee and its Securities Lending Committee in readiness for the April adoption.
The review process will be conducted through four working groups, made up from members from the UK Money Market Code subcommittee and experts from the industry.
Across the Code’s four chapters, the review team will be evaluating steps to improve settlement discipline, messaging and standards of professionalism in the London Money Market.
It will provide guidance on the treatment of unexpected bank holidays and where to seek guidance in instances of non-standard closure of CREST, the UK central securities depository’s settlement platform. It will also discuss steps to standardise the look-back period for floating rate certificates of deposit.
In its dialogue at the 6 September meeting of the UK Money Markets Code subcommittee, participants also reflected on how best to encourage more corporate signatories to the Code.
Earlier this year, the London Money Markets Association (LMMA) re-established a working group to examine settlement fail rates in the repo market, setting in train a programme which will dovetail with work on settlement efficiency by the BoE’s Securities Lending Committee and the Repo Working Group of the UK Money Market Code subcommittee.
The LMMA Working Group recently met with the Debt Management Office (DMO) and it will be consulting with its members to ask what changes they would like to see from LCH, Euroclear, the DMO and the Bank of England to improve settlement efficiency in repo markets.
In doing so, the Working Group emphasised that settlement efficiency needs to be taken more seriously by the London Money Market, regardless of the scale of market participants’ involvement in repo market activities.
The group hinted that financial penalties may ultimately be introduced, should they be required, to drive necessary improvements in settlement efficiency in UK repo markets.
