INTRODUCTION

In January 2013, the LMMA together with EUI and LCH.Clearnet announced a joint initiative to introduce and adopt a new service to centrally clear gilt repo on a term basis. When gilt repo was first introduced in 1986, it was done at a time when the gilt lending market was restricted to short term transactions. That is no longer the case but the weakness of the current clearing system is that any term DBV has to be implemented as if it were a series of overnight transactions, which is clearly an unwieldy process, resulting as it does in a cycle of unwinding and re-inputting trades each day until the underlying trade matures. Not only is the borrower often left short of cash in the period between the unwind and the re-input of the transaction, the whole process introduces operational risks as well as liquidity risks into the secured market.

Cleared Term DBV would eradicate these unnecessary liquidity and operational risks but the initiative to introduce this new product will require marketwide co-ordination and so a steering group has been established under the chairmanship of Ian Fox, Deputy Chairman of the LMMA and Group Funding & Liquidity Director of Lloyds Banking Group, to facilitate this work. The steering group will report into the Bank of England’s Money Market Liaison Group.

UK UNEMPLOYMENT RATE LOWEST FOR 42 YEARS BUT WAGE INFLATION SLUGGISH

August 16, 2017

The headline rate for UK employment fell to 4.4% which was lower than market expectations. This equates to a jobless total of 1.484 million while headline weekly earnings growth in June was slightly above expectations too at 2.1% but with … Continue reading

TERM DBV ENTERS NEW PHASE

February 13, 2016

Following the initiative agreed by the LMMA, Euroclear, LCH Clearnet and the Bank of England, Term DBV (TDBV) was finally launched to the CCP market on 7th September 2015. Although this was later than planned, the delay has allowed all parties … Continue reading

CLEARED TERM DBV WELCOMED BY THE MARKET BUT HITS TEETHING PROBLEMS

November 6, 2014

Since Cleared Term DBV was launched on 20th August, many institutions have participated in this new product for the Gilt Repo Market. As one of the stakeholders, (The Bank of England, Euroclear and LCH.Clearnet being the others), the LMMA has … Continue reading

CLEARED TERM DBV LAUNCHES TODAY!

August 20, 2014

The new Cleared Term DBV product was launched today. The LMMA does not expect volumes to be high on Day 1 as firms test their systems with real trades.

MMLG SUB GROUP ANNIVERSARY

February 20, 2014

On 25th February 2014, the MMLG Sub Group will convene for its monthly meeting, almost a year to the day when the first meeting was held at the Bank of England to begin work in over-seeing the development of a … Continue reading

LMMA HOSTS OPEN MEETING FOR CLEARED TERM DBV

January 22, 2014

The LMMA hosted a meeting for the gilt repo market last night, which allowed LCH.Clearnet and EUI an opportunity to give a progress report on the Cleared Term DBV project. The meeting was chaired by Ian Mair, Chairman of the … Continue reading

CLEARED TERM DBV PROJECT GATHERS PACE

September 30, 2013

The Cleared Term DBV Sub Group has made good progress over the summer months. Importantly, the market has agreed the basis of a good market practice document which has the full support of the London Money Market Association. The question of … Continue reading

LMMA CHAIRMAN URGES MARKET TO ENSURE READINESS FOR CLEARED TERM DBV

July 30, 2013

Ian Mair, Chairman of the LMMA , has been speaking at a Bank of England seminar to mark the formal launch of the initiative to introduce Cleared Term DBV. He urged the gilt repo market and the money market to ensure they … Continue reading

CLEARED TERM DBV INITIATIVE FORMALLY LAUNCHED AT BANK OF ENGLAND SEMINAR

July 26, 2013

The sterling repo initiative to introduce a new Cleared Term DBV service was formally launched at a seminar hosted by the Bank of England. This joint initiative was initially instigated by the LMMA and sterling repo market participants and LCH.Clearnet … Continue reading

LMMA SETS OUT ITS RECOMMENDATIONS ON MARKET DISCIPLINE FOR CLEARED TERM DBV

July 1, 2013

The LMMA has set out its recommendations on market discipline for Cleared Term DBV to the Bank of England’s Securities Lending and Repo Committee (SLRC). The recommendations are: 1 It is in the best interests of the market that no … Continue reading

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