June 2024
An update to the UK Money Markets Code (the Code), a voluntary code of conduct written by market participants and endorsed by the Money Markets Committee, was published Friday 7 June 2024 on the Bank of England’s website. See the links below.
The Code continues to apply to all UK money markets participants, including corporates and pension funds (see page 10 of the Code and page 16 of the Explanatory Notes). The ACT was represented in the working group and supports the revisions. The aim of this update is to ensure that the Code continues to be relevant and that the unsecured, repo and securities lending markets continue to benefit from clear principles and acknowledged best practice, underpinning safe and efficient market function.
The overarching Principles of the Code have not changed. However, recent developments in UK Money Markets have also been addressed in this updated Code. For example, the process for UK Market Participants in the event of unplanned bank holidays is introduced via a new section in the ‘Background’ chapter on unexpected market closures. The Code also reminds UK Market Participants of the importance of making every reasonable effort to settle transactions conducted in UK Money Markets. The language in the Code has been strengthened to reflect this and a new section on settlement discipline has been added to the ‘Securities lending’ chapter. Lastly, the Code highlights the emergence of digital assets in the securities lending market.
Similarly to the FX Global Code, voluntary commitment to the principles of the UK Money Markets Code is in the form of an initial statement, is applied proportionately and does not require annual attestation. The Code is recognised by the FCA as an industry standard. The principles are designed to protect both you and your counterparties, and to ensure orderly and efficient markets. Therefore, among other reasons for signing, we infer that a statement of commitment by a corporate treasury may be a beneficial (and efficient) way of demonstrating best practice when answering 'KYC' questions from its regulated sell-side counterparties.
Corporate treasurers may find it helpful to view the Code as a risk mitigation tool. Following best practice may help you: to keep your internal operations robust in periods of volatility; to know what to expect from your counterparties (and to hold them to account); to reduce settlement risk; and - if things do go wrong - potentially to support your legal position, if you can demonstrate that you were following recognised industry best practice.
Please see a link to the Code and the explanatory notes below:
The UK Money Markets Code - June 2024 | Bank of England
The UK Money Markets Code: explanatory notes - June 2024 | Bank of England.
