Date: 22 October 2025
Minutes
1: Welcome / introductions
The Chair welcomed the Group and those present as part of the observers’ programme.
2: Diversity, Equity & Inclusion
DE&I remains a priority for the Group, ensuring that the initiatives which are in place receive continued support. The Group discussed global developments and individual firms’ stance. There has been a reduction in flexible working conditions in recent months, particularly for front office roles. Members noted the flexible working conditions best practice included in the Money Market Code which encourages more diverse participation in financial markets.
3: Retrospective review of market conditions
The SONIA to Bank Rate wedge narrowed to circa 3.3bps below Bank Rate through to end of September, with further narrowing in the first days of October. The Group noted the shift in the 90th percentile to Bank Rate for several days, which coincided with changing market dynamics leading to increased demand for higher rated money market instruments and increased cross-currency basis.
Volume remains robust and movements fall within the normal range through the period.
4: RTGS operating hours
Bank staff provided an overview of the phased plan for extended RTGS and CHAPS opening hours. The Bank consulted on the proposal to open CHAPS for settlement from 1.30am, aiming for implementation in the second half of 2027. The same paper sought early views from industry on expanding the CHAPS contingency window and offering settlement in RT2 at points during certain bank holiday weekends.
The Bank will publish a policy statement in early 2026 following review of the responses to the proposed morning extension. The Bank plans to issue a second consultation paper in the first half of 2026 exploring options for near 24x7 settlement.
While extending RTGS operating hours would enable innovation in payments, the Group noted challenges including balance sheet reporting, credit risk exposure and the requirement for extended staff cover to manage processes. This in turn would drive higher costs and may lead to fragmented activity, as firms with global presence are better placed to manage extended trading hours. Members noted a potential impact on liquidity as liquidity buffer requirements may increase to cover longer payment periods. Members considered innovations which these changes enable, are likely to have a greater impact on the SONIA market than the extension of RTGS opening hours itself.
Bank staff presented an assessment of reserves draining and impact on private markets. The Group discussed how sterling markets are responding to the decline in reserves and the impact on rates and other liquidity metrics. Members noted a potential for greater rates volatility as reserves drain further and an increase in secondary market activity as participants seek to diversify sources of funding. Bank facilities have performed well providing liquidity to core markets and have supported orderly market functioning, capping rate volatility to period ends.
Bank staff provided an overview of the recent Discussion Paper on measures to enhance resilience in the gilt repo market, and sought opinion on mechanisms to reduce leverage and systemic risk in sterling markets. The Group discussed the pros and cons of greater use of central clearing facilities and the minimum collateral haircuts requirement, which could reduce build-up of leverage pre-crisis. Voluntary participation in clearing was seen as preferable to a mandate. Participants noted haircuts can be negotiable bilaterally, rather than automatically applied as is the case in centrally cleared repo. Increased costs and operational mismatch (term demand and overnight supply) are seen as barriers to participation whilst unintended consequences of mandatory clearing may amplify tail risk during periods of stress in financial markets.
6: Looking ahead
Members discussed changing dynamics in SONIA and considered the outlook for year end. The Group noted developments in international financial markets including changes in sovereign debt credit ratings and how financial markets are adapting to a rapidly changing news cycle.
7: Liquidity in SONIA derivative markets
The positive trend in SONIA exchange-traded derivatives continues, as both volumes and open interest have increased above the levels seen in equivalent LIBOR contracts pre-transition. Trading volumes and outstanding stock in SONIA swaps have also exceeded pre-LIBOR transition levels. SONIA is now firmly embedded as the primary benchmark in sterling markets with sustained and increasing usage over the last few years.
8: AOB
No further business was discussed.
Attendees
Chair: Caroline Stockmann (Independent member of SONIA Oversight Committee)
External Member: Alexandra Innes (Independent member of SONIA Oversight Committee)
Blackrock
ICE Futures
Insight Investments
ISDA
LCH
LGIM
Mizuho
NatWest
Rabobank
Société Générale
TC ICAP
Bank of England: Callum Ashworth, Paige Benattar, Joe Clouting, Faraaz Hamza, Anna Koch, Richard Lewis, Joanna McLafferty, Grainne McGread, Kirstine McMillan, Arif Merali, Matt Roberts-Sklar, Iain Ramsay, Joe Smart, Annalisa Stoddart, Ashley Young
Apologies
HSBC