B A N K O F E N G L A N D

Mr Derek Louden 1TP Solutions Via e-mail to: Derek.Louden @ itpsolutions.co.uk

Information Compliance Team Public and Internal Communications Division T 020 7601 4878 F 020 7601 5460 enquiries @ bankofengland.co.uk

24 October 2014

Please quote ref. V109933 on all correspondence

Dear Mr Louden

Thank you for your email of 26 September in which you ask questions under the Freedom of Information Act 2000 ('Fol Act') relating to the Governor's announcement in his Mansion House speech in June 2014 that the Bank of England {'the Bank') will widen access to the Bank's facilities (Sterling Monetary Framework ('SMF'}) in the coming year.

In particular you ask:

'1) Which organisations were covered by Mr Carney's offer of Bank of England support in times of market disruption a. Which participants in Forex Markets b. Which interest rate market participants c Which commodities traders d. Which other businesses are also covered

2) To what limit per participant has this cover been extended? 3) What rules must the participants abide by? 4) If a market participant acts ultra vires are they still covered? 5) What supervision is in place to ensure compliance with the rules? 6) What proportion of the $71.3 Trillion global market in 2013 for these services is conducted through London. 7) Finally what percentage of GDP does this represent, and how large is it in comparison to the 2008 bail-out ofthe High Street Banks?'

The Governor stated in his speech that the Bank was widening access to its facilities to include the largest broker-dealers regulated in the UK and to those central counterparties authorised to operate in UK markets'. The Governor had talked about how markets can seize up in times of crisis and went on to explain that just as central banks must act as a backstop for the banking system, there are also times when the same should happen for core markets to help support the real economy without excessive risk taking. This is why there had recently been a change to the SMF and why the facilities were being widened as outlined in the speech.

In respect of ihe SMF and how it works, there is a range of information already published on the Bank's website which is available to view at:

www.bankofenqland.co.uk/markets/Paqes/monev/defauit.aspx.

I have provided below links to pages which may be of particular interest to you which cover the principles for existing participants and also the terms and conditions which participants should abide by.

The Red Book sets out the framework forthe Bank's operations in the sterling money market and includes the principles for existing participants, this is available to view on the Bank's website at:

Bank of England, Threadneedte Street, London EC2R SAH T +44 (0)20 7601 4444 www.bankofengland.co.uk

2

www.bankofenqland.co.uk/ma

The legal terms governing participation in the Bank's operations under the SMF inciuding the Terms & Conditions, Operating Procedures and other documentation which all counterparties to the SMF must abide by, are available to view on the Bank's website at:

www.bankofenqland.co.uk/markets/Paqes/money/documentation.aspx.

In case you are not aware, in contrast to the position for other public authorities, Parts I to V of the Fol Act, (including the genera! right of access under section 1), do not apply to information which the Bank holds for the purpose 'of its functions with respect to (b) financial operations intended to support financial institutions for the purposes of maintaining stability' (see section 7 and the Bank of England entry in Schedule 1, Part VI of the Fol Act), insofar as the Bank may hold additional information within the scope of your request, it would be covered by this exclusion.

Yours sincerely

Sandra Collins Information Compliance Team