Buy side reflects on BoE’s gilt liquidity lifeline

Lending facility could prevent repeat of last year’s LDI crisis if properly designed, pension and insurance experts say

Those who do not learn from history are doomed to repeat it. UK regulators, determined to avoid a rerun of the market chaos that came with a spike in gilt yields last September, have adopted this truism as their unofficial mantra.

The Bank of England is working on a new gilt market liquidity facility for insurers and pension funds – including the liability-driven investment funds (LDIs) that came under severe stress in 2022. In a September 28 speech, Andrew Hauser, the BoE’s executive director

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