|London Money Market Association|
The objects of the LMMA are to monitor the liquidity of the sterling money markets, to consider matters of policy of interest to members in the areas of money market operations, regulation and legislation, to promote good relations and close consultation with the Bank of England, the Treasury, the Financial Services Authority and other bodies and to disseminate all relevant information to members. The Executive Committee of the LMMA generally meets six times each year providing an essential forum for money market practitioners to discuss and debate market developments and provide suggestions and proposals to the relevant authorities where appropriate. The aim is to make a difference and advise where necessary.
The LMMA has developed relationships with all the appropriate regulatory bodies in the United Kingdom, particularly with regard to the Bank of England in terms of money market operations. The Association is now represented on the Bank’s Money Market Liaison Committee (MMLG) and the Securities Lending & Repo Committee (SLRC) and is also represented on other market forums.
The Executive Committee of the LMMA is made up of representatives from each member firm and meets to discuss markets and market conditions, deciding on representations which might be made to the authorities where appropriate, either via MMLG and SLRC or by direct communication with the relevant body.History
The LMMA was established in 1997 and has its origins in the London Discount Market Association (LDMA), which was disbanded when the Discount Market was abolished, also in 1997. The London Discount Market Association itself was formed in 1941 with the tacit approval of the Governor of the Bank of England and became an innovative and influential voice in the sterling money markets for many years.
Prior to the formation of the LDMA, the Discount Market had previously occupied a key position in the money market by handling bills of exchange and mopping up surplus cash in the UK monetary system. Until the LDMA was formed, discount houses, they had previously operated on an individual basis, though they did have a committee which met to discuss rates of deposit. Subsequently, a sub-committee was formed to liaise with the Bank of England to discuss matters of mutual importance. In turn, this developed into a weekly meeting on Thursday afternoons at the Bank and the meeting became to be known colloquially in the Discount Market as “the Governor’s tea party”.
As the sterling markets developed, the importance of the Discount Market grew, providing as it did, a direct relationship for the market with the Bank of England. However, this influence began to wane as more and more banks, both domestic and overseas, involved themselves in the sterling money markets, particularly leading up to and after Big Bang, the Stock Market deregulation of 1986.
In 1997, the Bank of England gained its independence and it introduced many changes to its money market operations, which included the Discount Market being abolished. The changes introduced by the Bank were welcomed by the markets but while individual banks could now deal directly with the Bank, they created a void in terms of direct dialogue between the sterling money market as a whole and the authorities. Several market participants observed that there was a need for a representative association to provide a platform for regular exchanges of information and a conduit to allow representations to made on market issues to the regulatory authorities, particularly to the Bank of England.
Thus the LMMA was formed in 1997 with 8 founding member firms and despite the many mergers and changes within the London market, the Association has grown from strength to strength since its inception. The LMMA now has 26 active members who operate in all sectors of the wholesale financial markets industry, trading and providing liquidity on a daily basis in the sterling money markets.
The LMMA continues to review its role and purpose and will react to changes in the market place that might influence and widen further its contribution to developments in the London money markets.