BANK OF ENGLAND TO MONITOR WHEN-ISSUED TRADING
The Bank of England will step up
reporting requirements for primary dealers in U.K. Government
gilts during the when-issued trading period in between the date
an auction is announced and the date the sale is actually held.
    In its document on the auctions, the Bank said "The Bank is
content for such (when-issued) trading to cevelop subject to
certain conditions, in particular for predential supervision of
the credit risk to which the gilt-edged market makers and
Inter-dealer brokers may become exposed."
    The Bank is widely expected to require dealers to report
wehn-issued trading positions on a daily basis.
    When-issued trading presents certain unusual risks because
dealers are buying and selling a security that technically does
not exist although there is no uncertainty about when it will
be issued.
    Still, the fact there is no physical delivery possible
presents certain credit risks as well.
    The Bank is widely expected to expand its reporting
requiremenmts for unsettled trades, requiring firms to report
unsettled when-issued trades one day after they occur.
Normally, unsettled trades must be reported three days after
they occur.
 REUTER
