... tsingilts to bothbuyers and sellers,althoughnot to otherGEMMs.Theyalsohave to maintain a reasonablemarketshare−meaningthattheyhave to actuallybuy and sellbonds(ratherthanjustmakingmarkets and nottransacting)inboth the primarygiltauctions and the secondarymarkets.As a benefit,theyare the onlymarketparticipantsthatcanbuygiltsdirectly36 A bookis a trader’sportfolio of bonds.Thiswillbemadeup of bothrealbonds and derivatives.37Seesection A. 4.38 A list of the currentGEMMsisinAppendix A. 2.39 The giltissuingarm of the UKTreasury.19 The SterlingBondMarkets and LowCarbonor Green Bonds A report to E3GAlexVeysMay20101from the DMO and areable to “strip”and“reconstitute”gilts40.Theyarealsoinvited to a quarterlyDMOmeeting to discussfutureissuance and offertheiradvice to the DMO. The DMOhastwosets of meetingseachquarter:oneforinvestors and oneforGEMMs,both of whichfollow the sameform. The DMOfirstpresentstheirview of the market,theirexpectationsonfutureissuanceover the followingquarterin the context of the financial year, and anyotherpertinentdetail. The flooristhengiven to the investors ... industrysector and ratingcategory27.Itisworthnotingthatthereis a distinctpatternin the matrixshownby the weightsinbold.Thatisthat the “centre of gravity”forfinancials,industrials and utilitiesis a rating of A 28 and industrials“BBB”withsovereigns and othergovernmentbondsat“AAA”.25Seesection2.4.26Seesection3.4.3.27FormoredetailonCreditRatingsseeSection2.4.28Therehasbeen a changehereas the centre of gravityforfinancialsused to be“AA”butwith the creditcrisis,many financial institutionshaveeitherbeendowngradedorbroughtunder the UKgovernmentAAArating.15 The sovereignsectorisclearly the largestsector and onlyincludesonlygilts. The quasi and foreigngovernmentsector(10.3%)isdominatedby the EIB(3.5%) and KfWBankengruppe(2.5%). The formeris a supra‐nationalagencyratedAAA and the latter a GermangovernmentagencyalsoratedAAA. The financialsector(predominantlybanks and insurancecompanies)ismorebroadlyspreadbutstillhas a handful of dominant ... Thisiswhythereis a robustregulatory,accounting and legalstructure to minimizeasbestaspossible the asset/liabilitymismatch and itseffectonpensioners.44Howmuchyouwouldhave to payanotherentitytoday to buy the liabilities.21Aswellaspensionlaw,variousaccountingstandardshavebeenintroduced to formalise the measurement of the mismatch and also to, superficially,increase the transparency of the pensionfund.In the UKthisstartedwithFRS17 (a UKaccountingstandard) and then the internationalstandardIAS19. The equivalentUSstandardisSSAP24.ThePensionProtectionFund(PPF)wassetupin2005 to insurepensionfundsagainstmajordeficitproblems and, if the worstcame to the worst,takethemover.Insurancecompanieshavedifferentregulationsthat,arguably,aremorerobust.However,theseaccountingstandardsallstrugglewith the impossibility of comparingappleswithoranges. The actualfutureliabilitiesaretied to longtermeffectsthatarenottradedwhilst the valueso...