The Financial Policy Committee’s (FPC) Financial Policy Summary and Record published today (Wednesday), includes an update on the resilience of LDI following volatility seen in September 2022 when the market witnessed widespread selling of gilts by schemes’ LDI arrangements.
Nausicaa Delfas, TPR’s Chief Executive, said: “We welcome the FPC’s recent announcement recognising the progress TPR has made in response to its recommendations on making the leveraged LDI market more resilient to gilt market shocks.
“TPR will continue to work with the Bank of England and other regulatory partners to ensure any risks to financial stability in the pensions sector are reduced”.
TPR also published a letter, sent to the Bank of England’s Governor in January ahead of FPC's most recent meeting, which sets out TPR's progress and actions in relation to financial stability.
The FPC’s report also:
• welcomes TPR’s progress against FPC recommendations in November 2022 and March 2023
• recognises TPR’s guidance on steps for trustees to manage leveraged LDI risks
• highlights continued progress by TPR in implementing the FPC’s recommended resilience standards for LDI funds, which are continuing to function well
• recognises TPR’s enhancement of its data collection and capabilities and ongoing collaboration between UK authorities on LDI monitoring
• notes the government’s acceptance of the FPC’s recommendation that TPR incorporate financial stability considerations in decision making and balances this with its statutory objectives.
|
