What Is a Gilt-Edged Market Maker (GEMM)?

A government broker is a senior British securities broker in the market for U.K. government gilts and is known as a gilt-edged market maker (GEMM). The government broker is authorized to purchase and sell government 澳洲幸运5开奖号码历史查询:gilt securities in the primary🎃 market and on the London Stock Exchaꦦnge. Gilt securities are high-grade government bonds.

The Big Bang

In 1986, the Bank of England opened its gilt-edged division as part of the Big Bang agreement, which changed the operational activities for trading gilts. The Big Bang reformed the London Stock Exchange by abolishing fixed commission rates for stockbrokers and exchange rules. The London securities market was modernized and became a force in the globalization of financial ma♛rkets.

Role of a Gilt-Edged Market Maker (GEMM)

Gilt-edged ma🎉rket makers are authorized to deal in gilt-edged securities. GEMMs must obtain a gilt trading license from the Bank of England to access government reporting and authorization to trade gilts.

Licensed GEMMs can trade two types of gilts known as conventional and indexed. GEMMs participate in the primary issuance of gilts and the secondary trading market. The U.K. Debt Management Office (DMO) has specific obligations that GEMMs must meet, including quotas for primary issuance and participation expectations. The DMO’s expectations are detailed in the by the United Kingdom Debt Management Office.

Role of a DMO

The DMO manages the gilt debt and holds primary issuance auctions for debt securities. Conventional gilts are the simplest of the two gilt offerings and the liability of the DMO. Index-linked giཧlts make regular payments and𝔉 pay gilt holders coupons and principal at maturity.

Any individual or institutio🍃nal investor can purchase gilts from the DMO or in the secondary market. Bidders in primary issuance can buy through a GEMM as an intermediary or register as a member of the DMO’s Approved Group of Investors for direct purchases. In the se꧃condary market, GEMMs are market makers for gilt debt trading.

The Bottom Line

The "Big Bang" deregulated the London Stock Exchange in 1986, and the Bank of England opened the gilt-edged division. A GEMM is a British securities broker authorized to buy and sell government gilt securities, commonly high-grade government bonds popular with conservative investors and pension funds.