As a long-term steward of £17.2bn (as at 31 December 2025) in client assets, around half of which we manage on behalf of UK charities, we believe well-functioning public markets are fundamental to delivering sustainable returns for our clients. In this case, we see a clear alignment of interests between UK investors seeking secure, flexible short-term returns and the Government’s need for a deep and reliable pool of capital.
However, the UK Treasury Bill market is currently characterised by structural and regulatory features that limit participation by asset managers and asset owners. In practice, as a direct result of these limiting factors, we rarely use T-bills, despite seeing a strong investment case for them. Instead, we allocate significant cash balances to alternative short-term instruments such as sterling liquidity funds.
In our submission, we highlight four core impediments to a deeper and more efficient market:
- Regulatory constraints on bank intermediaries, notably aspects of the Leverage Ratio and Net Stable Funding Ratio, which may inadvertently discourage balance sheet capacity for T-bills and dampen secondary market liquidity.
- Auction design and access, where uncertainty over allocation and limited direct participation can deter end-investors.
- Market depth and liquidity, with the UK market materially smaller and less liquid than peers such as the US, limiting its effectiveness as both a funding tool for Government and a cash management instrument for investors
- Differential tax treatment between gilts and T-bills, which disadvantages T-bill investors.
We propose a focused package of reforms: a review of capital adequacy treatment, consideration of auction structure changes (including multi-tier approaches and re-taps), reassessment of differential tax treatment relative to gilts, and a gradual increase in T-bill issuance as a share of total debt.
Improving liquidity is the key to unlocking demand. A deeper, more accessible T-bill market would enhance choice and certainty for investors managing short-term capital, while broadening and diversifying the Government’s funding base
We welcome further engagement with policymakers as this work progresses. A more efficient T-bill market would serve both long-term investors and UK taxpayers alike.
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