in the UK money markets is Actual/365.   Market Structure The UK market structure comprises both gilt repo and gilt securities lending. Some institutions will trade in one activity although of course many firms will engage in both. Although there are institutions which undertake only one type of activity, there are many institutions trading actively in both areas. For example, an institution that is short a particu- lar gilt may cover its short position (which could result from an either an outright sale or a repo) in either the gilt repo or the securities lending market. Certain institutions prefer to use repo because they feel that the value of a special bond is more rapidly and more accurately reflected in the repo than the stock lending market. Some firms have preferred to remain in securities lending because their existing systems and control procedures can accommodate stock lending     more readily than repo. For example, a firm may have no cash reinvest- ment facility or experience of managing interest rate risk. Such a firm will prefer to receive collateral against a bond loan for a fee, rather than inter- est bearing cash in a repo. They may also feel that their business does not need or cannot justify the costs of setting up a repo trading facility. In addition, securities lending has benefited from securities houses and banks who trade in both it and repo; for example, borrowing a bond in the lending market, repoing this and then investing the cash in say, the CD market. Other firms have embraced repo due, for instance to the perception that value from a bond on special is more readily obtained in the repo market than in the lending market.   Market Participants Virtually from the start of the market, some firms have provided what is in effect a market making function in gilt repo. Typical of these are the former SEMBs and banks that run large matched books. According to the Bank of England, during 1999 there were approximately 20 firms, mostly banks and securities houses, which quoted two-way repo rates on request, for GC (general collateral), specifics and specials, up to three months. Longer maturities are also readily quoted. Examples of market making firms include former SEMBs such as Lazards, Cater Allen (part of the Abbey National group), and Rowe & Pitman (part of the UBS group), and banks such as RBS Financial Markets, HSBC, Deutsche Bank, and Barclays Capital. Some firms will quote only to their own cli- ents. Many of the market making firms quote indicative repo rates on screen services such as Reuters and Bloomberg. Exhibit 8.8 presents a Bloomberg screen of repo rates in UK markets on November 13, 2001