In the UK, stripping is all the rage. Today's top film The Full Monty concerns a group of redundant steelworkers who take to striptease to make ends meet. And on December 8 the official gilt (UK government bond) strips facility will be initiated. Unlike the Sheffield strippers, the UK treasury hasn't gone all the way. The stripping facility will be restricted to certain issues with the same coupon-redemption dates, so that the stripped coupons are more easily tradable.
The move is part of an extensive modernization of the gilts market. A gilt repo market was introduced at the start of 1996, and although in its infancy it has proved to be a success. The Central Gilts Office settlement service is to be upgraded on November 10, which will speed up administration and allow greater volumes to be traded. The new computer system will also help in the stripping and reconstitution of gilts. These developments were part of what Bank of England executive director Ian Plenderleith described last year as "five parallel planks which constitute a coherent platform for a modern trading market in gilts".
Strips have already been introduced in other European government bond markets, but have not gone as smoothly as hoped.