The UK's Debt Management Office may revive switch auctions to improve liquidity in the gilts market. These auctions allow investors to exchange one government bond for another, a tool last used in 2001 but popular in other markets. Both dealer banks and gilt investors have expressed support for the mechanism in recent meetings with the DMO.

Switch auctions could help maintain liquidity in benchmark gilts without increasing overall supply, according to feedback from market participants. The DMO said it may use them in the fiscal year starting April but does not currently plan to deploy them in the first three months of its annual program. The office plans to consult further with market participants before making any final decision.

The UK plans to sell £252 billion of gilts in the coming fiscal year, among the largest issuance packages on record. This marks a significant shift from the early 2000s when low issuance prompted the original use of switch auctions to build benchmark gilts.