The UK’s largest banks and asset managers will be tested against a hypothetical shock worse than last year’s gilt market spiral, in a Bank of England exercise to see how non-bank financial institutions can amplify systemic stress.

More than 50 financial market participants, including banks, insurers, asset managers, hedge funds, and pension funds, are involved in the central bank’s first system-wide exploratory scenario exercise, according to a statement. Participants have been supplied with details of a severe, but plausible, stress scenario.

“This is faster, wider ranging, and more persistent than those seen in recent periods of market instability,” the central bank said in the statement. “The exercise is not a test of the resilience of the individual firms participating. Published materials will not provide information on any individual firms.”

The BOE is working closely with the Financial Conduct Authority and The Pensions Regulator as part of the exercises, which were announced in June. Participants will consider the scenario and submit their responses in January, with the central bank’s final report on the exercise due by the end of next year.

The test scenario incorporates many elements from recent market events, including the shock tied to liability-driven investments last year. When gilt prices collapsed in the wake of then-Prime Minister Liz Truss’s historic tax-cutting plan, pension fund managers using LDIs faced margin calls. The central bank ultimately stepped in to stabilize the market.

The new test might incorporate a scenario where UK government borrowing costs increase “very sharply” as yields on 10-year nominal gilts increase by 115 basis points, the central bank said. That would be similar to the move seen during the LDI episode.