Market origins

The international financing of public and private projects has existed since the 19th Century. The international capital market in its current form began life in the early 1960s. The driving factor behind its growth and development was the tax regime introduced by the American government in 1963, aimed at discouraging foreign issuers from borrowing from US investors. US tax law also made it difficult for US multinationals to fund their overseas subsidiaries from within the USA.

Until that time, the vast majority of international borrowing had been channelled through New York. After 1963, however, borrowers wishing to raise debt denominated in US dollars came to Europe, where a growing pool of investors was ready to provide those funds without the burden of expensive taxes. The Eurobond market was born.

Growth

During the past thirty years, the market has experienced exponential growth in both issuance and trading volumes. The market has enabled an increasingly diverse range of borrowers access to an ever wider investor base via a wide range of currencies and innovative structures.

The range of instruments traded has also grown substantially, and now includes debt denominated in euro and many other currencies as well as warrants, global depository receipts, international floating rate notes and Euro commercial paper. As a result, the term 'Eurobond' has given way to a wider, and more appropriate, label for all these forms of borrowing as 'international securities'.

Today the international capital market is the world’s largest non-governmental market for medium to long term capital, with a market size as at December 2004 equivalent to more than USD 8 trillion in outstanding issues.

Why ICMA?

The success of the international capital market was threatened in its early days by the limited scope of communications facilities, coupled with a shortage of experienced back office staff. By the late 1960s, the market found itself unable to cope with the increasing volume of primary issuance and secondary market activity when a backlog of failed or late deliveries of securities - exacerbated by the lack of standard settlement procedures - threatened to bring it to a halt.


The solution to the crisis came in 1969, when a group of senior bond dealers representing banks and securities houses from the markets' principal financial centres decided to form a new association called the Association of International Bond Dealers (AIBD). In the years that followed, AIBD was to oversee the formation of a series of rules and recommendations governing issuance, trading and settlement in this market.

In 1984, IPMA, the International Primary Market Association, was established by a group of AIBD member banks as the separate trade association for the leading banks and investment banks of the world in their capacity as underwriters and managers of international issues of debt for the public sector and of debt and equity for the corporate sector.

In 1991 product innovation and geographical diversity led the way for a change of name, with AIBD becoming the International Securities Market Association (ISMA).

The expanding role of the Association in response to the growing challenges of increased regulation, lead to the formation of the International Capital Market Association in July 2005 by the merger of the International Securities Market Association (ISMA) and the International Primary Market Association (IPMA), creating an organisation with a broad franchise across the primary and secondary international capital market. This new association has the mandate and the means to represent the interests of the investment banking industry in maintaining and developing an efficient and cost effective international market for capital.