ICMA Update for Members - March 2018

The transition from LIBOR to Risk-Free Rates is a pressing global priority and will impact every single one of our members. The high level of coordination and cooperation amongst the different currency groups working on IBOR replacements has been most welcome, as has the focus on the needs of investors and others who are reliant on the benchmark. ICMA, as detailed below, is actively involved on behalf of market users in technical discussions taking place in official forums and is also working to raise awareness of the complexities involved for issuers and investors in international fixed income. Members requiring further information or advice are welcome to contact us via the ICMA helpdesk.

Martin Scheck
ICMA Chief Executive

If you have any comments on this update or its contents, please contact us at: info@icmagroup.org

New members in August

The following firms were admitted to ICMA membership in August 2018:
China Construction Bank (Asia) Corporation Limited, Hong Kong
CSI Capital Management Limited, Tortola
Fieldfisher LLP, London
Vanguard Asset Management, Ltd., London

Bringing the total number of ICMA members to 542 members in 62 countries.

Contact: sanaa.clausse@icmagroup.org
Transition from IBORs to Risk-Free Rates
To avoid the problems associated with manipulation of LIBOR in the past and the financial stability risks arising from continued dependence on LIBOR in the future, the authorities want financial markets to transition from the IBORs (eg LIBOR) to near Risk-Free Rates (RFRs). RFRs have been chosen in the UK (SONIA), US (SOFR), Switzerland (SARON) and Japan (TONAR), and the choice of an RFR is currently being considered in the euro area.
This transition is a considerable challenge for all IBOR users. In the international bond market, term LIBOR is currently used as a reference in floating-rate notes, securitisations and also capital securities. There are concerns that new bonds are still being issued referencing LIBOR with maturities beyond the end of 2021, when LIBOR may no longer be available. In July, the Sterling RFR Working Group published a paper prepared by the Bond Market Sub-Group on the risks of issuing new sterling bonds referencing LIBOR for maturities beyond 2021, when LIBOR may no longer be available.  
There is also the question of the conversion of legacy bonds referencing LIBOR. Conversion is likely to be more complex in the bond market than in the derivatives market as the bond market does not use protocols to amend large volumes of contracts.
Our recent briefing call for members highlighted recent developments related to ICMA’s work and involvement in the Working Group on Sterling Risk-Free Reference Rates, for which Paul Richards, Head of Market Practice and Regulatory Policy, chairs a sub-group focusing on benchmark transition issues in sterling bond markets. It also touched on developments in the euro area (where ICMA is a non-voting member of the Working group on euro Risk-Free Rates) and Switzerland (where ICMA participates in the National Working Group on Swiss Franc Reference Rates).
More information, including speeches and papers from the official sector, can be found on ICMA’s website.
Primary markets

The draft response for the ESMA consultation on guidelines on risk factors under the EU Prospectus Regulation is with members for comment; the response deadline is 5 October.
The draft response for the UK FCA Call for Input on the PRIIPs Regulation – initial experiences with the new requirements is also with members for comment; the response deadline is 28 September.
ICMA submitted a response to the FMSB on its proposed Statement of Good Practice on Information & Confidentiality for the Fixed Income and Commodities markets today.
ICMA has published suggested language for EU Benchmark Regulation Article 29(2) statement on benchmarks.

Contact: ruari.ewing@icmagroup.org; charlotte.bellamy@icmagroup.org

The ICMA Primary Market Forum, now in its 12th year, is the definitive annual event gathering issuers, syndicate banks, law firms and investors to discuss market trends and practices, regulatory developments and the overall outlook for the primary debt capital markets. Join us In London on 8 November.

Contact: charlotte.bellamy@icmagroup.org; katie.kelly@icmagroup.org

Secondary markets

A new report from ICMA details the state and evolution of the Asia-Pacific cross border corporate bond secondary market. While it primarily focuses on G3 (USD, EUR, GBP) denominated bonds of non-financial and financial corporate issuers, as defined by having the issuer country of risk within the APAC region, it also explores the ongoing internationalisation of local currency markets, in particular those of China. The report is based on interviews with market participants, including buy-side users, as well as extensive data and quantitative analysis. It sets out to map the state of the market, including trends in market size and structure, primary and secondary market liquidity conditions, the impacts of post-crisis financial and market regulatory reforms, developments in e-trading and new market technologies, and potential risks and opportunities.

Following the publication of a discussion paper on the potential market consequences of one of the provisions of the Central Securities Depository Regulation (CSDR), entitled How to Survive in a Mandatory Buy-in World, ICMA has published an information brochure on CSD Regulation mandatory buy-ins, outlining the scope and regulatory requirements. The CSDR buy-in provisions are expected to come into force in September 2020 and will also apply to non-EU/EEA domiciled trading entities. The brochure is part of ICMA’s ongoing work to ensure industry awareness and preparedness in the international cross-border fixed income markets.

ICMA has published a position paper on MiFID II trading suspensions from the perspective of fixed income instruments. The paper highlights scenarios where a blanket suspension of trading in debt instruments or related derivatives could be damaging to investors’ interests and the orderly functioning of the market. The paper further recommends that NCAs consider such circumstance, and possibly consult with market stakeholders, before imposing removals or suspensions of trading under Articles 32 and 52 of the regulation.

Contact: andy.hill@icmagroup.org

We have decided to restructure the existing Electronic Trading Council, which brings together representatives of the entire electronic trading ecosystem. The Electronic Trading Council will now cover bond electronic trading and automation, e.g algos, axe dissemination, streaming quotes etc, while the MiFID II Data Workstream will cover data availability and usability; considering: quality, scope, delivery, ownership/rights, aggregation and use.

Contact: elizabeth.callaghan@icmagroup.org

Sustainable finance

The Quarterly Newsletter for Green, Social and Sustainability Bonds containing statistics on market size and summaries of recent developments in this fast growing market sector was last issued in July.
The next Introduction to green bonds training course will run in London on 1 and 2 October, providing a thorough and practically oriented introduction to the essentials of green bonds. Developed and delivered by ICMA’s green bond experts, the course enjoys input from leading market practitioners in the form of content and / or as guest speakers, including members of the GBP Executive Committee, the elected representatives of the most significant issuers, investors and underwriters in the green bond market. Workshops focusing on case studies deliver market-relevant skills. Further training courses, both public and tailor-made / in-house versions, are planned in other locations, including Asia, later in the year.

Registrations will open shortly for the Annual ICMA and JSDA Joint Conference: Developments in Green and Social Bond Markets – The Asian Perspective in Tokyo on 11 December.

Contact: greenbonds@icmagroup.org

Repo and collateral

The forthcoming SFT Regulation will be one of the major topics on the agenda at the European Repo Council and Collateral (ERCC) autumn meeting in London on 17 October. The introduction of extensive reporting requirements through the SFTR is one of the big challenges that the industry is currently facing.
The agenda also includes updates on other regulations that are impacting repo markets, including CSDR and NSFR, among others. The meeting is open to all ICMA members and the repo community at large.

Contact: alexander.westphal@icmagroup.org
Asset Management and Investors Council

The AMIC Covered Bond Investor Council (CBIC) secretariat has produced a summary analysis of rapporteur Bernd Lucke MEP’s first report on the European Commission’s proposed Directive on covered bonds: Draft Report on the issue of covered bonds and covered bond public supervision and amending Directive 2009/65/EC and Directive 2014/59/EU and a Draft Report on the proposal as regards exposures in the form of covered bonds amending Regulation (EU) No 575/2013 of the European Parliament and of the Council). The analysis covers the main amendments proposed including a suggested creation of a two tier “premium” and “ordinary” covered bond market in Europe. CBIC is seeking feedback from its members on the report in order to form a response in advance of additional amendments being tabled in the European Parliament and the Council. If you are a covered bond investor and are not yet represented on the CBIC, please get in touch.

The next AMIC Conference will be held in London on 22 November. Key ICMA priorities, including benchmark reform and transition to risk-free rates, mandatory buy-ins, the evolution of the landscape for investment research as well as securitisation, will be discussed from a buy-side perspective. All buy-side representatives including other financial market participants are invited to attend, the event is free of charge; however, registration in advance is essential.

Contact: patrik.karlsson@icmagroup.org; bogdan.pop@icmagroup.org


Applications of distributed ledger technology, artificial intelligence/machine learning, big data analytics or cloud computing have significant potential to alter the lifecycle of bonds, from issuance, trading to settlement, and impact the functioning of financial markets. ICMA has produced a listing of new applications of fintech in bond markets taken from public sources, such as press announcements and made it available on the ICMA website.
Contact: gabriel.callsen@icmagroup.org

Market Practice and Regulatory Policy

For a full list of ICMA’s Market Practice and Regulatory Policy experts and their areas of expertise click here.

More detailed information on ICMA Market Practice and Regulatory Policy work on behalf of members can be found in the ICMA Quarterly Report for the Third Quarter 2018 which was published on 5 July 2018. The Quarterly Report for the Fourth Quarter 2018 will be published on 11 October.

The ICMA Regulatory Grid which summarises proposed financial regulations affecting the cross-border securities market in Europe is available for download on the locked members’-only area of the ICMA website.  It is a working draft provided by the ICMA Market Practice and Regulatory Policy team and is periodically updated (most recently on 8 June 2018).

Future Leaders Essay Competition

ICMA invites members to participate in its Future Leaders Essay Competition. Professionals with a maximum of 8 years of experience in financial markets and who currently work for ICMA member firms are invited to write an essay on the broad theme ‘How will the international bond markets look in 10 years’ time?’. Entries should be between 3,500 and 4,500 words in length and the deadline for submission is 31 October 2018. 
Contact: futureleaders@icmagroup.org

ICMA Legal and Regulatory

Helpdesk numbers

(ICMA members only)


+44 20 7213 0341 (London)

+41 44 360 5237 (Zurich)

+852 2531 6590 (Hong Kong)


For legal queries: legalhelpdesk@icmagroup.org

For market practice and regulatory policy queries: regulatoryhelpdesk@icmagroup.org

Get Involved!

New to the industry? Read Get involved! our quick guide to the international capital market and how to engage with ICMA.

ICMA Events
ICMA Women’s Network
The ICMA autumn events schedule includes four events from our thriving ICMA Women’s Network.
The first, a networking event in Madrid on 4 October hosted by BBVA, features a panel of inspirational industry figures discussing their career paths and how they managed their progression. This event is sold out already, contact leigh-anne.cook@icmagroup.org to join the waiting list.

In Amsterdam on 11 October the theme of the IWN meeting will be ‘Igniting change through innovation’ examining the shift towards sustainability in finance and the opportunities that this creates for an increasingly diverse workforce.

On 1 November the London IWN meeting will focus on building a sustainable future, with contributions from notable women who provide thought leadership and are at the centre of innovation in this rapidly growing area of finance.

Save the date for the first ICMA Women's Network (IWN) event to take place in Italy! The agenda for this event in Milan on 15 November will be announced soon.

All these events are open to all ICMA members at no charge.

Contact: ICMAwomensnetwork@icmagroup.org

ICMA Future Leaders
In Paris on 17 October, ICMA members are invited to an evening of networking, featuring a discussion on Cryptocurrencies & ICOs. 

Contact: futureleaders@icmagroup.org

ICMA workshop: Bond syndication practices for compliance and middle office professionals, conveys an in-depth understanding of the practices that are involved in launching a deal in the international debt capital market while considering the interaction of current regulation with the process at each stage. London, 2 November.
For a full list of all the ICMA events coming this autumn please see our website.

ICMA Executive Education

The full autumn course schedule for our flagship qualifications has been announced and you can book these now, starting with our Introduction to Fixed Income Qualification (IFIQ) running
in London on 3-5 October 2018 and the ICMA Fixed Income Certificate (FIC) in Amsterdam on 22-26 October.

Market finance is playing an increasingly significant role in the financial ecosystem with Europe's companies accessing funding to grow their businesses through the primary markets.
Sign up for ICMA's Introduction to Primary Markets Foundation Qualification (IPMQ) which has been specifically designed to provide the basic information that you need to develop an understanding of both the debt and equity capital markets.
The course provides an overview of how and why borrowers access the capital markets, together with an introduction to the key documents, relevant regulations and an insight into in-house transaction management considerations.

To book your place on ICMA EE online or classroom courses visit icmagroup.org/education


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