ICMA | International Capital Market Association

ICMA Update for Members October 2014


Substantial reduction of liquidity in secondary bond markets has been of concern to ICMA and its members for several years. Recent market volatility has again highlighted this issue and the impact of regulation on banks’ ability to commit capital is being cited as one of the causes. We are in the process of analysing a detailed secondary market survey of our members to evaluate the causes of reduced liquidity and to look at trends and future market developments in this area. The study will be published before the end of the year. Recent discussions on sovereign contract reform have also been very much in the news, along with our new revised model terms, which are now starting to be used.

Martin Scheck
Chief Executive, ICMA

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

The helpdesk service for members is the first point of contact to get directly in touch with ICMA legal and regulatory experts for information and guidance on a range of issues that affect your business in the debt capital markets. The helpdesk numbers are answered by ICMA staff during normal business hours, usually 8.00 to 18.00 CET. Outside those hours you can contact us through two dedicated e-mail addresses:
For legal queries: legalhelpdesk@icmagroup.org
For market practice and regulatory policy queries: regulatoryhelpdesk@icmagroup.org

Telephone: + 44 20 7213 0341 | + 41 44 360 5237
New ICMA Members in September/October
Clydesdale Bank plc, Glasgow
Nomura Fixed Income Securities Private Limited, Mumbai
Northern Bank Limited, Belfast
Northern Trust Global Services Limited, London
SIA S.p.A., Milan
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Tokyo

These new members bring the size of ICMA's membership to 465 firms in 54 countries.
Contact: Sanaa.clausse@icmagroup.org
Sovereign debt reforms

At the end of August 2014, following two consultations with its members, ICMA published the final version of its sovereign bond contract reforms incorporating new Collective Action Clauses designed to allow orderly debt restructuring of government issued bonds in a crisis and a new pari passu provision. The response to these new measures in the press and from commentators has been significant and encouraging. In September, the G20 issued a communiqué that included a positive reference to the ICMA measures and the IMF paper on contractual reforms designed to address collective action problems in sovereign debt restructuring, published on 2 September, also endorsed ICMA’s work in this area. The focus now is very much on implementation. Earlier this month Kazakhstan became the first sovereign borrower to issue a bond incorporating the new ICMA Collective Action Clauses.

Contact: leland.goss@icmagroup.org

Successful migration of European bond markets to T+2

The migration of the standard settlement cycle for cash trading in bonds from settlement at T+3 (Trade date + 3 working days) to T+2 was made in response to the EU Central Securities Depositories Regulation (CSDR) and took effect on 6 October 2014. Initial feedback from members and operations working groups indicates that the transition to settlement at T+2 for the European fixed income markets has been largely successful with few issues. In repo markets, the shorter-settlement cycle for underlying securities, and the migration of liquidity for most financing trades from T+2 to T+1, has not posed any immediately observable issues, although the ICMA European Repo Council will continue to monitor the situation closely, particularly the impact of increased volumes in same-day collateral and liquidity management. A number of issues remain to be resolved, but ICMA and the ERC will continue to work closely with their members and the various international market bodies to reach agreed standards and practical solutions.

Contact: andy.hill@icmagroup.org

CSDR Mandatory Buy-ins and the treatment of SFTs

The regulation on central securities depositories and securities settlement (CSDR) establishes a framework designed to enhance settlement discipline including the provision for penalties for settlement fails and a mechanism for executing mandatory buy-ins against failing transactions in financial securities. ICMA has produced a briefing note on the implications of the proposals for securities financing transactions (SFTs) and for secondary market liquidity in corporate and sovereign debt markets and is running a series of seminars in Europe to update members.

Contact: andy.hill@icmagroup.org

ICMA's rules and recommendations for the secondary market

ICMA has recently published an updated version of its statutes, by-laws and rules and recommendations for the secondary market incorporating changes made since 2010.The rule book is available (to ICMA members only) from the website. Guidance on the application of the rules and recommendations for the secondary market is available through the ICMA legal help desk.

Contact: legalhelpdesk@icmagroup.org
Asset Management and Investors Council (AMIC)

The twice yearly AMIC Council meeting was held in London this week, with the participation of more than 100 international asset managers, institutional investors and representatives from the regulatory community. AMIC has responded to the FCA Discussion Paper DP14/3 - the use of dealing commission regime. New working groups on securitisation and shadow banking have been set up to take forward AMIC’s work in these areas.

Contact: Patrik.karlsson@icmagroup.org

6th UK-China Economic and Financial Dialogue

On September 11, as part of the 6th UK-China Economic and Financial Dialogue, Vice-Premier Ma Kai and Chancellor of the Exchequer George Osborne agreed a number of areas of cooperation between the UK and China for the coming year. One of the work streams cited is in the area of capital markets where it welcomes the formation of a working group chaired by ICMA and NAFMII composed of experts from financial institutions in London and China to share market expertise and to assist in further developing China's onshore bond market.

Contact: Mushtaq.kapasi@icmagroup.org

ICMA signs MoU with Malaysian Investment Banking Association

ICMA has recently signed an MoU on closer co-operation with the Malaysian Investment Banking Association (MIBA), an organisation which plays an important role in developing the capital market of Malaysia. ICMA and MIBA will be in regular contact to exchange expert views and experience on best market practice and regulatory matters in debt capital markets.

Contact: allan.malvar@icmagroup.org

ICMA regions

ICMA has set up a regional chapter for Africa to support the growing number of members in the region by providing a focal point for them to put forward their views to ICMA and as a platform for ICMA to communicate more effectively with members as domestic markets develop and internationalise. The new regional committee of members currently consists of representatives from banks in Tunisia, Egypt and South Africa. New chairman have been elected for the following ICMA regions:
Russia and CIS - Denis Kozub, Head of Funding Products Desk, Sberbank CIB
Nordic - Fredrik Jenestrand, Head of Regulatory Strategy and Implementation, Nordea
Latin American Chapter - Sérgio Fonseca Lima , SVP - Tesouraria - Funding Proprietário, Itaú BBA

Contact: Candice.weinrcih@icmagroup.org

Market Practice and Regulatory Policy update
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 Fourth Quarter which was published on 8 October 2014.
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.
ICMA Executive Education
ICMA EE in Dubai

ICMA Executive Education delivered its two day Fixed Income Portfolio Management course in Dubai on 15-16 September. The programme was sponsored by Qatar Capital Ltd., a proprietary investment management company focused on the GCC fixed income market, and hosted by the Dubai International Financial Centre Authority at the DIFC. The Dubai International Financial Centre (DIFC) is the financial hub for the Middle East, Africa and South Asia, providing a world-class platform connecting the region’s markets with the economies of Europe, Asia and the Americas.

The course was conducted by Lindsey Matthews, CFA, Managing Director, UBS Delta, in Securities Distribution at UBS Investment Bank, London. The programme provided an introduction to the management of fixed income portfolios, considered how and why investors allocate money to fixed income and looked at issues impacting risk and return. Participants, who comprised delegates from a number of financial institutions in the region, gained a broad understanding of how European Fixed Income Portfolios are constructed, how risk is managed and how returns are achieved.

ICMA Executive Education was pleased to co-operate with the DIFC in holding this joint venture and looks forward to further collaborations in the future.

ICMA Executive Education Skills Courses

Successful Sales:
London: 13-14 November 2014
New ICMA Members in September/October
Sovereign debt reforms
Successful migration of European bond markets to T+2
CSDR Mandatory Buy-ins and the treatment of SFTs
ICMA’s rules and recommendations for the secondary market
6th UK-China Economic and Financial Dialogue
ICMA signs MoU with Malaysian Investment Banking Association
ICMA regions
ICMA Executive Education
ICMA Seminar on CSDR - Mandatory Buy-ins & ICMA Capital Market Lecture with Mario Nava, European Commission

Brussels, 4 November
Conference: MiFID II, CSDR and Secondary Bond Market Liquidity
Hosted by Mannheimer Swartling

Stockholm, 5 November
Bond syndication practices for compliance professionals and other non-bankers - an ICMA Workshop

London, 11 November
The 8th ICMA Primary Market Forum

London, 12 November
ICMA Seminar: Central Securities Depositories (CSD) Regulation - Mandatory Buy-ins

Paris, 14 November
ICMA European Repo Council (ERC) General Meeting
Hosted by MTS

London, 19 November
ICMA Workshop: Global Master Agreements for Repo and Securities Lending

London, 26-28 November
ICMA Seminar: Central Securities Depositories (CSD) Regulation - Mandatory Buy-ins

Eschborn, 27 November
ICMA Roundtable: SRI & Green Bond Investments: Moving Towards the Mainstream

Paris, 2 December
Euroclear Collateral Conference
Singapore, 4 November
Global Private Placement Forum
London, 5 November
ASIFMA Annual Conference 2014
Singapore, 5-6 November
39th ICA Conference
Dubai, 6-9 November
AMF - Annual Assembly and Convention 2014
Madrid, 24 November
Convergence in Transatlantic Financial Regulation - A One-Day Conference
London, 25 November
The 9th Asian Bond Markets Summit 2014
Singapore, 26 November
Clearing and Settlement World
London, 26-27 November
X Annual International Repo Forum
Moscow,10-11 December
IFLR Asia Capital Markets Forum 2014
Hong Kong,4 December
Part I, Introductory Programmes

Financial Markets Foundation Course (FMFC):
London: 5-7 November 2014
Luxembourg: 10-12 June 2015

Securities Operations Foundation Course (SOFC):
Brussels: 12-14 November 2014
London: 25-27 February 2015
  Part II, Intermediate Programmes

Operations Certificate Programme (OCP):
Brussels: 22-28 March 2015

Primary Market Certificate (PMC):
London: 17-21 November 2014
  Part III, Specialist Programmes

Fixed Income Portfolio Management:
London: 27-28 November 2014

ICMA Guide to Best Practice in the European Repo market
London: 17 November 2014

Corporate Actions – An Introduction
London: 12-13 May 2015

Corporate Actions – Operational Challenges
London: 14-15 May 2015

The full 2014 course schedule is available here, www.icmagroup.org/Training-Development
This communication is presented by the International Capital Market Association (ICMA). ICMA believes that the information contained in the communications is accurate and reliable but makes no representations or warranties, express or implied, as to its accuracy and completeness. © International Capital Market Association (ICMA), Zurich, 2014. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission from ICMA.

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