New ICMA Members in 2018
We welcomed the following new members to ICMA in February:
- Ahli United Bank, B.S.C., Manama
- Asian Infrastructure Investment Bank (AIIB), Beijing
- Bank of Finland, Helsinki
- La Banque Postale Asset Management
- Shenzhen Stock Exchange, Shenzen
Bringing the total number of ICMA members
to 531 members in 61 countries.
ICMA has been engaging with regulators and members on the global issue of benchmark reform for several years. (See ‘The transition from LIBOR’
, originally published in the ICMA Quarterly Report of Q1 2018 for a summary of the issues involved).
Most recently, ICMA’s focus is the development of Risk-Free Reference Rates (RFRs), which are being developed in response to recommendations by the Financial Stability Board
(FSB) made to increase confidence in the reliability and integrity of interest rate benchmarks.
In particular, ICMA is a member of the Working Group on Sterling Risk-Free Rates
, with Paul Richards (Head of Market Practice and Regulatory Policy, ICMA) chairing a sub-group focusing on benchmark transition issues in bond markets. ICMA is also a non-voting member of the Working Group on Euro Risk-Free rates
established by the ECB, the Belgian Financial Services and Markets Authority, ESMA and the European Commission.
In addition ICMA and other trade associations have published a roadmap
that highlights key challenges involved in transitioning financial market contracts and practices from interbank offered rates, or ‘IBORs’, to alternative risk-free rates. This aggregates and summarises existing information published by regulators and various public-/private-sector RFR working groups in order to provide a single point of reference on the work conducted so far to select alternative RFRs and plan for transition.
On 31 January, the final report of the Commission’s High-Level Expert Group on Sustainable Finance (HLEG)
was published setting out strategic recommendations for a financial system that supports sustainable investments. ICMA, which has contributed to the HLEG from the outset, sees the final report as a real step forward in creating a framework for the financing of a sustainable European economy, noting also key recommendations such as those for a European green bond standard with the current draft explicitly referring to the market-based Green Bond Principles
Registrations will open soon for the 2018 Green and Social Bond Principles Annual General Meeting and Conference
, co-organised by ICMA and the Hong Kong Monetary Authority (HKMA) and supported by the Hong Kong Financial Services Development Council (FSDC) which will be held in Hong Kong on 14 June 2018. This is the first time that this event will be held in Asia, signifying the growing influence of Asia in the development of green bonds in particular, and sustainable finance more widely, as well as recognising Hong Kong’s status and importance as an international financial centre.
ICMA study into the European single name credit default swap market
ICMA has published a report on the current state and evolution of the European corporate single name credit default (SN-CDS) market
, focused on its benefits for liquid and efficient corporate bond markets.
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, establishing who are its main users and what benefits and risks are associated with the product. Concentrating on the European corporate SN-CDS market, it looks at where and how liquidity is provided, and the related costs and challenges of the CDS product. ICMA members are invited to find out more at a lunchtime briefing
in London on 2 March.
Repo and collateral
Following dislocation in the repo market at year-end 2016 ICMA published a report on the European repo market at year end 2017
, based on market data and interviews with market participants (sell-side and buy-side) to provide a brief analysis of the way the market performed and the underlying factors that affected it. The 2017 data shows that while there were significant year end effects on repo rates and on liquidity, particularly affecting the ability of the pension and insurance funds to manage their cash and collateral requirements over the year end period, these were markedly less severe than in the previous year.
In February, nineteen individuals
from member firms of ICMA’s European Repo and Collateral Council (ERCC) were elected to the new ICMA European Repo and Collateral Council Committee for a term of one year. The ICMA ERCC Committee is the governing board of the ERCC which is the main industry representative body for repo and collateral markets. The latest election increased representation by the buy-side on the Committee, while Godfried De Vidts remains its Chair.
Asset Management and Investors Council
The AMIC responded
on behalf of ICMA’s buy-side community to the publication of the proposals to review the European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB).
ICMA and AMIC are strong supporters of Capital Markets Union (CMU) and welcome proposals which will help to deliver better functioning capital markets for investors, including in the areas of: (1) enhanced supervisory convergence; (2) inclusion of ESG factors; (3) cost-benefit analyses for guidance and recommendations; (4) improved third country equivalence; and (5) role for ESMA in data collection. Nevertheless, AMIC's view is that these proposals should be revisited if this framework is to be successful in increasing supervisory convergence and addressing the challenge of the UK leaving the EU.
The Spring meeting of AMIC
will be held in Brussels on Tuesday, 6 March, with panels on smart beta, corporate governance, liquidity and other aspects of the AMIC work programme. The afternoon will end with a keynote presentation by Jyrki Katainen, Vice-President for Jobs, Growth, Investment and Competitiveness, European Commission.
Lunchtime briefings in Singapore, 19 March
and Hong Kong, 23 March
, will provide an overview of the main changes that MiFID II/R has brought to European fixed income market structure and operation and highlight the opportunities that are being created for new market entrants and new ways of doing business. They will include an open discussion on the impacts and challenges for Asian fixed income issuers, investors and banks.
In line with the ICMA European Repo survey and in cooperation with ASIFMA we are currently conducting an Asian repo survey, this work builds on the pilot survey last year
and should give a threshold size for the repo market in Asia.
Since 2010, ICMA and the ICMA Centre, together with the National Development Reform Commission Training Centre (NDRCTC), have been providing a Corporate Finance Consultant Certificate in China under the training of Tsinghua University PBC School of Finance and the China Foundation for Development of Financial Education, as well as NDRCTC. The training of corporate finance professionals remains an important factor in the development of the financial markets in China and 900 individuals obtained the certificate in 2017.
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 first quarter of 2018
which was published on 10 January 2018. The Quarterly Report for the second quarter of 2018 will be published in April.
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 Future Leaders (IFL)
Michael Sansen of ING has been elected as the new Chairman of ICMA Future Leaders
, while Davy Djasmadi of Euronext remains as Vice Chairman. IFL’s projects this year include the launch of a quarterly newsletter for the next generation of young professionals in the industry and the formation of an IFL Fintech working group to feed in to ICMA’s work in this area. IFL events are in the pipeline for London, Amsterdam, Paris, Frankfurt, Milan, Zurich and Stockholm.