New members in October
The following firms were admitted to ICMA membership in October 2018.
CBP Quilvest S.A., Luxembourg
Electricite de France SA, Paris
ICAP Securities Limited, London
Industrial and Commercial Bank of China (Europe) S.A., Luxembourg
Lloyds Bank Corporate Markets plc, London
Nasdaq Stockholm AB, Stockholm
SGX Bond Trading Pte. Ltd., Singapore
Swedbank Robur Fonder AB, Sundbyberg
Bringing the total number of ICMA members
to 549 in 62 countries.
On 26 September 2018, ICMA published several updates to the ICMA Primary Market Handbook
and communicated this to ICMA members and ICMA Primary Market Handbook subscribers.
On 28 September, ICMA responded to a UK FCA Call for Input on PRIIPs
. The ICMA response notes that the product scope of the PRIIPs regime has been confusing in practice. It seems to have been interpreted by some as wider than initially expected, eg to include some vanilla bonds. This needs to be rectified given the potential sanctions for PRIIPs availability to EEA retail investors without a KID and the apparent consequential avoidance of retail investors by many borrowers.
On 1 October 2018, ICMA responded
to the ESMA Consultation Paper on Guidelines on risk factors under the Prospectus Regulation, noting that many of the draft guidelines appear to be flexible and proportionate, and the position set out in the consultation paper is a helpful starting point. However, the precise impact of the draft guidelines on issuers will depend on the approach taken by NCAs in applying the guidelines. ICMA also raised several detailed points related to the proposed risk factor guidelines.
ICMA has reviewed denomination data since 2000 for EUR benchmark bond issues
which shows a continuing decline tin the volume of low denomination new issues available to retail investors, accentuated by the PRIIPs and MiFID II product governance regimes.
Nearly a year on from the implementation date, ICMA is running a series of workshops on the challenges the fixed income market has experienced when implementing MiFID II and what still needs to be adjusted in order for the market to benefit fully from its provisions, including enhanced transparency, data analysis, research availability and best execution. These sessions will also look at how MiFID II has become a catalyst for change in the evolution of electronic bond trading across Europe.
Designed for bond trading participants who are heavily focused on transparency, best execution and the research obligations of MiFID II/R, as well as the newly emerging trends in market structure, the first of these will take place in Brussels on 20 November
and Madrid on the 12th
CSDR and mandatory buy-ins
While the Central Securities Depository Regulation (CSDR) deals mainly with the regulation of Europe’s settlement systems, it contains a section on ‘settlement discipline’, which includes measures to improve settlement efficiency, such as cash penalties for fails. Among these is the provision for mandatory buy-ins. We have been looking in detail at the new mandatory buy-in regime,
outlining its scope and regulatory requirements. It differs in a number of essential features from existing buy-in rule practice, notably ICMA’s own long-established buy-in rules relied on by our global membership. It has the potential to create additional market risks and economic uncertainties for bond market participants, both buyers and sellers, as well as intermediaries and lenders of securities. It also unintentionally creates adverse behavioural incentives for market participants.
ICMA published the latest in a series of papers
in October looking at the effects of mandatory-buy-ins on the securities financing transactions.
Our recent webinar
gives an overview of the CSDR mandatory buy-in provisions and contrasts these with more conventional processes, including ICMA’s own rules.
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.
Repo and collateral
The European Repo and Collateral Council (ERCC) released the results of its 35th semi-annual survey of the European repo market
. The survey, which calculates the amount of repo business outstanding on 6 June 2018, from the returns of 62 offices of 59 financial groups, sets the baseline figure for European market size at EUR 7,351 billion up from EUR 7,250 billion in the December 2017 survey. Year on year this represents an increase of 13.9% since the June 2017 survey.
The next survey will take place on 6 December 2018, to participate download the survey forms
The October ERCC General Meeting took place in Bloomberg’s award-winning new building in London, over 150 attendees from the European repo market heard the latest updates on SFTR from representatives of ESMA and others, the presentations are available to view online
ICMA has published a GMRA legal opinion for Mauritius
bringing the number of jurisdictions covered to 67.
The Quarterly Newsletter for Green, Social and Sustainability Bonds
updating statistics on market size and summarising recent developments in this sector was issued in October.
We have made some improvements to the Green, Social and Sustainability Bonds database
on our website, which lists the issuers who have publicly disclosed their external review reports, or who have completed the relevant templates or forms, in accordance with the recommendations of the Principles. At the end of October nearly 300 issuers were listed in the database and users can now easily research green, social or sustainability bond issuers by selecting a category, a country or an external review provider.
Registrations are open for
the Annual ICMA and JSDA Joint Conference: Developments in Green and Social Bond Markets – The Asian Perspective
, in Tokyo on 11 December.
Featured speakers include:
SAVE THE DATE: 2019 Green Bond Principles and Social Bond Principles Annual General Meeting and Conference
- Masamichi Kono, Deputy Secretary-General, OECD
- Jun Ohta, Director, Deputy President and Executive Officer,
- (Representative Executive Officer) Group CFO and Group CSO, SMFG
- Akira Kiyota, Director & Representative Executive Officer, Group CEO, Japan Exchange Group, Inc.
, Frankfurt, 13 June 2019
We have recently run successful green bond training courses in London, Singapore and Kuala Lumpur, the next Introduction to Green Bonds Training Course
will take place in London on 11-12 February.
Asset Management and Investors Council
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.
The results of the second AMIC FICC Research Unbundling Survey will be discussed at the conference.
The rise of FinTech has sparked increasing interest from financial regulators. Applications of distributed ledger technology, machine learning, big data analytics or cloud computing have significant potential to alter business models and impact the functioning of financial markets. In response, financial regulators have adopted different approaches to address FinTech and innovation in their respective jurisdictions.
ICMA published a summary of financial regulators’ approaches to FinTech
, identifying examples in the cross-border debt capital markets, and aiming to provide a sense of the direction of travel. The paper is based on publicly available information and covers selected regulatory initiatives across 26 jurisdictions within Europe, Asia and North America.
This complements our other work in this area, including our overview of selected practical examples
of FinTech applied in fixed income primary, secondary, repo and collateral markets, bringing together information on the latest developments.
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 Fourth Quarter 2018 was published on 11 October 2018. The first Quarterly Report of 2019 will be published in January.
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.