26 October 2017

The intensity of focus on MiFID II/R is at a very high level, with our committees and working groups striving to clarify the open points with members, law firms and regulators to facilitate implementation of this swathe of new legislation by 3 January 2018. Significant concerns remain, notably that the unbundling of research may cause declining availability of research on SMEs, compromising their access to capital markets and that the proposed product governance regime is likely to curtail further the appetite of issuers to engage with retail bond investors. Both run counter to the objectives of CMU. We are also aware of members’ concerns over difficulties arising from counterparties who have not obtained LEIs, particularly counterparties situated outside the EEA who may still not be fully aware of the MiFID II/R requirements.

We have run an extensive programme of MiFID II/R workshops for members across Europe focused on implementation for fixed income trading, and also in a number of financial centres in Asia, dates for Dublin and Zurich will be announced soon. Members can also seek advice through our Legal & Regulatory helpdesk. More information on implementation issues for primary markets, secondary markets, repo and collateral and asset management can also be found in our Quarterly Report or please contact our specialists directly.

Martin Scheck
Chief Executive ICMA



MiFID II/R implementation in primary markets

In primary markets ICMA continues to work on anticipated approaches, for syndicated cross-border issuance, to the implementation of the MiFID II/R product governance (PG) and PRIIPs regimes ahead of their coming into effect in January 2018.
Other primary market implementation aspects of MiFID II/R include: allocation justification recording, inducements, costs and charges and trade and transaction reporting.

Contact: ruari.ewing@icmagroup.org

MiFID II/R implementation in secondary markets

With MiFID II/R’s deadline looming, many firms are concerned that they may not have the optimal solution implemented on day one that meets both regulatory obligations and their firm’s trading objectives. With this in mind, ICMA has some suggestions for road-testing new regimes and safety nets for new trading workflows to allay fears and assist in preparations for the MiFID II/R implementation date of 3 January 2018. These are based on the many interactive discussions in ICMA’s MiFID II/R Working Group meetings.

Contact: elizabeth.callaghan@icmagroup.org

Legal Entity Identifiers (LEI):
The “Legal Entity Identifier” is a mandatory requirement under MiFID II/R. ESMA published on 9 October a Briefing on the LEI, reiterating to whom the requirements apply and how to obtain an LEI.

Transparency and investor protection:
ESMA provided further guidance on 3 October in the form of Q&A updates with respect to transparency and investor protection. Topics include pre- and post-trade transparency requirements for trading venues and systematic internalisers, publication deferrals, package orders, best execution on OTFs, order record keeping requirements, information on costs and charges, and client categorisation. A briefing note can be found on ICMA’s website.

FIRDS database:
As part of the second phase of the Financial Instrument Reference Database (FIRDS), ESMA has provided on 16 October access to the database containing the currently available reference data that will eventually enable market participants to identify instruments subject to MAR and MiFID II/R reference data reporting requirements. Further instructions can be found on ESMA’s website.

Contact: gabriel.callsen@icmagroup.org

IOSCO consultation:
ICMA’s members have used IOSCO’s consultation on regulatory reporting and public transparency in the secondary corporate bond markets to voice concerns about the imminent implementation of the MIFID II/R pre- and post-trade transparency regime. View the ICMA response.

Contact: andy.hill@icmagroup.org

MiFID II/R implementation in repo and collateral markets

A summary of the implementation issues around securities financing transactions (SFTs) can be found in the ICMA FAQs.

Contact: andy.hill@icmagroup.org

MiFID II/R implementation of research unbundling for asset management

Asset management firms continue preparations for the introduction of research unbundling on 3 January 2018. With no further Q&A expected on research unbundling from ESMA, firms are engaging with research providers to formalise charging structures. Most asset managers have made public announcements about their intention to absorb the costs of research, but some firms are also intending to charge research to clients. AMIC has explored the topic with members on the AMIC Executive Committee. At its previous meeting on 27 September 2017 the Executive Committee empowered the AMIC secretariat to run a survey of AMIC members and ICMA buy-side firms about their intentions on FICC research specifically as current information either relates to equity research or does not differentiate between equity and FICC research. Accordingly, AMIC prepared a set of questions specifically addressing FICC research and how firms are preparing to adapt to paying for FICC research. The survey is now open to all asset management firms to complete and the results will be collated, anonymised and published in time for the AMIC Council Conference on 8 November 2017. The results will eventually also be displayed publicly on the ICMA website. We strongly encourage all asset management firms to participate, as according to our research this is the only survey which focuses on FICC research and the industry's approach to tackling the MiFID II/R rules. Your firm can participate in the survey, open until Friday, 27 October.

Contact: patrik.karlsson@icmagroup.org

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