ICMA Secondary Markets Update

ICMA Secondary & Repo Markets Update for Asia Pacific - 20 August 2021

ICMA market and regulatory practice initiatives

Regulatory updates
Relevant publications and news items
ICMA events, meetings and podcast episodes
ICMA Education: upcoming courses


ICMA market and regulatory practice initiatives

Mandatory buy-ins
Industry awaits guidance on mandatory buy-in implementation: It is widely hoped that the EU’s mandatory buy-in (MBI) regime, part of the CSDR Settlement Discipline (SD) provisions, will not come into force, as scheduled, in February 2022. Rather, the MBI framework will be subject to a rigorous review and rethink, while the effects of the other pillars of SD, including cash penalties, are assessed. It is further hoped that this will be communicated to the market well ahead of the rapidly approaching go-live date. In recent weeks ICMA has been meeting with various regulators and policy makers to press home the industry’s concerns about the MBI regime, which include an absence of legal clarification on a number of critical implementation issues, some significant design flaws, as well as the widely expected negative impacts on bond and repo market liquidity. ICMA has also shared widely a briefing note outlining these concerns 

In the meantime, ICMA is coordinating with other trade associations on how to progress contractual solutions (covering both repo and cash bonds) for day one compliance, whilst waiting for clarification on the regulatory implementation schedule. 

ICMA CSDR-SD technology directory (focused on cash penalties solutions for repos and cash bonds)
Article 7 of Chapter III in CSD Regulation (EU) No 909/201 (CSDR) provides for measures to address settlement fails, which include cash penalties for settlement fails and mandatory buy-ins. To assist market participants prepare for CSDR implementation, ICMA has gathered technology solutions aimed at managing the requirements under CSDR Settlement Discipline. The initial focus of ICMA’s CSDR-SD technology directory is toward those solutions assisting firms in the management of cash penalties. This is intended to provide a consolidated overview on the functionalities of market solutions, such as calculation, aggregation, reconciliation, invoicing, reporting, and appeals or claims management processes. The directory also lists supported connectivity and additional services offered by providers.

The scope of the mapping may be further expanded to include solutions to facilitate the management of buy-ins, depending on regulatory developments.

Download the CSDR-SD Technology Directory here

AMCC Bond Market Liquidity Working Party
In March 2021, the IOSCO Affiliate Members Consultative Committee (AMCC) issued a call for interest in a Bond Market Liquidity Working Party. The objective of the BML WP is to support the work currently being undertaken by the IOSCO Financial Stability Engagement Group (FSEG) on how corporate bond markets, globally, performed during the Covid-19 related market turmoil of early 2020. The WP consists of a number of national and international associations and is chaired by ICMA. In May, the WP provided the IOSCO FSEG working group with a compendium of research to support the first phase of its work, which is a diagnostic analysis of how markets performed at that time. The WP is currently discussing how it can support the second phase of this work, which is a more qualitative assessment of corporate bond market micro-structures and the behavioural drivers of different stakeholders.

Common Domain Model (CDM) for repo and bonds 

The CDM provides a single, common digital representation of trade events and actions across the lifecycle of repo and bonds, securities lending and derivatives, intended to promote standardisation and facilitate interoperability across firms and platforms. 

On 21 July 2021, ICMA held a virtual event providing a round-up of its CDM project for repo and bonds, including demonstrations of the CDM in action, as well as a panel discussion with members of ICMA’s CDM Steering Committee on key take-ways from the project, the path to implementation and next steps. The recording of the CDM event (1h:25) is available here. Individual CDM demonstrations from the event can also be found here:
An introduction to Rosetta by REGnosys (5 mins)
CDM in action – execution, clearing and settlement of a repo transaction by FINXIS LLC (8 mins)
Download the presentations by ICMA’s Gabriel Callsen and REGnosys.

SFTR implementation

ESMA publishes updated Level 3 guidance: On 29 July, ESMA published a set of long-awaited updates to the SFTR level 3 guidance documents, including an updated version of the EU SFTR validation rules as well as updated XML reporting schemas. The documents are available on ESMA’s SFTR webpage, along with the full list of published implementation guidance. The updated validation rules are due to apply from 31 January 2022. ICMA has reviewed the changes and circulated a summary analysis to the ERCC’s SFTR Task Force. The updates have also been incorporated in the latest internal version of the ICMA SFTR recommendations

ERCC Operations

Settlement efficiency: The ERCC’s targeted work with members to support and improve settlement efficiency across the market continues. The initiative was launched earlier this year, as part of the industry effort to prepare for CSDR settlement discipline and has gained good momentum since then. A particular objective is to better understand and encourage the use of post-trade tools which are available to help reduce settlement fails and mitigate their impact. The ERCC is currently running focused workshops to discuss such tools and specific related recommendations. A first workshop was held in May focusing on partial settlement and auto-partialling. This was followed by a second workshop in July to discuss the shaping of settlement instructions and assess whether this could be applied on an automated basis in Europe. Finally, a third workshop is scheduled for 10 September and will look into (auto-)borrowing services offered by ICSDs and custodians and the scope for related improvements. A number of follow-up discussions are already under way, including with the relevant market infrastructures and other stakeholders, industry bodies and the ECB. Concrete conclusions and next steps will be communicated in autumn once the workshop series has been concluded. 

Repo & sustainability
ERCC report summarising the consultation feedback: ICMA has reviewed all the feedback received in response to the ERCC consultation paper on the role of repo in green and sustainable finance and drafted a summary report which assesses all the responses, highlighting the key themes for each of the questions and setting out some proposed next steps for ICMA. The draft summary report has been circulated to the relevant ERCC Committees and working groups for review before publication in early September.


Regulatory updates


17 August 2021: SEBI issued a circular, introducing a penalty for repeated delivery default.

16 August 2021: SEC Philippines published the Rules on Authorisation of an Investment Company as a Qualifying Collective Investment Schemes (CIS) and Recognition of a Foreign CIS Under the ASEAN CIS Framework.

13 August 2021: SEBI announced that it will develop a platform for ‘Security and Covenant Monitoring System’ using DLT.

11 August 2021: PBOC announced that it has decided to pilot the repeal of requirements on credit rating for debt financing instruments issued by non-financial enterprises in the interbank market.

11 August 2021: NAFMII issued a notice requiring lead underwriters to report quarterly and annually on their quotations for bond underwriting services. 

10 August 2021: SFC issued consultation conclusions on proposals to introduce investor identification regime for the securities market in Hong Kong (“HKIDR”) and to require reporting of OTC securities transactions. Bonds which constitute “securities” under the Securities and Futures Ordinance, listed or traded on the Stock Exchange of Hong Kong’s trading system are subject to HKIDR.

10 August 2021: SEBI consolidated existing circulars into a single operational circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper.

6 August 2021: PBOC, NDRC, MOF, CBIRC, and CSRC published a notice setting out requirements for credit rating agencies to strengthen their rating methodologies and systems, improve corporate governance and internal control mechanisms, and strengthen information disclosure.

5 August 2021: SEC Philippines published requirements for participation in the government securities repo market.

4 August 2021: Thai SEC issued a draft regulation on registration for authentication under the Bond Investor Registration program. The regulation is expected to come into effect on 4 January 2022.

30 July 2021: ESMA published data for systematic internaliser calculations.

30 July 2021: ESMA made available the first consolidated tape provider data.

29 July 2021: SEBI’s Board approved the proposal to introduce a framework for ‘Accredited Investors’ in the Indian securities market and the proposal to amend the SEBI (Foreign Portfolio Investors) Regulations, 2019 to permit eligible Resident Indian Fund Managers (other than individuals) to be constituents of Foreign Portfolio Investors (FPIs).

28 July 2021: ESMA published the MiFID II/MiFIR Annual Review Report on RTS 2.

23 July 2021: ESMA published the MiFID II/MiFIR Annual Report 2021.

20 July 2021: SEBI issued the framework for segregation and monitoring of collateral at client level.

16 July 2021: ESMA published its third report on CSDR implementation.

9 July 2021: ESMA launched a consultation on the review of transparency requirements under MiFIR.

9 July 2021: PBOC published a consultation draft of the Administrative Measures for Bond Lending in the Interbank Bond Market.

8 July 2021: RBI issued a notification to banks and financial institutions on the timeline of LIBOR and MIFOR transition.

1 July 2021: SC Malaysia announced several amendments to the Capital Markets and Services Act 2007, which came into force on 1 July 2021. The amendments have widened the categories of sophisticated investors.

1 July 2021: The Basel Committee published two technical amendments to the minimum haircut floors for securities financing transactions. The amendments consist of: (i) rewording the restrictions on collateral re-use in the case of collateral upgrade transactions (CRE56.5); and (ii) amending the formula for SFT netting sets (CRE56.10).

1 July 2021: The European Commission published a report on CSDR.

25 June 2021: Bank Indonesia announced that it is enhancing monetary policy transmission effectiveness by fast-tracking the development of repo and Domestic Non-Deliverable Forward (DNDF) transactions. A Multi-matching Electronic Trading Platform, with a central counterparty providing clearing services to be implemented by the end of 2021, will facilitate repo and DNDF transactions.



Relevant publications and news items

ICMA Briefing Note on ECB bi-monthly PEPP data (June-July 2021), ICMA, August 2021
The role of government for the non-financial corporate sector during the COVID-19 crisis, ECB Economic Bulletin Issue 5, August 2021
Basic Figures on Fails (July 2021), Bank of Japan
Collateral Accepted by the Bank of Japan (End of July 2021), Bank of Japan
Basic Figures on Fails (June 2021), Bank of Japan
Statistics on Securities Financing Transactions in Japan (June 2021), Bank of Japan
Liquidity Indicators in the JGB Markets (May 2021), Bank of Japan
Recent Corporate Bond Market Conditions, Monetary Policy Report June 2021 (pp. 46-50), Bank of Korea
Survey on credit terms and conditions in euro-denominated securities financing and over-thecounter derivatives markets (SESFOD), Q2 (April-June 2021), ECB, July 2021
Macroeconomic impact of Basel III finalisation on the euro area, ECB Macroprudential Bulleting, Article No. 14., July 2021
Dash for dollars, Bank of England, Staff Working Paper No. 932, July 2021
Fiscal and monetary policy interactions in a low interest rate world, BIS Working Papers No 954, July 2021
Digital euro experimentation scope and key learnings, ECB, July 2021
U.S. Dollar Currency Premium in Corporate Bonds, IMF Working Paper No. 2021/185, July 2021
Hedge Fund Treasury Trading and Funding Fragility: Evidence from the COVID-19 Crisis, Kruttlie, S.M., et al., Federal Reserve, June 2021
Lending Standards and Borrowing Premia in Unsecured Credit Markets, Dempsey, K, and Ionescu, F, Federal Reserve, June 2021
Help For Europe: A Brand New Funding Plan, Grant, J, BNY Mellon, June 2021
Combining negative rates, forward guidance and asset purchases: identification and impacts of the ECB’s unconventional policies, Rostagno, M, et al., ECB Working Paper Series, No 2564 / June 2021
The COVID-19 Crisis and the Federal Reserve’s Policy Response, Clarida, R.H., et al., Federal Reserve, June 2021
Euro Area Sovereign Bond Risk Premia During the COVID-19 pandemic, Corradin, S, et al., ECB Working Paper Series, No 2561 / May 2021
The Internal Capital Markets of Global Dealer Banks, Gupta, A, Federal Reserve, April 2021


ICMA events, meetings and podcast episodes


Third meeting of 2021 of the ICMA Secondary Market Practices Committee
15 September, 3pm-4.30pm CEST (invitation only)

Green, Social and Sustainability Sukuk for Shaping the Post-COVID Recovery in IsDB Member Countries 
25 August 2021, 6pm-7:30pm HKT / 1pm-2:30pm KSA time

ERCC Professional Repo Market and Collateral Management Workshop 2021
27, 28 September; 4, 5 October 2021, 16.00-20.00 HKT/SGT
After a break in 2020, this year ICMA will again hold its annual Professional Repo and Collateral Management Workshop, the repo industry’s principal educational forum.

Missed an ICMA event? Watch the recording


ICMA podcast      

ICMA线上简介答疑研讨会:《绿色债券原则》2021年的重要更新 (ICMA briefing in Chinese - the 2021 update to the GBP)

ICMA podcast  

Common Domain Model (CDM) for repo and bonds
21 July 2021 This virtual event provided an introduction to the CDM project for repo and bonds and a demonstration of the CDM in action, providing a roundup of ICMA’s recent work, in collaboration with ISDA, ISLA, and REGnosys, to extend the Common Domain Model (CDM) to include repo and, by extension, outright bond transactions.

ICMA podcast  

DCM primary market practices in Asia-Pacific: an ICMA conversation
19 July 2021 ICMA Chief Representative for Asia-Pacific Mushtaq Kapasi speaks to Leland Goss, ICMA General Counsel, and Ruari Ewing, Secretary to the ICMA Primary Market Practices Committee about DCM syndication practices in the Asian international markets.


Sustainable sukuk
ICMA’s Mushtaq Kapasi speaks with Zalina Shamsudin, General Manager, Capital Markets Malaysia, about green and social sukuk in the context of the global sustainable and Islamic capital markets. The discussion covers how Islamic finance principles interact with conventional sustainable finance, the investor base for green sukuk, and Malaysia’s efforts to grow the market and facilitate further positive investment in south-east Asia.


Monthly Market update: ICMA Asset Management & Investors Council (27 July 2021)
Robert Parker, Chair of ICMA’s Asset Management and Investors Council, reviews the market events of the past weeks, including the Chinese equities sell-off, the pause in the reflation trade, and the ECB policy guidance.


Secondary corporate bond markets in the US and Europe
ICMA’s Liz Callaghan discusses trends in corporate bond markets in the USA and in Europe with BondCliq CEO Chris White and Gabriele Frediani who heads business development for Bondcliq in Europe,  highlighting similarities and the differences between the two markets. They also reflect on the need for a balanced approach for pre-trade transparency and data ownership and the lessons learned from Covid regarding market mechanics.


An insight into the Kuwaiti debt capital market
Martin Scheck, ICMA Chief Executive talks to Abdulkarim Al-Yaqout,  Head Of Product Development at Kuwait Clearing Company (KCC) about the Kuwaiti debt capital market, its characteristics, main developments as well as its ambitions in ESG and fintech. Abdulkarim also discusses the role of KCC, their medium term strategy and the measures needed to develop further international involvement in the local market.


Euronext in the European fixed income space
Chris Topple, Euronext London CEO, talks to ICMA’s Martin Scheck about changes in European fixed income markets post MiFID II and how Euronext has scaled up its fixed income capabilities through recent acquisitions including Borsa Italiana to meet market structure challenges. They discuss the electronification of fixed income markets, the future of fixed income trading and improving post trade efficiency.


Asia international bond markets – a conversation with Christophe Roupie of MarketAxess
Andy Hill, Head of Secondary Markets at ICMA, speaks with Christophe Roupie, Head of EMEA and APAC at MarketAxess, about recent and ongoing developments in the Asia international bond markets. Christophe shares his observations and insights on a number of aspects, including the internationalization of local markets, the growing predominance of China, the rapid adoption of e-trading and automation across the region, as well as the potential for further transformation of market structure in the near future.      




ICMA Education: upcoming courses

ICMA’s courses are eligible for Hong Kong SFC CPT hours. For an overview of the full suite of ICMA Education courses, available online in livestreamed or self-study format, please check our website.

ICMA Education upcoming livestreamed repo and collateral courses
Credit Derivatives 7, 8, 14, and 15 October, 16.00-19.30 HKT/SGT
Collateral Management 21, 22, 28 and 29 October, 16.00-19.30 HKT/SGT
Introduction to Repo, 3, 4, 10 and 11 November, 17.00-20.30 HKT/SGT
Securities Lending, 22, 23, 29 and 30 November, 17.00-20.30 HKT/SGT

ICMA Education online self-study
Complete an ICMA Education online self-study course and gain an accredited qualification. You can choose to study at any time throughout the year, with cohorts starting on the first of each month:
Financial Markets Foundation Qualification (FMFQ)
Introduction to Primary Markets Qualification (IPMQ)
Introduction to Bond Markets Qualification (IBMQ)
Securities Operations Foundation Qualification (SOFQ)
Introduction to Green, Social & Sustainability (GSS) Bonds
Fixed Income Certificate (FIC)
Coming soon! Collateral Management


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