In light of ongoing international health concerns with respect to the Coronavirus (COVID-19) and in the interest of maintaining the health of our members, delegates and staff, we have made the decision to postpone the ICMA Asset Management and Investors Council (AMIC) Conference that was scheduled to take place on March 11 in Paris. New date for this conference will be announced in due course.
ICMA has issued the third in its series of studies into the state and evolution of the European investment grade corporate bond secondary market. Based on quantitative market data, stakeholders surveys, as well as in interviews with market participants, the study looks at the current state of market liquidity; the evolution of market structure; and participants’ expectations for future developments in the market. The study concludes that secondary market liquidity conditions remain challenged, and have deteriorated since 2016.
ICMA has published FAQs on CSDR mandatory buy-ins and Securities Financing Transactions. The FAQs are intended to outline considerations and, where possible, to provide clarity with respect to the application of CSDR buy-ins in the case of repos and other SFTs. The FAQs will be updated in light of new guidance from ESMA and agreed market best practice.
The next AMIC Executive Committee meeting will take place in Paris on 11 March, kindly hosted by BNP Paribas Asset Management in parallel with conference call participation hosted by ICMA in the London office. The meeting will feature a discussion on the MIFID II/R review and updates from the work done by the various AMIC working groups on fund liquidity, cyber-security, sustainable finance and the primary market investor, syndicate and issuer roundtable.
ICMA Asset Management and Investors Council (AMIC) Regulatory Update
3 March 2020 ESMA publishes translations for guidelines on MMF stress tests
The European Securities and Markets Authority (ESMA) has published translations for guidelines on MMF Regulation.
National Competent Authorities (NCAs) to which these Guidelines apply must notify ESMA whether they comply or intend to comply with the Guidelines, within two months of the date of publication by ESMA of the Guidelines in all EU official languages.
5 March 2020 Speech by Mark Carney (BoE) on the grand unifying theory (and practice) of macroprudential policy
Speech by Mark Carney, Governor of the Bank of England (BoE), on how macroprudential policy can be used to protect financial stability. He also compares macroprudential policy with monetary policy.
He reiterated the BoE's concerns regarding liquidity mismatches and first-mover advantage in open-ended funds investing in potentially illiquid assets and recommended the application of pricing tool, notice period or a combination of both that reflects the liquidity of their underlying assets. He announced that the BoE will publish in July in its Financial Stability Report an analysis on the implementation of these tools.
6 March 2020 FCA announces proposals to improve climate-related disclosure by listed companies
The Financial Conduct Authority (FCA) has published proposals outlining new climate-related disclosure requirements for premium listed issuers.
The new rule will require all commercial companies with a premium listing to either make climate related disclosures consistent with the approach set out by the Taskforce on Climate-related Financial Disclosures (TCFD)or explain why not. The FCA will consider consulting on extending this rule to a wider scope of issuers.
The proposals set out in the Consultation Paper build upon the recommendations of the TCFD, an existing global standard.
28 February 2020 FCA publishes their feedback statement which summarise responses from DP18/10
The Financial Conduct Authority (FCA) has published their feedback statement which summarise responses from DP18/10.
This Feedback Statement summarises responses from DP18/10 on whether there are unnecessary barriers to investing in patient capital through authorised funds. The FCA discuss the feedback as well as a proposal from the Investment Association for a new type of fund.
28 February 2020 Speech by Nisha Arora (FCA) on their approach to ensuring firms treat vulnerable customers fairly
Speech by Nisha Arora, Director Consumer and Retail Policy at the Financial Conduct Authority (FCA), talked about their approach to ensuring firms treat vulnerable customers fairly.
The highlights of the speech are:
- Speech to TISA vulnerability conference outlined our forthcoming Guidance, which seeks to give firms greater clarity and explain what, under our Principles for Businesses, firms need to do to ensure that vulnerable consumers are treated fairly and consistently across financial services sectors;
- We want to see the Guidance embedded in firms’ culture, processes and practices. Our supervisors will be supporting firms to do this and will want to see them demonstrating how they are complying with our Principles in respect of the treatment of vulnerable consumers;
- Our aim with the Guidance is to change the discourse from whether the right boxes have been ticked to achieve compliance, to firms stepping back to ask what their vulnerable customer’s needs are, and how they are then responding to deliver good outcomes; and
- We will consult on our revised Guidance in Spring this year with a view to finalising it later in the year.
28 February 2020 FCA publishes the number of STORs received in 2019
The Financial Conduct Authority (FCA) has published their suspicious transaction and order reports (STORs) figures for the year ending 2019.
The 2019 figures also show the number of commodity and fixed income STORs have continued to rise. This reflects steps taken by firms to improve their detection capabilities and we encourage firms to continue developing surveillance capabilities in this area. The overall quality of STORs continues to improve every year.
2 March 2020 ESMA advises Commission on C6 energy derivatives for EMIR
The European Securities and Markets Authority (ESMA) has issued a report on C6 energy derivatives and related obligations under the European Market Infrastructure Regulation (EMIR).
The report assesses the adequacy of mandating C6 energy derivative contracts, which currently benefit from a special exemption regime, subject to the clearing obligation and margin requirements of EMIR. ESMA also analysed the potential impact of including these contracts in the calculation to determine which counterparties are subject to clearing.
3 March 2020 Keynote speech by Steven Maijoor at 4th Annual Fintech Conference
Keynote speech by Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA), at the 4th Annual Fintech Conference in Brussels.
In his speech, Mr Maijoor focused on, amongst other issues, BigTech financial services: trends and potential growth, the benefits and risks of BigTech in finance, distributed ledger technology (DLT), global stablecoins and the need for a coordinated approach amongst regulators.
3 March 2020 The Commission publishes their Annual European EFSIR
The 2020 edition of the Commission's Annual European Financial Stability and Integration Review (EFSIR) examined recent economic and financial developments and their impact on financial stability and integration in the EU. In addition to financial sector developments, this year's review combines different perspectives on the various structural changes that are taking place in Europe's financial system.
The focus this year is on the banking sector and, in particular, on three main challenges it faces: increased investments in certain assets (such as R&D, computer software and databases), the emergence of cryptocurrencies, and progress in relation to cross-border banking. Overall, while financial stability risks have slightly increased over the past year, price integration has decreased in equity markets and stalled in bank markets. This is a strong signal illustrating the importance of continuing efforts to advance both CMU and Banking Union.
3 March 2020 ECB publishes report on Financial Integration and Structures in the Euro Area
The European Central Bank (ECB) has published a report on Financial Integration and Structures in the Euro Area.
According to the new report, the financial structure of the euro area continues to be dominated by non-marketable instruments, despite an increase in financial integration in 2019. Given that overall financial integration has not yet reached a satisfactory level and that euro area households, firms and governments would benefit from broader and deeper capital markets, the ECB expresses strong support for recent initiatives to advance with the EU’s CMU project. The size of the euro area financial system has remained broadly unchanged in recent years but the strong dominance of banks has been on the decline since the early 2000s, which has been more than offset by a rise in the importance of non-money market investment funds and other financial institutions. The last decade also saw rapid growth in FinTech entities, but most of the 2,800 FinTech firms in the euro area are locally owned.
Together with this new ECB report there are three special features:
- (a) implications of Brexit for the EU financial landscape;
- (b) how could a common safe asset contribute to financial stability and financial integration in the banking union?; and
- (c) is the home bias biased? New evidence from the investment fund sector.
The planned opening keynote of Luis de Guindos, ECB Vice-President, CMU: The Role of Equity Markets and Sustainable Finance, was also published.
2 March 2020 ESMA seeks experts in corporate finance to join its industry advisory group
The European Securities and Markets Authority (ESMA) has published an open call for candidates for industry experts in corporate finance.
The two-year term of the current Consultative Working Group (CWG) for the Corporate Finance Standing Committee (CFSC) will expire shortly. Therefore, ESMA is launching the process to renew the composition of the CFSC CWG.
Upcoming ICMA Courses
Financial Markets Foundation Qualification – Online course, 1 April
Fixed Income Certificate (FIC) – Online course, 1 April
Fixed Income Certificate (FIC) Amsterdam, 18-22 May
Fixed Income Portfolio Management & Construction London, 27-29 May
Financial Markets Foundation Qualification (FMFQ) London, 3-5 June
Securitisation: An Introduction London, 16-17 September