ICMA Secondary Markets Update
 


ICMA Secondary Markets Update for Asia Pacific – July 2020


Mandatory buy-ins
ICMA Bond Market Transparency Directory
ICMA FinTech Mapping Directory
Panel discussion with official sector on transition to risk-free rates
Recent ICMA Podcast episodes
Regulatory updates
Relevant publications and news items

 

 


Mandatory buy-ins

ICMA will host a virtual event on CSDR Settlement Discipline – Implications for trading and documentation in Asia-Pacific, on Thursday, 23 July at 16:00 HKT/SGT. For more information on the event and registration, please refer to this webpage.

The ICMA CSDR Settlement Discipline Working Group remains focused on implementation challenges of the mandatory buy-in regime with respect to cash bond and repo markets. The solutions and best practices being agreed by the Working Group will be incorporated into the ICMA Buy-in Rules which are being updated to create a contractual framework and market best practice to support implementation of and compliance with the new regulatory requirements (which come into force on 1 February 2021). The ICMA Buy-in Rules (part of ICMA's Secondary Market Rules & Recommendations), apply automatically between members, and are usually incorporated into firms’ terms of business (members and non-members) by reference.
 
On 16 June, following a request from the European Commission, ESMA launched a review of CSDR. ESMA is looking to garner information from national competent authorities (NCAs), relevant authorities (RAs), the EBA, and a limited number of relevant trade associations (including ICMA). The Survey covers all of CSDR, but importantly includes Article 7 (Settlement Discipline). This provides an opportunity for ICMA, on behalf of its members, to submit suggested amendments to the original regulation, along with justification, including evidence and data. The deadline for responses is July 10

Please contact Andy Hill if you or your firm would like to be engaged in this important initiative.


ICMA expands scope of Bond Market Transparency Directory
 
ICMA has expanded its Bond Market Transparency Directory to include pre-trade reporting obligations, in addition to post-trade obligations across multiple global jurisdictions including Australia, China, Hong Kong, Korea, Indonesia, Japan, Malaysia, Philippines, Singapore, and Thailand. The purpose of the mapping is to provide a consolidated view to compare both regulatory rules and best practice guidance on bond trade reporting transparency regimes, as well as details on reporting fields and exceptions.

This is a non-exhaustive overview and is intended to be a living document with periodic reviews. Please contact us for further details and see also Bond market post-trade transparency regimes from the ICMA Quarterly Report Second Quarter 2020.
 

ICMA publishes updated FinTech Mapping Directory
 

ICMA has updated its mapping directory of technology solutions for repo and cash bond operations. The directory now lists a total of over 160 solutions, compared to 130 solutions last year and 87 solutions when it was first launched in November 2017. It is divided into 10 categories comprising collateral management, corporate actions, exposure agreement, intraday liquidity monitoring and reporting, matching, confirmation & allocation, reconciliations but also ancillary areas such as static data and SSI, workflow and communication and KYC onboarding.  
 
The majority of new solutions originate from known providers extending their services across other market segments. The review shows an increased focus on matching, confirmation & allocation, collateral lifecycle management, and exposure agreements and reconciliation services. Ancillary categories such as workflow & communication have also seen an increase in diverse tools to manage operational and legal processes. The directory is available here.
 
The mapping directory does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the mapping directory and wish to join are very welcome to do so. Please contact us for further details.

ICMA held an official sector panel discussion on transition to risk-free rates

This ICMA webinar recorded on June 25 presents a unique opportunity to hear from the European Central Bank, the European Investment Bank, the Financial Conduct Authority, the Federal Reserve Bank of New York and the Swiss National Bank about progress on the transition away from LIBOR and other IBORs and towards risk-free reference rates, with a focus on the international bond market.

The official sector panellists discuss three main issues during the panel: first, progress on the transition to risk-free rates so far, despite the market impact of the coronavirus pandemic; second, remaining challenges to complete implementation of the transition in time, including legacy issues; and third, the importance of international coordination, how this works and what it involves.

The webinar can be viewed on demand here.

 

 

 

ICMA Podcast episodes
 

Japan’s first COVID-19 bond
COVID-19: impact and outlook for covered bonds
COVID-19 crisis - the view from UBS
The IIX women’s livelihood bond
Electronic trading, performance during the crisis and future developments
Accessing the Indian capital market
Islamic finance: its history, products, and role in the international capital market
The European IG bond market in the COVID-19 crisis
Navigating through the crisis, an Allianz GI perspective
China's new securities law: an offshore perspective
Bond market post-trade transparency and the consolidated tape – recording of ICMA virtual event (23 June 2020)
Capital market insights - an emerging market perspective

 

 

 

Regulatory updates

 
1 July PBOC, NDRC and CSRC jointly published the Notice on Issues Concerning Disposal of Defaults on Corporate Credit Bonds (in Chinese). The answers of PBOC officials to press questions on the Notice is available here (in English).
 
1 July FSB statement on the impact of COVID-19 on global benchmark reform
 
29 June PBOC, HKMA, and the Monetary Authority of Macao made a joint announcement on the launch of the Cross-boundary Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area.
 
24 June PBOC published the Administrative Measures for Standardised Bills (in Chinese).
 
24 June FSC Korea changed rules on liquid asset requirements for repo transactions.
 
23 June UK Treasury published Written Ministerial Statement outlining a number of areas where the UK is looking to tailor the application of EU financial regulation. Of note, the UK has stated that it will not implement the EU CSDR-SD regime from February 2021.
 
15 June ESMA published 2019 Annual Report and updated 2020 Annual Work Programme
 
11 June ESMA published statement on MiFIR open access and COVID-19
 
9 June ESMA extended deadline for responses to consultation on EMIR REFIT
 
8 June MiFID II: ESMA issued latest Double Volume Cap data
 
5 June ESMA provided guidance on the compliance function under MiFID II

 

 

 

Relevant publications and news items


July 2020
Corporate credit markets after the initial pandemic shock, BIS Bulletin No.26, July 2020
Recent Issues in Capital Flows - Trends in Capital Inflows to Japan & Asia and Challenges Ahead, Bank of Japan Review, July 2020
FIA and ISDA position paper on the CSDR settlement discipline regime, July 2020

June 2020
Asia Bond Monitor, ADB, June 2020. Articles by ICMA on page 6-7: COVID-19 - Impact on Capital Markets; page 39-40: Social Bonds and the COVID-19 Crisis
Liquidity Indicators in the JGB Markets (May), Bank of Japan, June 2020
Minutes of the Eleventh Round of the "Bond Market Group" Meetings (June 5, 2020), Bank of Japan
Developments in Overseas Credit Investment and Lending by Japanese Financial Institutions: An Overview Based on the Joint Survey by the Bank of Japan and the Financial Services Agency, Bank of Japan and Financial Services Agency
The Impact of COVID-19 and Government Intervention on Swaps Market Liquidity, ISDA, Q2 2020
On the inflation risks embedded in sovereign bond yields, ECB, June 2020
Financial stress and the debt structure, Staff Working Paper No. 875, Bank of England
The fiscal response to the Covid-19 crisis in advanced and emerging market economies, BIS Bulletin No. 23, June 2020
OECD Economic Outlook, June 2020
Central banks’ response to Covid-19 in advanced economies, BIS Bulletin No.21, June 2020
The People’s Bank of China’s response to the coronavirus pandemic – A quantitative assessment, BOFIT, June 2020
Asia's US dollar bond market: A new asset class, Invesco, June 2020
Central bank bond purchases in emerging market economies, BIS Bulletin No.20, June 2020
 
May 2020
Quantitative Easing, Investment, and Safe Assets: The Corporate-Bond Lending Channel, Giambona et al, May 2020
 

 

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