ICMA Secondary Markets Update
 


ICMA Secondary Markets Update for Asia Pacific – August 2020


Mandatory buy-ins
Joint association letter on digital future for financial markets
Regulatory updates
Relevant publications and news items
Recent ICMA webinars and podcasts
Meetings and events

 
 


Mandatory buy-ins

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 are expected to come into force on 1 February 2022). The ICMA Buy-in Rules (part of ICMA's Secondary Market Rules & Recommendations), apply between members, and are usually incorporated into firms’ terms of business (members and non-members) by reference. ESMA updated the CSDR Q&As on 8 July.

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


Joint association letter on digital future for financial markets
 
ICMA, along with ISDA, ISLA, LBMA, UK Finance, Association of German Banks (BdB), AFMA and International Islamic Financial Market, have jointly submitted a letter to policy-makers asserting their commitment to defining and promoting the development of a digital future for financial markets. The letter sets out a series of principles and objectives across three core areas – standardization, digitization and distribution – in order to increase efficiencies, reduce complexity and lower costs.

You can access the letter here.

 

 

 

Regulatory updates

 
5 August The ECB has published its second bi-monthly breakdown of holdings under its Pandemic Emergency Purchase Programme (PEPP), covering the period from June through end-of-July 2020. ICMA has consolidated the data into a short briefing note.
 
31 July The Supreme People’s Court of China released regulation to facilitate collective proceedings for securities disputes and protect investors' interests (in Chinese). The regulation specified the litigation rules and procedures for the trial of a case where an ordinary or special representative action is applicable.
 
31 July ESMA published the latest quarterly liquidity assessment for bonds available for trading on EU trading venues. For this period, there are currently 569 liquid bonds subject to MiFID II transparency requirements.
 
28 July Bangko Sentral ng Pilipinas (BSP) approved Single Borrowers Limit (SBL) relief on debt securities held by market makers. The new policy provides that debt securities acquired from market-making activities from 1 August 2020 to 31 July 2021 will be excluded from the SBL computation for 90 calendar days from the time of acquisition of the securities.  Beginning 1 August 2021, said debt securities will only be excluded from the SBL computation for a period of up to 60 calendar days.
 
28 July ESMA announced that it is preparing new RTS to further postpone CSDR Settlement Discipline to 1 February 2022. This followed a request for the postponement from the European Commission.
 
23 July ESMA published the MiFID/MiFIR Annual Review Report
"ESMA has conducted its assessment and considers that it is appropriate to move to stage S2 and accordingly amend Commission Delegated Regulation (EU) 2017/583 for bonds for which there is a liquid market and the size specific to the instrument for bonds. This should increase the level of transparency available in the bond market without a negative impact on liquidity. ESMA considers that at this point in time there is not enough evidence to move to stage S2 for other classes of financial instruments.”
 
22 July Securities and Exchange Board of India issued a Circular on Transaction in Corporate Bonds/Commercial Papers through RFQ platform and enhancing transparency pertaining to debt schemes.
 
19 July The People’s Bank of China and the China Securities Regulatory Commission approved interconnectivity cooperation between relevant infrastructure institutions in the interbank bond market and the exchange-traded bond market.
 
17 July The Korean government announced the official launching of the special purpose vehicle intended to support businesses facing liquidity problems by purchasing corporate bonds and CP. SPV’s bond purchasing program will be operated on a temporary basis for six months from July 14, 2020 until January 13, 2021, with the possibility of extension afterwards.
 
16 July ESMA published its first Review Reports on the MiFIR transparency regime
 
15 July The Supreme People’s Court of China released the Minutes of a Symposium on Handling Bond Disputes in Courts (in Chinese).
 
10 July
 
China Securities Regulatory Commission and China Banking and Insurance Regulatory Commission jointly revised and issued the Rules on Securities Investment Fund Custody Business.

 

 

Relevant publications and news items


August 2020
Managed fund asset valuations must be reliable during COVID-19, Australian Securities & Investment Commission, August 2020

Basic Figures on Fails (July 2020), Bank of Japan

July 2020
The Reserve Bank's Operations – Liquidity, Market Function and Funding, speech of Christopher Kent, Assistant Governor (Financial Markets), Reserve Bank of Australia

Credit Conditions Survey for June 2020, Reserve Bank of New Zealand, July 2020

Testing the Effectiveness of Unconventional Monetary Policy in Japan and the United States, Bank of Japan, IMES Discussion Paper No. 2020-E-10

COVID-19 Exposes Asian Banks’ Vulnerability to US Dollar Funding, ADB Briefs No. 146, July 2020

Statistics on Securities Financing Transactions in Japan (June 2020), Bank of Japan

Basic Figures on Fails (June 2020), Bank of Japan

The impact of the ECB’s monetary policy measures taken in response to the COVID-19 crisis, ECB Economic Bulletin, Issue 5/2020

US Fixed Income Markets – Issuance & Trading, SIFMA Research Quarterly 2Q20

Financial intermediation and technology: What’s old, what’s new? ECB Working Paper Series, No.2438

Effects of Fed policy rate forecasts on real yields and inflation expectations at the zero lower bound, BIS Working Papers, No 873

MiFID II/MiFIR report on systematic internalisers, ESMA Library document

Timeline of upcoming MiFID II Review Reports, ESMA Library document

 


Recent ICMA webinars and podcasts

In conversation with Ashley Alder, CEO of SFC and Chair of IOSCO Board (webinar)
CSDR Settlement discipline – Implications for trading and documentation in Asia Pacific (webinar)
COVID-19's Impact on the Asian and European repo markets (webinar)

COVID-19: ICMA Asset Management & Investors Council market update (7 August 2020)
COVID-19: an update on financial markets
China’s new Green Bond Catalogue
COVID-19 and future trends in the repo market
COVID-19 impact and outlook for covered bonds
COVID-19 crisis - the view from UBS
 

 


Meetings and events


15 September: ICMA Secondary Market Practices Committee (3-5pm BST) (virtual meeting) (invitation only)
22 September: Green Recovery in Asia-Pacific and the role of capital markets (virtual event)
6 October: Secondary markets in the wake of the pandemic (virtual event)
 

 
 

 

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