ICMA Secondary Markets Update

ICMA Secondary & Repo Markets Update for Asia Pacific - November/December 2020

Asian and European Repo Surveys
ICMA SFTR checklist for non-European firms
Mandatory buy-ins
ICMA to review ETP Directory (ongoing)
Regulatory and market updates
Relevant publications and news items
ICMA Podcast episodes
ICMA meetings and events



Asian and European Repo Surveys

On 11 November, ICMA released the results of a second survey of the Asia-Pacific repo market, undertaken jointly with ASIFMA. Using a similar methodology to the European repo market survey, the latest Asia-Pacific survey reports the value of repos and reverse repo on 10 June 2020. The report has been split into two parallel surveys, one for the repo market in Japan and the other for the repo market in the rest of the APAC region. The Japan survey reported an outstanding value on June 10 of USD 215.7 billion and average daily turnover over the previous six months of USD 192.4 billion, with an average deal size of about USD 260 million. The non-Japan Asia survey reported USD 216.7 billion in outstanding value and average daily turnover was USD 73.1 billion, with an average deal size of some USD 71 million.

On the same day, ICMA also released the results of its 39th semi-annual survey of the European repo market, based on repo business outstanding on 10 June 2020. The survey, therefore, captures the aftermath of the market turbulence triggered by the COVID-19 pandemic and shows clear traces of the impact of central bank asset purchases and other demand for high-quality assets during the crisis.

ICMA SFTR checklist for non-European firms

ICMA has produced a checklist for non-European firms to help them in deciding whether or not they are obliged to report under SFTR.

SFTR is the Securities Financing Transactions Regulation of the EU. SFTR has implications for companies located outside the EU. Among other things, it requires anybody within its scope to report:

  • the conclusion, amendment and termination of every securities financing transaction (SFT);
  • the details of each transaction and any changes; and
  • the re-use of collateral

The reporting requirements started to apply on 13 July 2020, initially to sell-side firms, CCPs and CSDs and as of 12 October 2020 also to buy-side firms. Non-financial counterparties in the EU will have to start reporting in January 2021, but are exempt from reporting in the UK.

SFTR specifies that the reporting obligations apply to any financial or non-financial SFT counterparty that is either established in the EU or established in a third country, if the SFT is concluded in the course of the operations of an EU branch of that counterparty.

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 buy-in obligation applies to all transactions intended to settle on an EU (I)CSD, regardless of the trading party’s jurisdiction.

ICMA is currently preparing for the anticipated CSDR Review, which is expected to include Settlement Discipline. ICMA views this as an opportunity to drive meaningful change to the SD provisions, particularly the mandatory buy-in regime.

The impact of CSDR on ICMA’s standard documentation is the focus of the CSDR Legal Working Group. In order to assist the market with the contractual requirements of CSDR, work has been done to produce (i) an amended form of the ICMA Rules and Recommendations for the Secondary Market; and (ii) an SFT CSDR Settlement Discipline Annex. In addition, ICMA has also considered legal opinion coverage to support enforceability diligence in relation to both forms of documentation. Substantive work on the CSDR document solutions has been paused until we have a better understanding of the scope of the aforementioned CSDR review. ICMA remains conscious of the document remediation time constraints. Please contact Andy Hill if you or your firm is not already engaged in this important initiative.

ICMA to review ETP Directory (ongoing)
ICMA is conducting a review of the Electronic Trading Platform (ETP) directory and welcomes the inclusion of any solutions not yet represented. The directory currently lists 44 solutions for electronic cash bond trading, including execution platforms, order and execution management systems (O/EMS) and information networks. Please contact us if you would like to flag any new initiatives or if you have any other suggestions. 

The directory and further information is available on ICMA’s website.



Regulatory and market updates


30 November 2020: PBOC published the consultation draft of the Amendments to the Announcement on Bond Trading and Circulation in the Inter-bank Bond Market (in Chinese). One of the main proposed changes is to remove the requirement that issuers or lead banks submit the list of initial bondholders and their respective holdings.

27 November 2020: Shanghai Stock Exchange published its Rules for Reviewing Bond Issuance and Listing.

27 November 2020: Shenzhen Stock Exchange published Guidelines for Preparing Rules for Bondholder Meeting and Template, facilitating the establishment of an efficient bondholder meeting procedure and clarification on rights and responsibilities.

23 November 2020: MAS announced the launch of a new initiative to provide up to RMB 25 billion of funding to banks in Singapore. The initiative will deepen RMB liquidity and further strengthen banks’ ability to meet the growing RMB business needs of their customers in Singapore and the region.

22 November 2020: The Financial Stability and Development Committee in China emphasized ‘zero tolerance’ for bond issuer misconduct and promised to pursue strict investigation on any bond issuer suspected of fraudulent issuance, false disclosure, malicious transfers of assets, or misappropriation of funds.

19 November 2020: HKMA announced that the list of eligible collateral for the RMB Liquidity Facility will include the RMB, USD and Euro denominated debt securities issued in offshore markets by - (i) the People’s Bank of China (PRC); (ii) the Ministry of Finance of PRC; and (iii) the policy banks of PRC.

18 November 2020: NAFMII published a Notice on matters related to further strengthening the issuance of debt financing instruments. The rules prohibit issuers from directly subscribing to their own bonds in the interbank market or buying them indirectly through affiliates or asset management products.

18 November 2020: ESMA publishes first overview of the size and structure of EU securities markets.

12 November 2020: SEBI issued a circular on Monitoring and Disclosures by Debenture Trustee(s).

10 November 2020: ESMA updates Brexit statements for the end of UK transition period

6 November 2020: ESMA consults on MiFID II/ MiFIR obligations on market data.

5 November 2020: SEBI published a Circular on Enhancement of Overseas Investment limits for Mutual Funds.

  • Mutual Funds can make overseas investments subject to a maximum of US $600 million per Mutual Fund, within the overall industry limit of US $ 7 billion.
  • Mutual Funds can make investments in overseas Exchange Traded Fund (ETF(s)) subject to a maximum of US $ 200 million per Mutual Fund, within the overall industry limit of US $1 billion.

3 November 2020: To protect the interest of investors in listed debt securities and to enable debenture trustee(s) to perform their duties effectively, SEBI issued several guidelines.

3 November 2020: Starting 5 November 2020, RBA will buy bonds issued by the Australian Government and by the states and territories, with an expected 80/20 split in the secondary market under the AU$100 billion bond purchase program. RBA remains prepared to purchase bonds in whatever quantity is required to achieve the 3-year yield target of 0.1%.

30 October 2020: ESMA makes new bond liquidity data available.

30 October 2020: MiFID II: ESMA publishes data for the systematic internaliser calculations for equity, equity-like instruments, bonds and other non-equity instruments.

27 October 2020: ESMA adds UK venues to opinions on third-country trading venues.

23 October 2020: The European Commission endorses the proposed delay to the implementation of CSDR Settlement Discipline to 1 February 2022.



Relevant publications and news items

ICMA publications

ICMA-ASIFMA Asia-Pacific Repo Market Survey - conducted June 2020 
ICMA European Repo Market Survey Number 39 - conducted June 2020
ICMA consolidation of SFTR Public Data
ICMA SFTR checklist for non-European firms
Axe Distribution Best Practice Standards - An ICMA Electronic Trading Council initiative

November 2020

India’s Gilt Market, RBI Bulletin, Reserve Bank of India
Statistics on Securities Financing Transactions in Japan (Oct. 2020), Bank of Japan
Basic Figures on Fails (Oct.), Bank of Japan
Money Market Funds during the March-April Episode: Thematic Note, IOSCO
Thematic Review on consistency in implementation of Money Market Funds reforms: Final Report, IOSCO
Holistic Review of the March Market Turmoil, FSB
Implementation and Effects of the G20 Financial Regulatory Reforms: 2020 Annual Report, FSB
Reforming Major Interest Rate Benchmarks: 2020 Progress Report, FSB
Corporate Bond Liquidity During the COVID-19 Crisis, Federal Reserve of Philadelphia
EU Securities Market: ESMA Annual Statistical Report 2020, ESMA
EU Derivatives Market: ESMA Annual Statistical Report 2020, ESMA
Government Bond Data Report: European market update Q3 2020, AFME
Fire sales by euro area banks and funds: what is their asset price impact?, Working Paper Series No 2491, ECB

October 2020

The impact of MiFID II on SME and fixed income investment research (Final Report), Risk Control for the European Commission, European Commission
Lessons from COVID-19: Overview of Financial Stability and Non-Bank Financial Institutions, BlackRock
Banking across borders: Are Chinese banks different?, BIS Working Paper (No 892) The Use of Supervisory and Regulatory Technology by Authorities and Regulated Institutions, FSB
Effects of eligibility for central bank purchases on corporate bond spreads, BIS Working Papers No. 894
Report on a digital euro, ECB
Money markets, central bank balance sheet and regulation, ECB Working Paper Series No 2483
Preliminary Recommendation Regarding Defining Electronic Trading, SEC
FIMSAC Staff Report on the Effects of the COVID-19 Economic Shock to U.S. Credit Markets, SEC
Adverse Selection Dynamics in Privately-Produced Safe Debt Markets, Federal Reserve Board, Finance and Economics Discussion Series
A range of market, academic, and regulatory papers and studies can be found in the ICMA Bond Market Liquidity Library.



ICMA Podcast episodes

ICMA Asset Management & Investors Council market update (26 November 2020)
Debt capital markets in Southeast Asia - trends and opportunities
SGX Digital innovation in bond issuance
The aging population of Japan and implications for the capital markets
The Common Domain Model – fundamentals & genesis
ICMA’s ERCC Operations Group: a focus on collateral market infrastructure and harmonisation
Novartis’ recent sustainability-linked bond – reinforcing its commitment to patient access
EBRD and its role in developing robust domestic capital markets


ICMA meetings and events

Recording: Panda bonds market developments and outlook for COVID-19

Climate transition finance – new guidance for issuers
9 December, 9 - 10.45pm HKT



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