ICMA Secondary Markets Update

ICMA Secondary Markets initiatives and workstreams


Mandatory buy-ins
On 1 April 2021, ICMA submitted its feedback on the European Commission’s Roadmap for the CSDR Review. Once again, ICMA posited that the mandatory buy-in framework, as currently drafted, requires significant revisions before attempting implementation. Furthermore, there are compelling arguments for not imposing a mandatory buy-in regime on the European bond markets, and that this could undermine market liquidity and stability.


On 11 March 2021, ICMA, along with 14 other markets associations, wrote to the European Commission and ESMA raising concerns about the implementation of the mandatory buy-in requirement that is due to go go-live on 1 February 2022, while concurrently undertaking a review of the regulation. Given the significant global implementation effort required to support implementation, the associations suggest that a far more robust approach would be to make the required revisions to the mandatory buy-in regime arising from the Review before attempting implementation. Accordingly the letter asks the European Commission for clarity on the Review and implementation schedule of CSDR-SD at the earliest opportunity.


Meanwhile, ICMA remains focused on supporting the implementation of the CSDR Settlement Discipline regime in the international bond markets, in particular the controversial mandatory buy-in obligation. ICMA will do this by updating its Buy-in Rules (part of the ICMA Secondary Market Rules & Recommendations) to provide a contractual framework and market best practice for the buy-in process.


Please contact Andy Hill if you wish to learn more about ICMA’s advocacy and implementation work related to CSDR-SD or would like to participate in ICMA’s CSDR Settlement Discipline Working Group.

Update to Bond market transparency directory
ICMA has updated its Bond Market Transparency Directory to include the latest guidance provided by the FCA in its Post-Brexit transparency workshop held on 11 March 2021. The FCA intends to use the annual LIS and SSTI thresholds expected to be published by ESMA in April 2021. The FCA intends to determine an instrument traded in the EU and UK liquid only if it is liquid on both ESMA and FCA calculations. It will fall to trading venues whether to follow FCA liquidity determinations or only refer to ESMA determinations. The FCA is expected to publish a consultation by end April to address changes to MiFID II rules in the UK, covering similar, but not identical considerations to the EU's MiFID II 'quick fix'.
The purpose of the directory 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 in more than 15 jurisdictions globally. The directory is a non-exhaustive overview and is intended to be a living document with periodic reviews. The Bond Market Transparency Grid is available on ICMA’s website.

ICMA’s Electronic Trading Council (ETC) is creating industry standards for bond pricing distribution and best practices.
Listen to Liz Callaghan interviewing Ricky Goddard, head of trading at Schroders about current bond pricing distribution practices in the EU and the challenges facing bond markets. They also discuss the importance of standardising current practices used today to advertise buy or sell bond interests and the role of electronic & technology solutions in price/quote distribution and the obstacles in achieving good quality and accurate bond pricing data. (Link in podcast section below)
Please contact Liz Callaghan if you would like to find out more about this initiative and/or to participate in the ETC’s axe standard working group.



Regulatory updates


6 April 2021: ESMA updates its Q&As on MiFID II and MiFIR transparency topics
31 March 2021: ESMA promotes coordinated action on the suspension of best execution reports
31 March 2021: ESMA promotes coordinated action on the suspension of best execution reports
31 March 2021: Application of TD requirements following Brexit 
31 March 2021: ESMA clarifies corporate disclosures obligations for UK issuers after Brexit
30 March 2021: ESMA proposes amendments to MiFIR transactions and reference data reporting regimes
28 March 2021: China proposes tighter rules for credit rating agencies
26 March 2021: ESMA advises on framework for data reporting service providers
24 March 2021: Annex to Transparency Opinion
19 March 2021: Statement Non significant liquidity provision
19 March 2021: FCA publishes statement on supervisory flexibility on RTS 27 reports and 10% depreciation notifications



Relevant publications and news items


March 2021

Non-Financial Corporate Credit and Recessions, Fed Notes, March 19 2021

Corporate Funding and the COVID-19 Crisis, IMF Working Paper, 2021

Interest Rate Swaps and the Transmission Mechanism of Monetary Policy: A Quantile Connectedness Approach, University of Portsmouth, March 2021

The Persistent Compression of the Breakeven Inflation Curve, Liberty Street Economics, March 2021

Bond Mutual Fund Outflows: A Measured Investor Response to a Massive Shock, ICI Viewpoint, March 2021

Liquidity management and asset sales by bond funds in the face of investor redemptions in March 2020, BIS Bulletin, No.39, March 2021

Price Discovery in China’s Corporate and Treasury Yield Curves, Hong Kong Institute For Monetary and Financial Research, March 2021

Liquidity of China’s Government Bond Market: Measures and Driving Forces, Hong Kong Institute For Monetary and Financial Research, March 2021

Asset managers, market liquidity and bank regulation, BIS
Networking the yield curve: implications for monetary policy, ECB
Procyclical asset management and bond risk premia, ESRB
Cross-border credit derivatives linkages, ESRB


ICMA Podcast episodes

40th edition of ICMA’s European Repo Survey
A buyside view - bond pricing distribution today
An insight into the Australian and New Zealand sustainable bond market
Whatever happened to underwriting?
Monthly Market update: ICMA Asset Management & Investors Council (10 March 2021)


Future meetings

SMPC Meeting
9 June, 3pm-4.30pm CET


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