Secondary markets
2023 has been a rollercoaster ride for secondary bond markets, with yields and spreads responding to ever changing outlooks on growth and inflation, as well as geopolitical shocks. Unsurprisingly, market conditions have become a regular top-of-the-agenda item at meetings of the Secondary Market Practices Committee (SMPC), engaging both sell-side and buy-side members, as well as financial market infrastructures.
This has also been reflected in the topics covered by guest speakers at ICMA forums including the ICMA AGM and Conference, Secondary Market Forum and at the SMPC, which have included ‘Recession, rates and repo: collateral in times of scarcity’, ‘An anatomy of the 2022 gilt market crisis’, ‘French sovereign debt liquidity’, and ‘EU bond issuance’.
The theme of market liquidity and resilience has been at the core of one of ICMA’s key initiatives of 2023: the Bond Market Liquidity Taskforce (BMLT). Working closely with members, ICMA has undertaken an analytical deep dive into the microstructures and functioning of the core European sovereign bond markets. A final report, along with recommendations to improve market resilience, will be published in early 2024.
In terms of regulatory engagement, ICMA through its relevant working groups has been actively involved in the EU MiFIR and MiFID II Review, in particular with respect to the bond consolidated tape and related deferral regime, the UK’s plans for a bond consolidated tape, and the EU’s CSDR Review, including the revised approach to mandatory buy-ins.
With the imminent move to ‘T+1’ in the US, the topic of shortening settlement cycles has been a key focus for both ICMA’s secondary market and repo constituents, and ICMA has been part of the cross-industry and regulatory discussions in both the UK and EU.
In 2023, ICMA renewed its focus on developments in electronic trading with the roll-out of the more technically focused Electronic Trading Working Group (ETWG).
Looking ahead to 2024, T+1 will remain a top priority, as will the EU and UK’s calibration of their respective bond transparency regimes, as well as general sovereign and corporate bond market functioning and liquidity and the next phase of the BMLT.
Contact: ICMASecondaryMarkets@icmagroup.org
Repo & collateral markets
Repo markets globally have been impacted by the end of accommodative monetary policy and sharp rises in interest rates. While repo markets in Europe and elsewhere have remained robust, with the ICMA European Repo Survey showing continued year-on-year growth in market size, the European Repo and Collateral Committee (ERCC) remains focused on potential resilience challenges related to dealer capacity and balance sheet scarcity. Against this backdrop, ICMA continues to follow new innovation and the evolution of market structure.
High in the ERCC’s regulatory agenda in 2023 was its work on improving settlement efficiency, which has become even more relevant in the wake of discussions around shortening settlement cycles, which has a very significant impact on repo markets. Prudential regulation remains a perennial focus, with the EBA’s ruling on the LCR treatment of open reverse-repos creating a major challenge for EU banks. Through its new Prudential Working Group, the ERCC continues to advocate for a more consistent treatment. Market transparency remains an important focus with our ongoing work on SFTR. An updated version of the SFTR Recommendations was released in April, including numerous further updates, reflecting rule changes and additional guidance from regulators. Otherwise, the ERCC remains vigilant on the EU’s EMIR Review with a view to removing barriers to non-bank access to repo central clearing, which has been thrown into sharper focus following the SEC’s decision to move to mandatory clearing for US Treasuries including repo. Establishing and reviewing market best practice for repo and collateral is one of the ICMA’s principle remits, with the latest version of the ERCC Guide to Best Practice in the European Repo Market being published in November 2023. In addition, a guide to the South Korean repo market was published in November, contributing to our series of reports on Asian domestic repo markets, which includes China, Japan, Indonesia, Vietnam, and the Philippines.
In 2023, ICMA strengthened its global reach and remit through the introduction of the Global Repo and Collateral Forum (GRCF). As well as bringing together members from across the world, the GRCF has helped to bring wider focus on common themes, including market best practice, market development, and the intersection of repo with sustainable finance.
The Global Master Repurchase Agreement (GMRA) remains the overarching legal framework for the international repo market across the globe, and in 2023 ICMA added a number of new jurisdictions to its coverage of legal opinions. This year also saw the introduction of the ICMA GMRA Clause Library and Taxonomy creating new efficiencies and data management capabilities in the GMRA negotiation process.
Contact: ercc@icmagroup.org
- About ICMA
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Welcome to the International Capital Market Association
For over 50 years ICMA and its members have worked together to promote the development of the international capital and securities markets, pioneering the rules, principles and recommendations which have laid the foundations for their successful operation.
A global community for the capital markets
ICMA has over 610 members located in 70 jurisdictions drawn from both the sell and buy-side of the market.
ICMA engages with its global membership on market practice and regulatory policy issues through its expert forums.
Here are the key sections covering our work programmes, including contact details of ICMA staff responsible for each area.
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Primary Markets
- ICMA Primary Market Handbook - Home
- Primary Market Committees ‣
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Primary Market Topics
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- Accounting and Auditing
- Benchmark Reform and Transition to Risk-Free Rates
- MiFID II/R in Primary Markets
- Primary Markets Conduct (non-MiFID)
- Electronification
- Primary Markets Technology Mapping Directory
- Dialogue with Investors
- Prospectuses
- PRIIPs KIDs
- Retail Access to Bond Markets
- Market Infrastructure and Asset Servicing
- Market Abuse Regulation (MAR) - Primary Market Aspects
- Periodic Reporting / Continuing Obligations
- Taxation (Primary Markets)
- Other ICMA Primary Market Materials
- Primary Market Products ‣
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Secondary Markets
- ICMA’s Rules and Recommendations for the Secondary Market ‣
- Secondary Market Practices Committee (SMPC) and related Working Groups ‣
- Central Bank Corporate Bond Purchase Programmes
- Electronic Trading ‣
- “T+1” – the shortening of standard settlement cycles
- Market Transparency ‣
- Market Data ‣
- Market Liquidity ‣
- Secondary Markets Regulation ‣
- Euro Safe Assets
- Archive
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Repo and Collateral Markets
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Legal Documentation
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- Global Master Repurchase Agreement (GMRA)
- ICMA GMRA Legal Opinions
- ICMA GMRA Clause Library and Taxonomy
- Master Regulatory Reporting Agreement (MRRA)
- Resolution Stays
- ICMA FAQs in relation to the GMRA and market turbulence
- 2011 Global Master Repurchase Agreement (GMRA) Protocol (Revised) Adhering Parties
- Repo and Collateral Council and related groups ‣
- ICMA ERCC Publications ‣
- “T+1” – the shortening of standard settlement cycles
- Market Data ‣
- Regulation ‣
- FinTech ‣
- Repo and Sustainability
- Other Resources ‣
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Legal Documentation
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ICMA serves as Secretariat to the GBP, the SBP, the SBG and the SLBP, providing support while advising on governance and other issues.
ICMA also leads numerous other initiatives in sustainable finance. ICMA is at the forefront of the financial industry’s contribution to the development of sustainable finance and in the dialogue with the regulatory and policy community.
ICMA seeks to mainstream relevant FinTech developments and market electronification through all of its initiatives, activities and fora.
FinTech and market electronification are addressed through ICMA’s various committees, working groups and work streams as well as through bilateral discussions with member firms and technology providers.
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