ICMA announces an update of its Buy-in Rules
March 1, 2017

In response to requests from ICMA’s members, ICMA’s Secondary Market Practices Committee (SMPC) proposed a review of the Buy-in and Sell-out Procedures with a view to improving their efficiency and practicability, particularly in light of more challenging market conditions. Following a lengthy consultation process with member firms, the ICMA executive committee, in close consultation and agreement with the SMPC, unanimously resolved to amend the Buy-in and Sell-out Procedures.

Most significantly, the revised rules remove the requirement to appoint a buy-in (or sell-out) agent, and provide for the party initiating a buy-in/sell-out to execute the procedure themselves (subject to certain limitations). The new rules also allow for greater flexibility for the initiating party in determining the timing of the execution of the buy-in/sell-out.  

The changes to the rules come into effect from April 3 2017.

The circular announcing and outlining the changes can be found here.

Results of the consultation on the ICMA Buy-in Rules

On November 30 2016, ICMA published the results of the consultation on its Buy-in Rules, along with discussion points and proposed drafting amendments to the Rules.
The results and proposals can be found here.

A member call was held on December 2nd 2016 to discuss the proposed amendments to the Rules. A note of the call can be found here.

Consultation on the Buy-in Rules

ICMA has launched a consultation to review and potentially update the ICMA Buy-in Rules under the Secondary Market Rules & Recommendations. This is in response to feedback from members with respect to the efficiency of the existing buy-in process in the current market environment.
The key areas for possible enhancement include:

  • The requirement (or not) to appoint a buy-in agent
  • Flexibility in the timing of the buy-in
  • The potential for buy-in auctions

More information is available in the linked background paper.
The period for the consultation is 5 September 2016 through 14 October 2016.
To complete the consultation and submit your response, please use the below link. Note that there are 14 questions in total (also allowing for additional comments), although it is not mandatory to respond to all of these.
Please ensure that this consultation request is shared with the appropriate people within your firm (in most cases this will be the relevant fixed income trading desks). It is possible for firms to submit multiple responses. All responses will be treated in confidence, and will not be shared unless in aggregated and anonymized form.

CSDR-Mandatory Buy-ins

ICMA is aware that CSDR, which was passed into law in August 2014, introduces a harmonized buy-in regime across the EU, and that this is expected to come into force by early 2019. Once implemented, this is expected to supersede the ICMA Buy-in Rules in the case of trades that are in scope of the EU regulation. Meanwhile, it is important that the ICMA Buy-in Rules continue to serve as an efficient and practical remedy available to participants in the cross-border bond markets in the event of settlement fails.  
If you have any questions related to the consultation, please contact Andy Hill at ICMA. The anonymized and aggregated results of the survey will be shared with the membership in October 2016, giving members the opportunity to provide further comments ahead of any proposed changes being put to the SMPC in November 2016.

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