ICMA News Archive

New ICMA members in December 2022

13 December 2022 ICMA welcomes the following new members in December 2022:

• Bernstein Autonomous LLP, United Kingdom
• Citigroup Global Markets Japan Inc., Japan
• Consolidated Bank Ghana Limited, Ghana
• Covalent Capital Pte. Ltd., Singapore
• Ecobank Transnational International, Togo
• Global Islamic Financial Services Firm, South Africa
• KPMG Huazhen LLP, China
• Mizuho Securities (Singapore) Pte. Ltd., Singapore
• Standard Chartered Bank (Singapore) Limited, Singapore

Click here to view the full list of ICMA members.

ICMA statement with the Executive Committee of the Principles on the EU GBS

13 December 2022 ICMA statement with the Executive Committee of the Principles on the EU GBS

ICMA is a membership association, headquartered in Switzerland, committed to serving the needs of its wide range of members. These include private and public sector issuers, financial intermediaries, asset managers and other investors, capital market infrastructure providers, central banks, law firms and others worldwide. ICMA currently has over 620 members located in 66 jurisdictions. See: www.icmagroup.org.

ICMA hosts the Principles that underpin sustainable bond issuances globally. In 2021, over 98% of the global sustainable bond issuance volume aligned with the Green, Social, Sustainability, and Sustainability-linked Bond Principles (the Principles). Several EU Member States and public bodies (e.g., EIB), as well as the European Commission issued sustainable bonds aligned with the Principles (see EC’s SURE social bonds and NGEU Green Bonds). Europe has so far been the clear leader in sustainable bond market activity with around 40% of the outstanding total coming from European issuers.

As globally accepted market standards, the Principles are the fruit of extensive work and input from over 420 organisations including issuers, investors, and various other stakeholders. Members of the Principles also participate in the drafting and elaboration of standards mainly via working groups and to the election of the Executive Committee (consisting of 8 issuers, 8 investors, and 8 underwriters) each year with their votes. The Executive Committee is currently chaired by EBRD, and in the past, by EIB, IFC, and NIB.

This feedback is a result of a consensus that emerged from ICMA’s constituencies and especially the Executive Committee of the Principles.

Download statement here.

Letter to the Joint Committee of the ESAs - Securitisation Regulation - Request for Guidance on Article 5(1)(e)

9 December 2022 The promotion of well-functioning cross-border debt securities markets, without unnecessary fragmentation, is at the heart of ICMA’s mission and a priority for ICMA’s members. This includes a healthy, efficient international securitisation market promoting global diversification and financial stability. For this reason, ICMA is supportive of the AFME request for relief in connection with the Report from The Commission to the European Parliament and the Council on the functioning of the Securitisation Regulation dated 10 October 2022 (the "SECR Report"). The Commission’s interpretation of Article 5(1)(e) has potential adverse consequences for EU investor choice and diversification of risk and flows of capital in global markets. Therefore, ICMA supports this AFME request for guidance to National Competent Authorities to use their enforcement powers in a proportionate and risk-based manner.

Letter to the Joint Committee of the ESAs - Securitisation Regulation - Request for Guidance on Article 5(1)(e)

ICMA and ASIFMA publish results of survey of Asia repo markets

5 December 2022 The ICMA European Repo and Collateral Council (ERCC) and ASIFMA‘s Secured Funding Markets Committee have published the results of the latest survey of the Asia-Pacific repo market. Using similar methodology to the established ICMA ERCC European repo market survey, the latest Asia-Pacific survey reports the outstanding value of repos and reverse repos as at June 8, 2022 and offers a detailed breakdown of those positions. It is important to note that the survey does not measure the size of domestic repo markets in the APAC region but cross-border business involving internationally-active banks.

Whereas normally the Asian survey differs from the European survey in that it is split into two parallel surveys, one for trading in Japan and the other for trading elsewhere in the APAC region, this survey covers only the APAC non-Japan region.

In broad terms, across the APAC non-Japan region, the survey reported USD 310.9 billion in outstanding value and an average daily turnover of USD 43 billion, compared with USD 260.1 billion and almost USD 29 billion per day in 2021. Average deal size was some USD 47 million, compared with USD 56 million in the last survey.

“We’re delighted to present the annual ASIFMA/ICMA repo survey.  Since 2016 this survey has offered a valuable source of information on the state of the cross- border repo markets of Asia-Pacific,” said ICMA Chief Executive Bryan Pascoe. “As we recover from the pandemic, we hope that work such as this will continue to benefit our members, authorities and regulators and other market participants in the region.”

“The ASIFMA/ICMA survey shows the growing importance of repo across the region and the dynamics of its structure and stakeholders,” added Philippe Dirckx, Managing Director and Head of Fixed Income at ASIFMA. “It is also encouraging to see the regulatory changes supporting its development aligned with our members’ expectations and requirements. There nevertheless remain impediments limiting cross-border repo to fully leverage the liquidity of the on-shore market. This is one of the key areas of focus when we engage with the relevant regulators and market infrastructures.”

Download the ICMA/ASIFMA Asia-Pacific (ex-Japan) repo market survey here.

Main survey findings

• The survey revealed that the bulk of business in the non-Japan repo market share of reported repos was still executed directly between parties by telephone and electronic messaging. However, voice-brokers and, to a lesser extent, automatic electronic trading systems, increased their share over the period under review. There was also a recovery in the share of CCP-clearing.
• There was a distinct change in the geographical nature of business, with a decline in cross-border business between APAC and Europe relative to cross border business within APAC.  This theme was also reflected in major shifts in shares away from transactions with counterparties in Europe, the US and major Asian markets in favour of “other APAC” and Australian counterparties.
• European securities and US Treasuries also lost ground in favour of Japanese securities and international bonds (eurobonds).  However, both US Treasuries remain a significant source of collateral.  Overall, government securities became the largest class of collateral.
• The US dollar remained the dominant currency in the APAC (non-Japan) repo business measured by the survey, but the Japanese yen took an increased share, largely at the expense of the euro. The Australian dollar continued to be a significant component.
• Most transactions were documented under the GMRA, which is an indicator of the non-domestic nature of the business surveyed and of the role of the GMRA as the standard master agreement for cross-border repo globally.

ICMA has responded to the UK FCA’s Consultation Paper on the Trading Venue Perimeter

24 November 2022 ICMA considers all regulatory perimeter requirements, for large or small firms, should be flexible and principles based, in order to continue supporting innovation in the UK. This will make it easier for all trading participants to access UK bond markets, resulting in the removal of potential barriers to entry. Furthermore, streamlining authorisation, where feasible, to make authorisation for new entrants as quick as possible, will be less costly for relevant entities involved. This logic extends to new ventures in existing trading venues, thus levelling the playing field. This ‘streamlined authorisation’ will facilitate overall UK competitiveness and innovation.

ICMA’s response was developed with input from a diverse range of members, representing views from the full secondary market ecosystem, including sell side, buy side, trading venues, data providers, EMS/OMS providers, and bulletin boards.

ICMA's response solely relates to trading of bonds in secondary markets and not primary markets.

Please click here to view the response.

ICMA Awarded Industry Association of the Year

23 November 2022 International Capital Market Association (ICMA) was awarded Industry Association of the Year in the 5th Regulation Asia Awards for Excellence 2022 at an in-person ceremony on 22 November 2022.

ICMA was recognised for its extensive work over the years to develop and introduce standards for green bonds, social bonds, sustainability bonds, and sustainability-linked bonds – which are now widely seen as robust best practice standards that can be used in global and domestic capital markets. ICMA has been assisting regulators, central banks and governments to draft domestic regulations
for such instruments and ensure their own issuances were successful and aligned with global standards.

In China, for instance, ICMA provided substantial advisory and market insight to regulators and standard-setters in the drafting and finalisation of the China Green Bond Principles, which significantly increase alignment with global best practices, promote harmonisation of domestic regulations, and address investor concerns. In Japan, ICMA provided drafting and advisory assistance to help the country become one of the first to launch social bond guidelines within its own regulatory environment.

Another key workstream for ICMA during the year was to address a major change to how bond book-building and placing activities are managed from Hong Kong. The reforms, which took effect in August, were considered the single biggest change for debt capital market participants in over a decade, also affecting syndication practices for cross-border transactions.

ICMA’s work involved engagement with the regulator to address challenges arising from the new requirements, achieve consensus on areas of conflicting interpretation, and ultimately lower the compliance burden for the industry. In light of the new requirements, ICMA also helped to develop industry consensus on processes and procedures to increase standardisation and efficiency, and drafted several template documents to facilitate compliance.

“ICMA’s market conventions and standards have been the pillars of the international debt markets for over 50 years,” said one judge on the Regulation Asia awards panel. “Its significant contribution to the global sustainable bond market is evident from local frameworks in APAC, which often cite ICMA’s standards and its assistance in developing regulations and guidance.”

ICMA is a membership association for the international bond markets, headquartered in Switzerland, with offices in Zurich, London, Paris, Brussels and Hong Kong. It currently services over 600 members in 65 jurisdictions worldwide.

About the Regulation Asia Awards for Excellence 2022

The Regulation Asia Awards for Excellence recognises financial institutions, technology companies, legal and consulting firms, exchanges and other players that help ensure the highest regulatory compliance standards are upheld in the financial industry. Each year, senior industry practitioners serve on a judging panel to help assess and score each submission to determine the winning entrants.

For a full list of the award 2022 winners, visit www.regulationasia.com/awards.

ICMA appointed by the FCA to jointly provide the Secretariat for a working group to develop a Code of Conduct for ESG data and ratings providers

22 November 2022 The International Capital Market Association (ICMA) is announcing that it has been appointed by the FCA to jointly provide the Secretariat with the International Regulatory Strategy Group (IRSG) for the newly formed ESG Data and Ratings Code of Conduct Working Group (DRWG). The group has been tasked with developing a voluntary code of conduct for Environment, Social and Governance (ESG) data and ratings providers.

As financial services firms integrate sustainability into their activities and expand their ESG-focussed products, they are increasingly reliant on third party ESG data and ratings services. While potential regulatory oversight is being considered, the FCA is encouraging industry participants to develop and follow a voluntary Code of Conduct.

The Secretariat is convening an independent group including investors, ESG data and ratings providers and rated entities, to develop the Code. The group will be co-chaired by M&G and Moody’s (Chairs) and London Stock Exchange Group (LSEG) and Slaughter and May (Vice Chairs).  Consistent with their respective objectives, the FCA, the Bank of England and other relevant financial regulators and government departments will sit as active observers to this group.

The group will meet for the first time in December 2022 to start development of the Code.

Bryan Pascoe, CEO of ICMA, commented “We welcome the mandate from the FCA to conduct this working group with the IRSG. Our combined, in-depth experience of UK and Global financial markets will help ensure an unbiased and balanced approach to the development of this code for the benefit of market participants looking to advance their integration of ESG measures.”

Nicholas Pfaff, Deputy CEO of ICMA and Head of Sustainable Finance added “We will contribute our expertise in bringing about industry-led standards in sustainability and look forward to help coordinate this important working group with the IRSG. This future Code supported by the FCA will be a significant step in the development of consistent global standards for ESG Data and Ratings providers.”

ICMA publishes new climate resilient debt clauses to facilitate sovereign debt relief and financial stability

9 November 2022 The International Capital Market Association (ICMA) has today published new Climate Resilient Debt Clauses (CRDCs) which can defer a country’s debt repayments in the event of a pre-defined, severe climate shock or natural disaster.  A standardised term sheet for this has been produced by the UK-convened Private Sector Working Group (PSWG): sub-group on Climate Resilient Debt Clauses, with legal support from Clifford Chance. The PSWG brings together International Financial Institutions, including the International Monetary Fund (IMF) and World Bank (WB), G7 countries, borrowing countries, and the private sector, including major US and European banks and investment firms, legal and financial advisors specialising in sovereign debt, as well as academic experts.

The working group, which included ICMA, developed new terms that provide for deferral of sovereign debt repayments to private creditors for a pre-agreed period and that can apply to a wide set of natural disasters and geographies, building on the previous work by the IMF, ICMA and Clifford Chance under the Canadian G7 Presidency in 2018.  As well as supporting disaster resilience by freeing up cash flow, CRDCs could help avoid the liquidity challenges faced by low-income countries in such circumstances becoming costly payment defaults leading to protracted restructurings. This timely announcement at COP27 Finance Day directly responds to developing countries’ calls for such innovations at previous COP meetings.

Leland Goss, ICMA’s General Counsel said: “We live in a world today where countries are vulnerable to both growing debt levels and an increasing risk of climatic shocks. If sovereign borrowers can avoid default at the time of a natural catastrophe, this will benefit both affected countries but also their creditors and the global financial system that might otherwise be providing finance potentially simultaneously in multiple jurisdictions.”

One objective of the working group was to extend CRDCs beyond the Caribbean to a wider range of geographies, including the Pacific, Africa, Central and Southeast Asia. It also agreed that, while technically no country is excluded from scope, CRDCs were likely to be most suitable for low-income countries, Small Island Developing States, or other developing countries particularly vulnerable to the impacts of climate change. The impact of severe climate shocks or natural disasters on these countries can be particularly severe relative to their ability to respond in the absence of outside assistance.

Guidance Note relating to the new Climate Resilient Debt Clauses, which can defer a country’s debt repayments in the event of a predefined, severe climate shock or natural disaster

Term Sheet relating to the new Climate Resilient Debt Clauses

Additional information on Sovereign Debt

ICMA publishes new majority voting clauses for commercial loans to sovereign borrowers to facilitate sovereign debt restructuring

1 November 2022 The International Capital Market Association (ICMA) has today published new majority voting specimen clauses for inclusion in commercial loan agreements’ payment terms for sovereign borrowers which have been produced by an HM Treasury-led public-private sector working group established by the United Kingdom during its time as chair of the G7 and convened with the support of the Institute of International Finance (“IIF”). The working group, which included ICMA, elicited private sector input and designed the new terms for inclusion in sovereign loan agreements in order to facilitate more efficient and effective sovereign debt restructurings. The use of these new terms in private sector loans to government borrowers is intended to facilitate less time consuming and disruptive debt restructurings by mitigating holdout creditor strategies and result in greater financial stability.

Leland Goss, ICMA’s General Counsel said: “The adverse global fallout potentially from simultaneous sovereign defaults together with more diversity amongst sovereign creditors today necessitates further measures to facilitate better creditor coordination and minimise the time and disruption entailed in sovereign debt restructurings. Introducing these new majority voting provisions (“MVPs”) in commercial loans to sovereign borrowers should serve to extend more broadly the same financial stability benefits conferred by the enhanced collective action clauses for sovereign bonds published by ICMA previously and in wide use today.”

An IMF Staff Paper has noted that the lack of MVPs to amend payment terms in sovereign loan agreements is a gap in the current international architecture for resolving sovereign debt cases involving private creditors. MVPs in sovereign loans, like collective action clauses in bonds, allow a majority of bondholders to agree to changes in the debt’s payment terms, for example to extend maturities or reduce principal, that are legally binding on all holders of the debt, including those who vote against the restructuring. The new specimen clauses for sovereign loans, as with CACs in sovereign bonds, provide a practical solution to the problem of blocking minorities through the inclusion of majority voting.

New majority voting clauses for commercial loans to sovereign borrowers to facilitate sovereign debt restructuring

Additional information on Sovereign Debt

ICMA publishes European repo market survey showing new record outstanding value of EUR 9,680 billion at half-year 2022

31 October 2022 The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 43rd semi-annual survey of the European repo market.

The survey, which measured the amount of repo business outstanding on 8 June 2022, from the returns of 56 financial institutions sets the baseline figure for European market size at a record high of EUR 9,680 billion, up by 5.2% from EUR 9,198 billion in the December 2021 survey and an increase of 10.9% since June 2021.

Download the 43rd ICMA ERCC European Repo Market Survey

While headline numbers showed accelerating growth in the European repo market, the underlying conditions showed few major differences to the previous survey.

One notable change was that, over the period, while the outstanding size of the market grew, there was the usual seasonal shortening of maturities in the survey as a whole but virtually no growth in turnover in electronic trading, suggesting smaller transactions and/or longer maturities in the latter market segment. Shorter maturities in the overall survey could reflect collateral scarcity, which would encourage shorter-term securities-driven repo. Longer maturities in electronic trading could reflect increased term trading in cash-driven repo in response to the further normalization of interest rates.

The easing of QE was evident in the continued recovery of tri-party repo, which is purely cash-driven.

There were also increases in the shares of floating-rate repos in the survey and in trading on the ATS, as would be expected in an environment of rising rates.

Despite overall eurozone activity growth over the period, the share of the euro in the survey had fallen back by June 2022 as the shares of the US dollar and Japanese yen expanded.

The next survey is scheduled to take place at close of business on Wednesday, 8 December 2022.

ICMA writes to ECB raising concerns about Eurozone repo and money market conditions

26 October 2022 The International Capital Market Association (ICMA) has written to the ECB expressing industry concerns about current conditions in the Eurozone repo and money markets, and the risk that rising dysfunction in the market could imperil the transmission of monetary policy. The letter is co-signed by ICMA’s dedicated constituencies representing the repo and collateral markets, the commercial paper and certificates of deposit market, the secondary bond markets, as well as the asset manager and investor community.

The letter points to a number of observations related to pricing dislocations, largely as a result of an environment of excess reserves and collateral scarcity, particularly around quarter-end reporting dates when the capacity for bank intermediation is reduced. As we enter a new phase of the monetary policy cycle, with the normalization of interest rates and associated market volatility, the potential for both the scale and frequency of such dislocations is likely to increase. Year-end has become a regular point of dislocation for the Eurozone repo and money markets, and the current indications are that the upcoming 2022 “turn” could be particularly challenging.

The letter also acknowledges policy initiatives adopted by other central banks intended to manage the disequilibrium of excess liquidity and collateral scarcity and to ensure the smooth transmission of monetary policy. Improving the capacity of banks to intermediate in repo and money markets (as well as bond and derivatives markets more broadly) could also help to contribute to market stability and resilience.

ICMA welcomes the opportunity to discuss its concerns and policy suggestions with the ECB further.

Click here to view the letter.

ICMA and UAE Financial Markets Association formalise cooperation in securities markets

26 October 2022 (London, UK - Dubai, UAE) The International Capital Market Association (ICMA) and the United Arab Emirates Financial Markets Association (UAE FMA) today formalised their cooperation to further develop and foster closer engagement. ICMA Chief Executive Bryan Pascoe and UAE FMA Chairman Mohammed Al Hashemi signed an agreement conferring reciprocal membership of each other’s associations at a ceremony in Dubai.

Areas of cooperation between UAE FMA and ICMA will include:

• Sharing of information on best market practice and regulatory developments in the capital market
• Communicating on efficient trading practices as well as clearing and settlement procedures
• Closer partnership across a programme of industry outreach opportunities

The ICMA and UAE FMA will cooperate closely on a schedule of events and expand their existing partnership on educational training programmes. UAE FMA will bring their knowledge and expertise of the region, while ICMA will provide its expertise and experience in the broader international capital markets. To coincide with the signing, ICMA and UAE FMA are today co-hosting a joint conference entitled “Dynamics and developments in the international repo markets - a lens on the MENA region”.

Commenting on the new formal relationship, ICMA Chief Executive Bryan Pascoe said “We look forward to a mutually beneficial partnership with the UAE FMA. The profile of the GCC within the international capital market landscape continues to grow apace, so strengthening our relationships with key partners such as the UAE FMA will help drive our objective to assist the development of the capital markets in the region.”

UAE FMA Chairman Mohammed Al Hashemi added “We welcome the partnership with ICMA, who bring decades of experience in the international markets that we can leverage for the benefit of our underlying membership. At the same time, UAE FMA will be able to provide further insight of the GCC capital markets to assist ICMA’s work in the cross-border markets.”

ICMA publishes report setting out a high-level categorisation relating to sustainability in the repo market

26 October 2022 ICMA’s Repo & Sustainability Taskforce has published a paper which sets out observations and categorisations relating to sustainability in the repo market. The paper is a reflection on recent market developments and looks at the different intersections between repo and sustainable finance from two perspectives: 1. wider sustainability considerations in the existing repo business, and 2. specific sustainability-related repo products that have emerged in the market. In addition, the report also includes a number of observations on current market practice which could be used as a basis for developing future guidance.

The paper published today follows up on a market consultation undertaken by ICMA in 2021 and was prepared based on input from ICMA’s Repo & Sustainability Taskforce, a joint working group with notably representatives from both the European Repo and Collateral Council (ERCC) and the Executive Committee of the Green, Social, Sustainability and Sustainability-Linked Bond Principles. Along with the Taskforce members, ICMA will continue to closely monitor the market evolution as well as any forthcoming regulations with the aim to encourage standardisation of terminology and sustainability approaches within the repo market.

ICMA publishes the first semi-annual report that provides detailed data on EU and UK bond market trading activity

24 October 2022 ICMA has published the first semi-annual report providing detailed data on the EU and UK bond market trading landscape. The report was produced in collaboration with Propellant digital.

The report captures more than 80% of all secondary bond market transactions (both corporate bonds and sovereign bonds) reported in the EU and UK over the period January through June 2022. It is therefore relatively representative of the aggregated bond market data as reported under the MiFID II/MiFIR obligation.

One of the core objectives of MiFID II/MiFIR was to provide greater public transparency of secondary trading activity in the EU and UK markets. As solutions have evolved to consolidate the disperse sources of public data, ICMA has sought to leverage the capabilities of such initiatives to provide a detailed and holistic view of bond market activity in the EU and UK.

ICMA intends to update the report on a semi-annual basis in order to be able to track long-term trends in secondary bond market structure and activity. ICMA also expects that in time both the depth and quality of the underlying data will improve, particularly as reports such as this seek to present a definitive picture of the European bond markets.

The European Parliament’s Committee on Economic and Monetary Affairs draft report on the review of the Central Securities Depository Regulation (CSDR)

13 October 2022 ICMA welcomes the draft report from the European Parliament’s Committee on Economic and Monetary Affairs on the review of the Central Securities Depository Regulation (CSDR).

In line with the ECB’s opinion on CSDR Refit, Rapporteur Johan Van Overtveldt considers regulation-driven mandatory buy-ins (MBIs) as a significant interference in the execution of securities transactions and the functioning of securities markets and suggests discarding the CSDR MBI regime it in its entirety.

ICMA has long advocated against the implementation of a regulatory buy-in regime in the European bond markets, pointing out that as well as being immensely difficult to apply, MBIs would negatively impact bond market pricing and liquidity, could lead to market instability, and would undermine the EU’s competitiveness as a global marketplace: a view broadly shared by the ECB in its recently published opinion. ICMA has argued that more targeted and proportionate initiatives to improve settlement efficiency would be more effective, such as those recently introduced to ICMA’s Secondary Market Rules & Recommendations, which provide best practice guidelines for trade shaping, partial settlement, and the use of CSD auto-borrow/lending programs.

ICMA co-signs joint trade association response to BCBS second consultation on the prudential treatment of crypto-assets exposures

4 October 2022 ICMA has co-signed, alongside the Global Financial Markets Association and its members, the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association, the International Securities Lending Association, the Bank Policy Institute, and the Financial Services Forum, a joint trade association response which was submitted on 30 September to the Basel Committee on Banking Supervision’s (BCBS) second consultation on the prudential treatment of crypto-assets exposures. This broad group encompasses many sectors across the industry, offering a comprehensive, global response grounded on a broad scope of expertise to the Consultation.

The Associations’ comments aim to improve the mutual understanding of current and emerging risks of private digital assets that depend on cryptography and distributed ledger or similar technology, the role of existing processes and frameworks for regulated entities to manage such risks, and to identify balanced solutions to help in the design of a capital framework that supports enhancing financial stability while avoiding overly restrictive limits to innovation. Achieving an appropriate prudential framework that meets our aligned objectives is critical to meet customer demand and harness the benefits of DLT and similar technologies for the financial services sector.

Bringing cryptoasset activities into the regulatory perimeter where institutions are subject to comprehensive regulation and supervision and have significant experience managing financial and operational risks would be beneficial for the stability of the financial system. Enabling banks to utilise cryptography and DLT or similar technology would also allow bank customers and the broader financial sector to benefit from the advances in efficiency, transparency and speed that these innovations offer.

The joint trade association response can be found here.

ICMA has recently become a signatory to the Women in Finance Charter

27 September 2022 ICMA has recently become a signatory to the Women in Finance Charter, a Charter introduced by the UK government to help build greater gender balance in financial services.

ICMA publishes updated version of its SFTR reporting recommendations

23 September 2022  ICMA has published today an updated version of its detailed Recommendations for Reporting under SFTR. This is the eighth update to the public version of the SFTR Guide since its initial release in February 2020. Compared to the previous public version, the updated Guide includes 6 new questions and numerous further updates, reflecting new insights as well as additional ESMA guidance, eg regarding the reporting of central bank SFTs in the UK, guidance on the reporting of settlement fails, other Q&As issued by ESMA, as well as statements on the reporting of third-country issuer LEIs from both ESMA and the FCA. A blackline version has been published alongside the Guide itself to provide a complete overview of the recent changes. The SFTR Recommendations will continue to evolve to reflect ongoing discussions within the ERCC’s SFTR Task Force as well as any further requirements published by regulators. New public versions of the Guide will be released periodically. In addition, ICMA members also have access to a range of further best practice documents which complement the Recommendations.

ICMA publishes FAQs on DLT and blockchain in bond markets

22 September 2022 ICMA has published a set of FAQs on Distributed ledger technology (DLT) and blockchain in bond markets. DLT and blockchain represent an exciting new frontier in the evolution of fixed income securities issuance and trading. To raise market awareness and clarify some of the fundamental questions, ICMA and its DLT Bonds Working Group have developed a first set of Frequently Asked Questions (“FAQs”). These FAQs are designed to serve as an entry point for non-experts to gain a basic understanding of DLT bonds and their impact on capital markets. The DLT and blockchain in bond markets FAQs, which will be updated regularly, can be found here.

ICMA, ISLA & ISDA Appoint FINOS for CDM Repository

8 September 2022 The International Capital Market Association (ICMA), the International Securities Lending Association (ISLA), and the International Swaps and Derivatives Association (ISDA) have announced the appointment of FINOS to provide a repository, with a view to fostering the growth of an open-source community for the Common Domain Model (CDM).

In May 2022, the associations invited potential host organisations to provide a service proposal to meet the requirements of providing such a repository for the open-source CDM, which establishes a single, common digital representation of trade events and actions across the lifecycle of financial products. The requirements included maintenance of the CDM code, facilitating the growth of a community to contribute to the development of the CDM, allowing for governance of the contributions to be overseen by the associations, and assisting in building awareness of the CDM.

The appointment of FINOS will advance the development and increase the speed of adoption and distribution of the CDM, with a view to migrate to FINOS by the start of 2023. The model will then be distributed on an Apache licence-standard for open-source software.

The associations will announce once migration is complete and describe how institutions can contribute when it occurs. Contributions are encouraged by either contacting the associations or visiting the portal website.

“The collaboration with FINOS marks a milestone in promoting open and common standards across financial markets. The CDM, as a cross-industry initiative, plays a key role in supporting the digital transformation of capital markets, fostering interoperability and cohesiveness through FINOS’s open-source framework,” said Bryan Pascoe, ICMA’s Chief Executive.

“Fostering an open-source community through FINOS’s global reach and resourcing will ensure faster development and convergence on standards,” said Andrew Dyson, Chief Executive Officer, ISLA. “Appointing FINOS moves forward the long-term strategy agreed on by the associations in our Memorandum of Understanding (MoU), and importantly should ensure acceleration of adoption. I look forward to working with the FINOS team and the other associations on the migration.”

“Having a completely transparent, open-source CDM maintained by FINOS and supported by three trade associations will help accelerate adoption, bringing greater consistency across derivatives, repo and securities lending. It will also avoid fragmentation of standards and duplication of effort across the industry,” said Scott O’Malia, ISDA’s Chief Executive.

“We are thrilled to have been selected to host the Common Domain Model as a FINOS open standard project, and grow the open-source community around it,” said Jane Gavronsky, Chief Technology Officer of FINOS. “An open, standard representation of transactions and events will bring many benefits to the industry, and will significantly advance the much-needed data and process interoperability across the business lifecycle.”

Further information on the CDM can be found via the below links:

ISLA resources on the CDM
ICMA resources on the CDM for repo and bonds
ISDA resources on the CDM

ICMA’s response to the 'Call for feedback on the Platform for Sustainable Finance's report on minimum safeguards

7 September 2022 ICMA has responded to the call for feedback on the Platform for Sustainable Finance's report on minimum safeguards.

The key points that we are making in our response are in summary:

• ICMA welcomes the draft report which provides proposed advice on the last missing component of the EU Taxonomy Regulation, the functioning of the minimum safeguards (MS)
• However, ICMA believes that it is urgent to first resolve existing EU Taxonomy usability issues related to product alignment and regulatory reporting as outlined in its publication “Ensuring the usability of the EU Taxonomy”
• We agree that proposed EU Regulation such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the European Sustainability Reporting Standards (ESRS) that EFRAG is currently working on under the Corporate Sustainability Reporting Directive (CSRD) could serve as proxies to confirm compliance with the MS at least for entities under scope of CSDDD and CSRD
• While CSDDD and ESRS are not final and therefore still subject to change, and without comparable mandatory regulation for non-EU companies and SMEs not under scope, MS risk further adding to already existing usability challenges with the EU Taxonomy
• ICMA therefore proposes flexibility, with MS compliance continuing to be assessed through proxies such as conformity with relevant national legislation, controversy screening and broader sustainability reviews. This would continue until CSDDD and ESRS are finalised and their usability and effectiveness for establishing compliance with MS has been assessed
• Further clarification is needed on how to establish compliance with MS in more complex cases such as for banks that are issuing sustainable bonds (re)financing loan portfolios
  
  

Chinese translation of the Global Master Repurchase Agreement (GMRA) is now available

7 September 2022 The ICMA GMRA is widely used throughout Asia and, for those in Chinese speaking jurisdictions, ICMA is pleased to announce the publication of a Chinese translation of the GMRA 2011 produced in partnership with Clifford Chance and King & Wood Mallesons. This new addition to our documentation suite will prove a valuable reference tool to its users.

The GMRA is recognised as the market standard master agreement for repo transactions, a market with a notional value in excess of EUR 30 trillion globally, and has been proved to be incredibly robust over the last three decades. Specifically designed, tailored and tested by market stakeholders, the GMRA provides an efficient and standardised contractual form.

GMRA – Chinese translation (publicly available).

*This translation is provided for information only and intended to serve as an educational reference tool. The official version of the GMRA 2011 is the English language version published above.

ICMA appoints Head of Fintech and Digitalisation

5 September 2022 ICMA is pleased to announce the appointment of Georgina Jarratt as Managing Director, Head of Fintech and Digitalisation and as a new member of the Executive Committee.

Fintech and digitalisation are transforming financial markets which are now well embedded in all of the association’s work in primary, secondary, repo and collateral fixed income markets. ICMA  has a number of technology initiatives already under way including the Common Domain Model (CDM) for repo and bonds and the Common Data Dictionary for primary bond markets, as well as running established working groups on DLT and blockchain in bond markets and market electronification.

Bryan Pascoe, ICMA Chief Executive said: “I am delighted to be welcoming Georgina who brings a huge breadth of experience across transformation, digitalisation and leadership. Georgina will be instrumental in advancing our work in Fintech and digitalisation in a broader and more strategic way to bring further efficiency, standardisation and subsequently, automation to the capital markets. Her extensive experience in executive leadership and people management will also help drive forward our diversity and inclusion agenda.”

Georgina has spent most of her career, which spans three decades, running large and complex programmes of change across a variety of industries including Financial Services, Telecoms and Utilities. She has been with HSBC since 2005 where she has held a number of roles including Global Programme Director, Prime Services, Global Head of Business Transformation, Global Banking and Markets and most recently as Head of Transformation, Digital & Innovation, Private Banking.

New ICMA members in August 2022

31 August 2022 ICMA welcomes the following new members in August 2022:

• Bank Handlowy w Warszawie SA, Poland
• BOCI Asia Limited, Hong Kong
• China Lianhe Credit Rating Co., Ltd., China
• CMBC Investment (HK) Limited, Hong Kong
• Finastra International Limited, United Kingdom
• Inveztor Ltd., United Kingdom
• Propellant.digital B.V., Netherlands
• Société Générale-Forge, France
• Tudor Investment Corporation, United States
• UAE Financial Markets Association, Dubai

Click here to view the full list of ICMA members.

ICMA responds to draft European Sustainability Reporting Standards proposed by EFRAG

8 August 2022 ICMA has responded to the draft European Sustainability Reporting Standards proposed by EFRAG.

ICMA responds to consultation on ISSB’s first two exposure drafts for general requirements and climate-related disclosures

29 July 2022 ICMA has responded to the consultation on the ISSB’s first two exposure drafts for general requirements and climate-related disclosures.

ICMA responds to the UK Transition Plan Taskforce’s Call for Evidence

13 July 2022 ICMA has responded to the UK Transition Plan Taskforce’s Call for Evidence.

ICMA response to IOSCO discussion paper

8 July 2022 ICMA has submitted its response to the Corporate Bond Markets – Drivers of Liquidity During COVID-19 Induced Market Stresses, IOSCO discussion paper. ICMA’s response, drafted under the guidance of its Secondary Market Practices Committee (SMPC), is predominantly from a European market perspective and offers feedback and insights on a range of topics, including liquidity during the COVID-19 induced stress, the drivers of liquidity from both a demand and supply perspective, corporate bond market structure, dealer intermediation and concentration, corporate bond heterogeneity and standardisation, the growth of electronic trading and the effects of increased transparency.

New ICMA members in June 2022

30 June 2022 ICMA welcomes the following new members in June 2022:

• Arteria AI Inc., Toronto
• Bank of Tianjin Co., Ltd., Tianjin
• China Securities (International) Finance Holding Company Limited, Hong Kong
• CSCI Pengyuan Credit Rating Co., Ltd., Shenzen
• Goldman Sachs Bank Europe SE, Frankfurt
• Goldman Sachs International Bank, London
• Huatai Financial Holdings (Hong Kong) Limited, Hong Kong
• La Banque Postale, Paris
• PricewaterhouseCoopers Zhong Tian LLP (trading as PwC China), Shanghai
• Standard Chartered Bank (DIFC Branch), Dubai

Click here to view the full list of ICMA members.

ICMA's response to the ECB questionnaire on financial market stakeholders’ potential interest in the Eurosystem providing EUR central bank money settlement of wholesale transactions in the payments, securities settlement and collateral management domains

28 June 2022 ICMA submitted its response to the ECB questionnaire on financial market stakeholders’ potential interest in the Eurosystem providing EUR central bank money settlement of wholesale transactions in the payments, securities settlement and collateral management domains using new technologies such as Distributed Ledger Technology (DLT). ICMA’s response to is based on views shared by members of its Blockchain Bonds working group and other ICMA constituencies, representing issuers, banks, investors, market infrastructures, and law firms. ICMA’s detailed response can be found here.

The Principles announce key publications and resources in support of market transparency and development

28 June 2022 The Green Bond Principles (GBP), Social Bond Principles (SBP), Sustainability Bond Guidelines (SBG) and Sustainability-Linked Bond Principles (SLBP) (the “Principles”) - the global standard for a $2.4 trillion market, representing the largest source of market finance dedicated to sustainability and climate transition available internationally to corporates, banks and sovereigns - announce new and updated publications including new definitions for green securitisation, updated key performance indicators for Sustainability-Linked Bonds and new resources for climate transition finance.

Specific publications and resources released today are:

• New definitions for green securitisation (Secured Green Collateral Bond, Secured Green Standard Bond) clarifying terminology and market practice, notably for collateral. A related Q&A is also being released (including sustainability criteria relating to collateral, no double counting principles, reporting requirements, etc.). Similar guidance is also available for social bond securitisation.
• An updated registry of approximately 300 key performance indicators (KPIs) for Sustainability-Linked Bonds, the fastest-growing segment of the sustainable bond market. The KPIs are classified by sector and between core and secondary indicators following the input of over 90 leading market participants and stakeholders. An accompanying Q&A also addresses, among other issues, the materiality assessment of KPIs, which has been a topic of debate among market participants and stakeholders.
• A new Climate Transition Finance (CTF) Methodologies registry has been created with a list of tools to specifically help issuers, investors, or financial intermediaries validate their emission reduction trajectories/pathways as "science-based". Similarly, the Guidelines for External Reviews have been updated to facilitate the assessment of alignment with the existing Climate Transition Finance Handbook (CTFH).

The Principles have also released today additional guidance, updates and templates, specifically:

• New metrics for impact reporting (1) for Green Projects relating to environmentally sustainable management of living natural resources and land use, and (2) for Social Projects (including an enriched list of social indicators and impact confirmation on target population).
• Updated high-level mapping to the United Nations’ Sustainable Development Goals (SDGs).
• A recommendations paper and proposed information template for providers of Green, Social and Sustainability Bond index services.
• Pre-issuance Checklist for Green Bonds/Green Bond Programmes and an updated Sustainable Bond/Bond Programme Information Template (including disclosure of the issuer’s sustainability strategy).

The standards and guidance from the Principles are developed with the input of over 400 market participants and stakeholders, as well as the participation of many other organisations through technical working groups. In 2021, the Principles were referenced by an estimated 98% of sustainable bonds issued globally and have been translated into 25 languages.

The new and updated publications and resources in support of market transparency and development are being announced at the 2022 Annual Conference of the Principles on the 28 June in London. The conference will also feature discussions on workstreams concerning the application of the Principles in a wider context, including commercial paper and repo, as well as high yield and emerging markets.

Denise Odaro, Chair of the Principles, Head of Investor Relations, International Finance Corporation (IFC), said: ”The Principles serve as a model for incorporating sustainability into capital markets, and the updates this year ensure that they remain current with market developments while also recognising emerging related products. Additionally, the updated KPI registry and climate transition methodologies stand to aid issuers to fundamentally and rapidly advance the transition to a low-carbon economy via the bond market and beyond.”

Nicholas Pfaff, Deputy Chief Executive and Head of Sustainable Finance, ICMA, said: “The 2022 announcements of the Principles represent critical support for market integrity and development. Sustainability now permeates all areas of the capital markets. The Principles provide market participants and stakeholders with an essential reference for product standards, agreed terminology and technical consistency, as well as a resource to benchmark ambition.”

Ashley Schulten, Head of Responsible Investing for Global Fixed Income, BlackRock, and Vice-Chair of the Principles, said: “What the Principles have accomplished over the years has been truly impressive. This has been possible thanks to the very active participation across various market players, the incredible support of ICMA, and the input through our member and advisory network covering the sustainability ecosystem. These updated guidelines reflect hundreds of hours of research, feedback and consensus-building across this community.”

Tanguy Claquin, Global Head of Sustainable Banking, Crédit Agricole CIB and Vice-Chair of the Principles, said: “As every year, the Principles community publishes new best practices and guidelines for the sustainable bond market. It is a great toolbox for market participants, but also a great reference for stakeholders and regulators that can be used to ensure market transparency and credibility. I want to deeply thank all the people who have dedicated their time to the development of these new texts.”


New/updated documents released:

Green Bond Principles - June 2021 (with June 2022 Appendix 1)
Pre-issuance Checklist for Green Bonds / Green Bond Programmes - June 2022
Social Bond Principles - June 2021 (with June 2022 Appendix 1)
Sustainable Securitisation Related questions - June 2022
Sustainability-Linked Bond Principles Related Questions - June 2022
Sustainability-Linked Bonds Illustrative KPIs Registry - June 2022
Climate Transition Finance Methodologies Registry - June 2022
Green, Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals - June 2022
Handbook - Harmonised Framework for Impact Reporting (Green Bonds) - June 2022
Harmonised Framework for Impact Reporting for Social Bonds - June 2022
Guidelines for Green, Social, Sustainability and Sustainability-Linked Bonds External Reviews June 2022 - June 2022
Green, Social and Sustainability Bond Index Service Mapping Supporting Paper - June 2022
Index Providers Mapping Template - June 2022

ICMA publishes market best practice recommendations to support settlement efficiency in the secondary bond markets

22 June 2022 ICMA has published secondary market best practice in support of settlement efficiency, intended to be applied by ICMA members in the context of the international secondary bond markets. These best practice recommendations have been developed through the work of ICMA European Repo and Collateral Committee (ERCC) and the ERCC Operations Working Group. The ERCC Committee endorsed this list of best practices in January 2022, highlighting the commitment of member firms to follow these recommendations for the benefit of the wider market and to encourage other firms to do the same. The recommendations have now been adapted and endorsed by ICMA’s Secondary Market Practices Committee (SMPC) and are intended to be applied in the secondary bond markets.

These best practice recommendations should also be viewed in the context of the EU’s CSDR Settlement Discipline regime. While a penalty mechanism for settlement fails has already been introduced, the Commission has proposed that a mandatory buy-in regime could be applied to certain markets at a future date in the event that settlement efficiency rates do not see an improvement.

The ICMA SMPC has also published a best practice recommendation to support the KYC process.

Where relevant, these recommendations will be included in the ICMA Secondary Market Rules & Recommendations.

Updated analysis of the proposals for the EuGB Regulation

22 June 2022 Trilogue discussions are beginning between the co-legislators to determine a final text for the Regulation on European green bonds. We strongly support the progress towards a consensus on a voluntary standard, as well as potentially on grandfathering of Technical Screening Criteria of the Taxonomy for the EuGB label.

However, we have real concerns for the success of the EuGB label if proposals for fundamental changes to its legal requirements are taken forward, as they will likely prove impractical and will significantly increase legal liability for issuers. We reiterate our view that the absence of a comprehensive solution to Taxonomy usability issues will considerably limit the potential alignment of green projects. This will also narrow the scope of the future EU GBS. Additionally, we identify unintended barriers for CapEx plan financing.

Our analysis of the European Parliament’s proposals to expand the scope of the Regulation to introduce mandatory requirements for all sustainable bonds, finds them to be largely superfluous as well as raising real implementation challenges. They essentially duplicate entity-level requirements that are or will be covered by other EU sustainable finance legislation, such as the Taxonomy Regulation and the future CSRD. Such duplication will also unintentionally diminish the appeal of the European sustainable bond market considerably, by adding unnecessary complexity and costs.

Finally, we have shared this paper with the Climate Bonds Initiative, which has confirmed its support for our analysis and recommendations.

Read the full analysis here.

ICMA submits feedback for the European Commission’s proposed amendments to CSDR

26 May 2022 ICMA has submitted its formal feedback for the European Commission’s proposed amendments to CSDR. ICMA’s members provide three main recommendations to enhance the effectiveness of the proposed revisions, along with some more technical refinements, such as amending the regulatory text to address the asymmetry in the cash compensation payment. The document also outlines some considerations for the penalty framework and application from both a secondary and primary market perspective.

Digitising legal documentation for future repo market efficiency

25 May 2022 The repo market, valued at over EUR 9,000 billion at year end 2021 (source: ICMA European Repo Survey December 2021), is essential to the functioning of financial markets, allowing cash and collateral to be moved efficiently around the system. Standardisation of the documentation to enable repo trading has been critical to the growth of the market, with the Global Master Repurchase Agreement (GMRA)  becoming the most widely used master trading agreement in the international market providing a basis on which to negotiate the trading relationship between two parties.

Digitisation of the GMRA is an important step towards achieving future automation and efficiencies in negotiating repo transactions. Recognising the need for consistent representation of legal data, ICMA launched the GMRA Clause Taxonomy and Library Project in October 2021, to explore the benefits of a catalogue of GMRA clauses and their negotiated business outcomes, together with a library of model wordings that could be used to draft for such outcomes in a standardised way across the industry.

ICMA has published a strategy paper which explores the potential to drive consistent wording across industry negotiated repo documentation, thereby improving the efficiency of the documentation process and assisting with the management of legal agreement data. The paper, produced in collaboration with D2 Legal Technology (D2LT) outlines the work undertaken so far on the GMRA Clause Taxonomy and Library Project and scopes out the tasks that remain.

Industry participants are strongly urged to participate in ICMA’s GMRA Clause Taxonomy and Library Working Group to contribute to this transformational project, building on the key role GMRA documentation plays in repo trading.

ICMA response to the European Commission’s Targeted Consultation on the functioning of the Money Market Fund Regulation

13 May 2022 ICMA responded to the European Commission’s Targeted Consultation on the functioning of the Money Market Fund Regulation. As well as addressing the technical points in the Consultation, ICMA suggested that a shift of focus away from individual MMF structures towards the efficiency and resilience of the underlying market would be more appropriate, by reference to its recent White Paper on The European Commercial Paper and Certificates of Deposit Market, which addresses potential vulnerabilities in the CP market, and proposes initiatives and recommendations that could support the development of market structure and enhance resilience. 

ISDA, ICMA and ISLA Seek Third-Party Solution for CDM Repository

10 May 2022 The International Swaps and Derivatives Association (ISDA), the International Capital Market Association (ICMA) and the International Securities Lending Association (ISLA) have announced a request for proposal for a third-party organization to provide an open-source repository for the Common Domain Model (CDM).

The three associations signed a memorandum of understanding in August 2021 to strengthen collaboration on the future development of the CDM, which establishes a single, common digital representation of trade events and actions across the lifecycle of financial products. The associations are now inviting potential host organizations to provide a service proposal to meet their requirements.

Responding organizations will need to be able to:

• Provide a repository for the open-source CDM, which allows maintenance of the CDM code, open access for its consumption and use by the CDM community;
• Facilitate the growth and maintenance of a community, members of which can contribute to the development of the CDM;
• Allow for the governance of contributions to the CDM to be overseen by the associations; and
• Assist in creating and maintaining awareness of the CDM within the financial services community.

Proposals should be submitted no later than June 17, 2022 at 22:00 BST/17:00 EDT.

To receive a copy of the detailed requirements document and further details, please contact: CDMinfo@isda.org, regtech@islaemea.org or Fintech@icmagroup.org.

Further information on the CDM can be found here:
ISDA resources on the CDM
ICMA resources on the CDM for repo and bonds
ISLA resources on the CDM

ICMA has responded to ESMA’s consultation on trading venue perimeter

4 May 2022 ICMA has clarified its member’s interpretation of the definition of multilateral system. The response also covers the key characteristics (automated and non-automated) required in order for an entity to be authorised or not authorised as a trading venue. In addition, ICMA has made clear the regulatory boundaries for communication tools, and when they may or may not be required to be authorised as trading venues.  Finally, ICMA explains governance of the execution is crucial when assessing whether activities are multi-lateral or bi-lateral. ICMA’s response is based on buy-side, sell-side, trading venue and technology provider views. While there was a clear majority from all taskforce members, a limited few trading venues disagreed with the overall response.

New ICMA members in April & May 2022

4 May 2022 ICMA welcomes the following new members in April & May 2022:

• Arab Federation of Capital Markets, Lebanon
• Conv-Ex Advisors Limited, United Kingdom
• KPMG International Limited, United Kingdom
• MarkitServ LLC, United States
• State Street Bank and Trust Company, United States
• State Street Global Advisors Limited, United Kingdom
• Valantic Transaction Solutions GmbH, Germany

Click here to view the full list of ICMA members.

ICMA publishes Guide to Asia Repo Markets: Vietnam

3 May 2022 ICMA has published the third instalment of its Guide to Asia Repo Markets, which covers Vietnam. The report covers financial infrastructure, types of repo and collateral, market participants and dynamics, post trade operations, and the legal and regulatory framework. It also highlights recent efforts to foster a more liquid domestic market in true repo, and current obstacles to further development.

Download ICMA Guide to Asia Repo Markets: Vietnam

This is the latest in a series of reports on domestic repo markets that ICMA is publishing as part of its continued commitment to promoting the development of repo markets around the world. Guides to domestic repo markets in
Japan and Indonesia were published in February and March. The guide for the Philippines will be available shortly, followed by Thailand, Malaysia, China, Hong Kong, Taiwan, Korea, and Singapore.

ICMA has played a significant role in promoting the international repo market since the 1990s. This includes the development of the Global Master Repurchase Agreement (GMRA), which has become the principal master agreement for cross-border repos globally, as well as for many domestic repo markets, supported by annually updated legal opinions in more than 60 jurisdictions. (View a full list of jurisdictions covered by the 2022 legal opinions update).

For more information contact: apac@icmagroup.org

ICMA Podcast
Listen to repo expert and author of the ICMA Guide to Repo Markets, Richard Comotto, highlighting the challenges faced by frontier markets in trying to build a new repo market, including lack of an active interbank money market, illiquid collateral and legal obstacles.

AMIC response to the ESMA consultation paper ‘Guidelines on certain aspects of the MiFID II suitability requirements’

27 April 2022 AMIC submitted its response to the ESMA consultation paper on the ‘Guidelines on certain aspects of the MiFID II suitability requirements’. In its response, AMIC highlighted the implementation challenges of the 2 August application date from product manufacturer, distributor and end-investor perspectives; and made specific suggestions on the proposed draft guidelines to help the clients assessment process and align the final guidelines to the Delegated Act. Most critically, AMIC recommended a no action letter from the ESAs advising NCAs to not prioritize supervisory action towards implementing sustainability preferences in the MiFID II suitability assessment as of 2 August 2022. This forbearance period would allow firms to implement the final guidelines avoiding the burden and risks arising from double implementation; as well as wider availability of products to offer to clients following their suitability assessment as the necessary (corporate related) data should become available and more reliable in 2025 the earliest.

Financing social projects to support fragile and conflict states with Social and Sustainability Bonds

27 April 2022 The Executive Committee of the Principles, supported by the International Capital Market Association (ICMA), underline that existing guidance for Social and Sustainability Bonds is appropriate for use in the support of fragile and conflict states.

Social Bonds finance projects that directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes directed towards a specified target population. Sustainability Bonds are raised by public and private organizations to finance both green and social projects. Social and Sustainability Bonds are neither grants nor concessional finance and are to be repaid by the borrower. Borrowers also need to have processes to identify mitigants to known material risks of negative social and/or environmental impacts from their projects.

Illustrative examples of eligible social projects within the context of fragile and conflict states support include direct emergency relief such as food, shelter and healthcare, as well as specific projects designed to alleviate unemployment generated by the circumstances. These can especially target refugees and displaced persons fleeing the conflict, although they may also seek to support a wider population affected by the economic crisis. Additional information in the form of a targeted Q&A are also being made available.

Denise Odaro, Chair of the Executive Committee of the GBP SBP, Head of Investor Relations at IFC, stated: “The very essence of the Principles is to support issuers in financing projects that achieve positive social outcomes and the well-being of society. As such, the Principles very naturally apply to the support of the most vulnerable and marginalized communities escaping conflict or being affected by it.”

Nicholas Pfaff, Deputy CEO and Head of Sustainable Finance of ICMA, stated: “Social and Sustainability Bonds can and are being used by borrowers such as governments, supranationals and official agencies to raise capital for emergency relief and social projects in support of fragile and conflict states “.

Q&A for Social and Sustainability Bonds used to raise capital for social projects to support fragile and conflict states
View the 2021 Social Bond Principles
View the Sustainability Bond Guideline

Sanctions on Russia: Considerations for repo and secondary trading

21 April 2022 ICMA members can access a paper on ‘Sanctions on Russia: Considerations for repo and secondary trading’ illustrating how repo transactions and secondary trading may be affected by the sanction regimes.

Sanctions on Russia: Considerations for repo and secondary trading

(ICMA members only – log in required, please contact membership@icmagroup.org if you do not know your log in credentials.)
 

European repo market - ICMA publishes survey showing record outstandings of EUR 9,198 billion at year end 2021

20 April 2022 The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 42nd semi-annual survey of the European repo market. The survey, which measured the amount of repo business outstanding on 8 December 2021, from the returns of 57 financial institutions sets the baseline figure for European market size at a record high of EUR 9,198 billion, up by 5.4% from EUR 8,726 billion in the June 2021 survey and an increase of 11.0% since December 2020.

Download the 42nd ICMA ERCC European Repo Market Survey

Accelerating growth in the European repo market, as reflected in the ICMA survey, was broadly based across the participating financial institutions. The strong performance of voice-brokers and a muted showing by electronic trading systems (both automatic interdealer and automated dealer-customer platforms) as well as CCP-cleared repo points to particularly strong growth in over-the-counter (OTC) repo between dealers.

A significant share of the business seen in the survey was securities-driven, reflecting the worsening collateral shortage in the run-up to the year-end, which was a product of central bank asset purchases, substantial short-selling of government bonds in anticipation of higher yields and the usual seasonal tightening of dealer’s balance sheets. German, French, Italian and Spanish government bonds were most affected. Meanwhile, cash-driven repo, not least tri-party repo, revived but is still held back by the abundance of central bank liquidity.

Two additional ICMA ERCC reports have been published today alongside the main repo survey: Electronic trading in the European repo market, and A look-back at the tri-party securities lending data reported in the ICMA survey. The latter follows a similar report published as part of the previous edition of the European Repo Market Survey which focused on tri-party repo.

ICMA publishes 2022 legal opinion updates for the Global Master Repurchase Agreement

19 April 2022 ICMA has announced the publication of the 2022 updates to the legal opinions which underpin the use of the Global Master Repurchase Agreement (GMRA) the most widely used legal agreement for international repo transactions.

The opinions provide ICMA members with exclusive access to a substantive body of legal know-how in relation to the enforceability of the GMRA and, in particular, the GMRA netting provisions in more than 60 jurisdictions.

Access the 2022 legal opinions

(ICMA members only – log in required, please contact membership@icmagroup.org if you do not know your log in credentials.)

Regulators require repo transactions to be documented under robust written legal agreements like the GMRA, supported by regularly updated legal opinions, as a condition of recognising the reduction of credit risk by collateral and close-out netting in the calculation of regulatory capital requirements and large exposures. The GMRA legal opinions assist members in satisfying such regulatory conditions in order to realise related capital benefits.

Regulated entities will be concerned to review legal opinions for the jurisdiction in which their repo counterparty is incorporated, the jurisdiction in which any involved branch of their counterparty is located and the jurisdiction whose law governs the relevant netting master agreement. Providing ICMA members with access to a comprehensive list of annually updated legal opinions, spanning over 60 jurisdictions, offers members a business-critical service in relation to their GMRA related activities.

A new user interface has been introduced on the ICMA website for accessing the GMRA legal opinions, with improved search functionality and filters.

For more information contact info@icmagroup.org

ICMA ERCC updates its Repo Best Practice Guide

29 March 2022 ICMA’s European Repo and Collateral Council (ERCC) has released an updated version of one of its flagship documents, the Guide to Best Practice in the European Repo Market. The detailed Guide provides recommended practices, conventions, and clarifications intended to support the orderly trading and settlement of repos.

The latest version introduces a number of new and updated guidelines intended to address issues that have arisen since the last publication in March 2021. These include further additions to best practices relating to the use of settlement optimisation tools, such as shaping and auto-borrowing, which were agreed as part of a broader  ERCC initiative to support settlement efficiency. But the latest edition also introduces a number of other updates around the trading, margining and lifecycle management of repo trades which have been agreed by the ERCC’s Best Practice Working Group and subsequently endorsed by the ERCC Committee.

For comparison, the updated Guide has been published along with a blackline version which shows all the latest changes. The ERCC will continue to review the Guide and make further updates in line with future market evolution.

Download ICMA Guide to Best Practice in the European Repo Market

ICMA publishes the second edition of the report Asian International Bond Markets: Development and Trends

22 March 2022 ICMA, supported by the Hong Kong Monetary Authority (HKMA), has today published the second edition of its report, the Asian International Bond Markets: Development and Trends. The report shows annual issuance of cross-border bonds from Asia has increased more than sixfold from US$ 107 billion in 2006 to US$ 614 billion in 2021.

Download the report: 
English version        Chinese version

Looking at markets across Asia including China, India, Japan, ASEAN and South Korea, the report identifies trends in both issuance and trading of international bonds in the region.

The growth of international bond markets in Asia has been fuelled by the steady entry of new issuers and by an increasing and diverse investor base, with Asian financial centres playing a larger role in arrangement and listing. Chinese issuances now account for 37% of the international issuance volume in Asia. Entrance of new issuers from China has been one of the key drivers of growth, while Indian issuers also increasingly contributed with debut international bonds in 2021.

Commenting on the report, ICMA CEO Bryan Pascoe said: “Our research clearly shows that Asian financial centres are playing significant and growing roles in facilitating the development of international bond markets, by arranging and listing primary market issuances, as well as providing secondary market liquidity through the market making activities of the international and domestic banks.”

ICMA welcomes today’s proposal from the European Commission for a revised mandatory buy-in framework under CSDR

16 March 2022 ICMA welcomes today’s proposal from the European Commission for a revised mandatory buy-in framework under CSDR, which takes into account a number of the concerns previously raised by ICMA and the wider industry, not least the potential negative effects of the regime, both in normal and stressed market conditions. For example, the inclusion of a pass-on mechanism and the provision for symmetrical payments of the buy-in differential are welcomed enhancements to the previous proposal. It is also encouraging that the application of the mandatory buy-in regime will be subject to an assessment by the Commission as to its appropriateness in the light of the evolution of settlement efficiency in the EU, allowing the opportunity for cash penalties, as well as other initiatives focused on improving settlement efficiency, some time to make an impact. However, ICMA would stress the importance of a robust approach to assessing not only settlement efficiency rates that importantly differ across different instruments and transaction types, but also the precise causes of settlement fails, with recognition of the extremely fragmented post-trade landscape that is a particular and longstanding characteristic of EU capital markets. ICMA would further caution that a regulatory, one-size-fits-all buy-in regime could be counterproductive for markets that already benefit from contractual buy-ins or other well-established remedies for settlement fails, for instance bond markets.

New ICMA members in March 2022

9 March 2022 ICMA welcomes the following new members in March 2022:

• D2 Legal Technology Ltd, United Kingdom
• DirectBooks LLC, United States
• Hannon Armstrong Sustainable Infrastructure Capital, Inc., United States
• Monzo Bank Limited, United Kingdom
• Talwar Thakore & Associates, India

Click here to view the full list of ICMA members.

ICMA response to ESMA Call for Evidence on a DLT Pilot Regime

2 March 2022 ICMA has submitted its response to ESMA’s Call for Evidence on a DLT Pilot Regime. The call for evidence sought feedback from stakeholders on the need to amend the RTS on pre- and post-trade transparency and data reporting requirements in the context of the DLT Pilot. The response focuses on points most relevant to international debt capital markets and ICMA’s membership.

Suspension of Russian members

1 March 2022 The ICMA Executive Committee has resolved, effective immediately, to suspend the membership of our Russian members and their relevant affiliates until further notice. We are also suspending generally the participation of these members / Russian organisations in our working groups.

For further details please contact: legalhelpdesk@icmagroup.org

ICMA announces the recipients from Africa and Asia for its 2022 Scholarship Programme

16 February 2022 ICMA is delighted to announce the students who have been selected from Africa and Asia to its 2022 scholarship programme. The 20 individuals from Sub-Saharan Africa (Ethiopia, Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda, Zambia) and 15 from Asia (Malaysia, Mongolia, India, Indonesia, Philippines, Thailand, and Vietnam) were selected from an extensive number of applications received, based on their academic attainments and a personal statement on their suitability for their chosen course of study. The ICMA scholarship programme is part of ICMA's mission to raise standards and support inclusion in financial markets.

The new students will study online for an ICMA Diploma in either debt capital markets, securities & derivatives or financial market operations, starting next month.

Bryan Pascoe, Chief Executive, said ‘Supporting the development of financial market participation in emerging economies is a major focus for ICMA. Congratulations and welcome to our selected scholarship applicants from Asia and Africa. We wish them all the best with their studies and in their future careers.’

2022 ICMA scholars from Sub-Saharan Africa

2022 ICMA scholars from Asia

ICMA makes proposals to address usability concerns over the EU Taxonomy

14 February 2022 ICMA has published a paper which identifies challenges for the financial and corporate sector in providing information on the alignment of their activities with the EU Taxonomy as required by existing and proposed future regulatory reporting. The paper makes five key recommendations EU co-legislators and regulators to address these usability concerns. The objective is to ensure the availability of Taxonomy information to help guide market participants and policy makers alike in their decisions relating to sustainable strategy and policy making.

While the Taxonomy has been widely discussed recently in terms of how it defines sustainability and its scope, the new paper Ensuring the usability of the EU Taxonomy identifies practical concerns supported by research over the usability of the Taxonomy for the financial and corporate sector, not least the difficulty in sourcing or estimating the required detailed information on alignment, or the reliance on EU legislation and criteria in an international market. The paper aims to provide solutions drawing on both conceptual and practical solutions to these issues that exist or that are emerging from both regulation and market practice.

Bryan Pascoe, ICMA Chief Executive said: “The EU Taxonomy is an important and ground-breaking project designed to help inform the market and policy makers on their progress towards sustainability. Our analysis and proposals, produced with the input of ICMA members, are a contribution to the ongoing efforts of many parties to ensure that it can fulfil in practice its intended objective.”

The EU Taxonomy aims to define environmentally sustainable activities to fulfil the EU’s objective of steering private and public capital to a sustainable economy. It will be used as the main classification tool to identify and monitor sustainable activities and as a reference for disclosure obligations and official labels for financial products. It is unique in that it is incorporated into EU regulation and legislation, which will require detailed environmental reporting by financial and non-financial firms under the Sustainable Finance Disclosure Regulation and eventually under the proposed of the Corporate Sustainability Reporting Directive and the EU Green Bond Standard.

ICMA response to European Commission targeted consultation on the Listing Act

11 February 2022 ICMA has responded to the European Commission’s targeted consultation on the Listing Act: making public capital markets more attractive for EU companies and facilitating access to capital for SMEs. The consultation posed a wide range of questions relating to the state of public capital markets in the EU and the associated regulatory regimes, namely the EU’s Prospectus Regulation (PR), Market Abuse Regulation (MAR), MiFID, Transparency Directive and Listing Directive. The key points from ICMA’s response are as follows.

1. The EU’s primary bond markets currently function efficiently, particularly in the wholesale space. The regulatory environment for listing wholesale bonds in the EU is considered to be reasonably well-calibrated, although is perceived to place more emphasis on investor protection than ensuring access to finance for bond issuers.
   
   
2. Given the well-functioning nature of wholesale primary bond markets currently, many ICMA members would welcome only necessary adjustments to the PR. However, some more ambitious proposals to increase flexibility for bond issuers could also be considered. In any event, the base prospectus format, wholesale disclosure regime and flexibility for bond issuers to choose their home Member State under the PR work well and must be retained. Similarly, the public offer exemptions and application to securities to be admitted to a regulated market (but not MTFs) provide important flexibility.  
   
   
3. In relation to MAR, the broad scope (namely its application to securities listed on regulated markets, MTFs and OTFs), the definition of “inside information”, obligations relating to insider lists and the market soundings regime are considered problematic or disproportionate.
   
   
4. Changes to the listing-related requirements under MiFID, Transparency Directive and Listing Directive are, on balance, not considered to be necessary at this time.
   
   
5. There is scope to develop a pan-EU retail bond market, but regulation is only one factor among various other commercial and market drivers. Constructing an appropriate regulatory regime would require a holistic consideration of various regulatory tools and incentives. The situation is similar for SME issuer access to public bond markets, where investors tend to need more (rather than less) information about the issuer. While challenges exist in both the retail and SME contexts, they should be considered separately given retail investors are less likely to be able to assess and bear the increased risks associated with investing in SME bonds. 

Results of the 2022 ICMA ERCC elections

10 February 2022 We are pleased to announce the results of the 2022 ICMA ERCC elections. The 19 individuals that were elected to the new ERCC Committee are listed below. The term of office of the new Committee will be approximately one year starting immediately and ending on the day that the results of the 2023 ERCC elections are announced. The results are based on valid votes received from 76 ERCC members (out of a total of 114 member firms)

Charlie Badran
AXA Investment Managers GS Ltd

Thomas Hansen
Banco Santander S.A.

Nick Dent
Barclays Capital Securities Limited

Emma Cooper 
BlackRock Investment Management (UK) Limited

Eugene McGrory
BNP Paribas

Peter Fejfer Nielsen
Citigroup Global Markets Limited

Jean-Robert Wilkin
Clearstream Banking

Andreas Biewald
Commerzbank Aktiengesellschaft

Romain Dumas
Credit Suisse International

Frank Gast
Eurex Repo GmbH

Marije Verhelst
Euroclear Bank S.A./N.V.

Ned Taylor
HSBC Bank plc

Lav Lukic
J. P. Morgan Securities plc

Antony Baldwin
LCH Limited

Daniel Bremer
Merrill Lynch International

Roelof van der Struik
PGGM Vermogensbeheer B.V.

Sylvain Bojic
Société Générale S.A.

Gareth Allen 
UBS AG

Harald Bänsch
UniCredit Bank AG

ICMA publishes discussion paper with proposals to strengthen settlement efficiency in Europe

1 February 2022 In the wake of the go-live of CSDR settlement discipline, the ERCC is releasing its discussion paper, ‘Optimising settlement efficiency’  to focus attention on a number of key opportunities to strengthen settlement efficiency in Europe, which are complementary to the CSDR measures. While ICMA and the ERCC have been supportive of cash penalties, we believe that these should be supplemented by a broader industry effort to support settlement efficiency, focusing on existing tools and processes.  Over the past year a number of key issues have been identified and explored further with members in a series of cross-industry workshops, including the shaping of settlement instructions, partial settlement and auto-partialling, as well as automatic borrowing and lending. This paper recaps the key take aways from those discussions and aims to serve as a basis for a broader debate on settlement efficiency with other industry stakeholders, central banks and regulators.

Alongside the paper, the ERCC has published a compilation of best practice recommendations , extracted from the Guide and endorsed by the ERCC Committee at its latest meeting highlighting the commitment by member firms to follow these best practices recognising the benefits for the wider market.

ICMA has developed FAQs and Best Practice Recommendations for CSDR penalty regimes

1 February 2022 ICMA, through its CSDR Settlement Discipline Working Group, has developed a list of Frequently Asked Questions (FAQs) and Best Practice Recommendations intended to support implementation of the CSDR Penalty regimes for the bond and repo markets, when it goes live on 1 February 2022. The FAQs and best practice cover a range of issues, such as scope, invoicing and billing, restitution, as well as the confirmation and allocation process under Article 6 of CSDR. They are also intended to be aligned with, and complementary to, the ECSDA Penalty Framework and the AFME Best Practice for Bilateral Claims.

The ICMA FAQs and Best Practice are intended to be living documents and will be updated as new issues are raised following go-live, or in response to regulatory clarification. These also represent ICMA’s commitment to establishing best practice for international bond and repo markets as well as underpinning market resilience and efficiency.

New ICMA members in January 2022

ICMA welcomes the following new members in January 2022:

• BancTrust Investment Bank Limited, London
• BlackRock (Singapore) Limited, Singapore
• BlackRock Asset Management North Asia Limited, Hong Kong 
• Corporacion Andina de Fomento (trading as CAF - Development Bank of Latin America), Bogota
• IBP Markets Limited, London
• Mizuho Securities Asia Limited, Hong Kong
• Sinara Financial Corporation (Europe) Ltd, Limassol
• ION Trading UK Limited, London 

Click here to view the full list of ICMA members.

The European repo market at 2021 year-end

17 January 2022 The ICMA European Repo and Collateral Council (ERCC) has published a report on the performance of the European repo market at year-end 2021, focused on the euro, sterling, US dollar and Japanese yen markets and based on market data and accounts provided by market participants (both sell-side and buy-side). This is the 6th in the series of annual reports, following the analysis of dislocations in the euro denominated repo market at the end of 2016.

The general view of market participants is that the year-end for the euro repo market was relatively orderly from an operational perspective, particularly for core sovereign collateral, where, along with significant pre-positioning, central bank lending programmes are likely to have played an important role. That said, this was still the most expensive year-end for core repo since 2016, and certainly saw the lowest rates for the most sustained period leading up to any year-end. Meanwhile, non-core repo rates, somewhat unexpectedly, were even tighter than at year end 2016, making this the most expensive turn since the euro was launched. And while the levels of stress experienced at the 2016 year-end were not observed in 2021, some participants have expressed concern at the extreme levels recorded, the relative lack of liquidity, and the fact that participants were pre-positioning actively, and expensively, from as early as October.

Download 'The European repo market at year-end 2021'

AMCC publishes Report of the survey on corporate bond market microstructures and participant behaviours

17 January 2022 AMCC publishes Report of the survey on corporate bond market microstructures and participant behaviours

 The AMCC report of the survey on corporate bond market microstructures and participant behaviour is an initiative of the IOSCO Affiliate Members Consultative Committee (AMCC) Bond Market Liquidity Working Party (BMLWP). While there are some gaps in the survey responses, the feedback may help in contributing to paint a picture of the different corporate bond market structures across key regional and national jurisdictions, as well as the market participant behaviours and drivers in times of market stress, drawing on the experience of the March-April 2020 turmoil. It concludes that that any interventions to help build market resilience should be focused on dealer capacity and incentives, rather than attempting to anticipate and influence the decisions and behaviours of an extremely diverse and complex universe of investors. ICMA, as Chair of the AMCC BMLWP, was actively involved in coordinating the survey and drafting the report. The report has been submitted to the IOSCO-FSEG Corporate Bond Market Liquidity Workstream, and is intended to complement and inform the second phase of its work.

Automation of debt issuance: ICMA references over 45 solutions

10 January 2022 Digitisation of debt issuance continued apace in 2021. ICMA’s latest review of its primary markets technology directory, conducted in Q4 of last year, saw the addition of more than 10 platforms or applications for the issuance of debt instruments. This brings the total number of solutions to over 45, up from 35 in Q4 2020 and more than doubling compared to 2018 when the directory was first launched.

The directory seeks to provide greater transparency in a rapidly expanding competitive marketplace by comparing the key features and capabilities of technology solutions available to automate all or part of the process of issuing debt securities. The scope includes bonds, but also other types of debt instruments such as commercial paper, loans and Schuldscheine. It highlights whether the various solutions are aimed at underwriters, investors, issuers or others, at what stage of the issuance process they can be utilised, supported issuance methods as well as connectivity options.

Key observations:

• Since the last review in 2020, new technology offerings have targeted in particular bond syndication, seeking to enhance deal-related data management and communication between underwriters and issuers, but also investors.
• New platforms have emerged to streamline end-to-end issuance workflows, but also to support the issuance, trading and settlement of digital securities based on distributed ledger technology.
• The directory includes a growing number of auction platform aimed at both public sector and corporate issuers, amongst others.
  
  

Analysis of the amendments to the EuGB Regulation proposed by the Rapporteur of the EU Parliament

5 January 2022 ICMA analysis of the amendments to the EuGB Regulation proposed by the Rapporteur of the EU Parliament 

The Rapporteur of the EuGB Regulation at the European Parliament released proposed amendments on 2 December 2021. We believe these amendments reflect a fundamental shift from the Commission’s proposal. They add new requirements for bonds aligned with the EuGB and propose that it become mandatory for all green bonds between 2025 and 2028. Very significantly, they aim to regulate the entire European sustainable bond market via the EuGB Regulation and introduce comprehensive mandatory requirements for all sustainable bonds and their issuers.

It is our view that these amendments would lead to an unsustainable level of additional cost and liability for issuers, which would hinder the uptake of the label. They would also undermine the inclusive, voluntary and aspirational nature of the European sustainable bond market replacing it with a mandatory framework lacking any form of incentive to counterbalance the additional cost and liability being required from issuers.

Should the draft amendments be adopted in the final legislation, we expect that only organisations that feel compelled to access the European sustainable bond market would do so and these would very likely come from the official sector. Other issuers would simply switch to other sources of European market or bank finance, or access sustainable finance from other jurisdictions. The ensuing contraction of the European sustainable bond market and issuer flight would effectively end the current undisputed leadership of the EU in the international sustainable capital markets.

This outcome would especially conflict with the original intentions of the legislation to further develop “the market for high quality green bonds, thereby contributing to the Capital Markets Union, while minimising disruption to existing green bond markets…” and support the growth of sustainable finance to fund the European Green Deal.

We otherwise remain supportive of the Commission’s EuGB proposal subject to the comments summarized in our note of 8 July 2021.

For any questions, please contact nicholas.pfaff@icmagroup.org or ozgur.altun@icmagroup.org

ICMA responds to the International Platform on Sustainable Finance (IPSF) Common Ground Taxonomy Consultation.

4 January 2022 The response focuses on the points that are most relevant to the global sustainable bond market, as well as ICMA’s membership.

ICMA co-signs joint-association statement regarding the application of CSDR mandatory buy-ins

ICMA co-signs joint-association statement regarding the application of CSDR mandatory buy-ins

On 17 December 2021, ESMA issued a public statement indicating that NCAs are not expected to prioritise supervisory actions in relation to the application of the CSDR mandatory buy-in regime (MBI regime) when it comes into effect on 1 February 2022. The ESMA public statement follows agreement between the European Commission, the Council, and European Parliament at the 24 November 2021 trilogue meeting for the DLT Pilot Regime Regulation that the MBI regime should be decoupled from the CSDR Settlement Discipline package in order to delay its implementation. This is in light of the ongoing European Commission review of CSDR, with amendments to the regime and implementation timeline expected in the first half of 2022. The ESMA statement is intended to bridge the legislative gap until a new date of application has been passed into law.

Today, 22 December 2021, ICMA has co-signed a joint-association statement setting out a common interpretation of ESMA’s statement, which is that EU legislators do not expect market participants to take further action towards implementation of the mandatory buy-in requirements, including but not limited to the contractual obligations of Article 25 of RTS (EU) 2018/1229 on Settlement Discipline (CSDR RTS).

For further information, please contact andy.hill@icmagroup.org or lisa.cleary@icmagroup.org

ICMA and ASIFMA publish results of survey of Asia repo markets

14 December 2021 ICMA’s European Repo and Collateral Council (ERCC) and ASIFMA have published the results of the latest survey of the Asia-Pacific repo market. Using similar methodology to the established ICMA ERCC European repo market survey, the latest Asia-Pacific survey reports the outstanding value of repos and reverse repo on June 9, 2021, and a detailed breakdown of those positions.

The report splits the Asian survey into two parallel surveys, one for trading repo in Japan and the other for rest of the APAC region. The focus of the business surveyed is cross-border transactions by global and regional banks, rather than domestic activity. The ICMA/ASIFMA survey is the only source of data on this business.
The Japan survey reported an outstanding value of repos and reverse repos for the survey sample on June 9, 2021, of USD 202.9 billion, compared with USD 215.7 billion last year. Average daily turnover over the year to 9 June was almost USD 33 billion, with an average deal size of about USD 63 million.

The non-Japan Asia survey reported USD 260.1 billion in outstanding value and an average daily turnover of USD 29 billion, compared with USD 216.7 billion and almost USD 37 billion per day in 2020. Average deal size was some USD 56 million, compared with USD 76 million in the last survey.

“The annual ICMA/ASIFMA repo survey is a unique source of information on the state of the cross- border repo markets of Asia-Pacific” said ICMA Chief Executive Bryan Pascoe, “It continues to inform our work with members and the authorities in the region on developing this important funding market”.

“The ICMA/ ASIFMA survey shows the growing importance of Repo across the region and the dynamics of its structure and stakeholders,” added Philippe Dirckx, Managing Director and Head of Fixed Income at ASIFMA. “It is also encouraging to see the regulatory changes supporting its development aligned with our members’ expectations and requirements. There nevertheless remain impediments limiting cross-border repo to fully leverage the liquidity of the on-shore market. This is one the key areas of focus when we engage with the relevant regulators and market infrastructures.”

Download the ICMA ASIFMA Asia-Pacific repo market survey here

Main survey findings

• In both the Japan survey and the non- Japan survey the overwhelming share of reported repos was still executed directly between parties by telephone and electronic messaging. Voice brokers continue to play a more significant role in the Japan market than in the rest of APAC. Automatic and automated trading was very limited in this largely cross-border business.
• Japanese securities continued to dominate the Japan survey, particularly JGBs. US Treasuries had a small share. Correspondingly, the Japanese yen remained predominant in the Japan survey, with the remaining business mainly in US dollars.
• The non-Japan APAC survey sample largely traded US dollars, Australian dollars and euros against US, Australian and European collateral, with the US dollar dominant. About one-third of outstanding business was in Asian currencies. The overwhelmingly largest share of all collateral was non-government securities but the largest individual pools of collateral were in US Treasuries, Australian government securities and eurozone government securities. There were also material amounts of non-government US securities, JGBs, issues by international financial institutions and Chinese securities.
• The major share of the outstanding business reported in the non-Japan APAC survey was cross-border with counterparties in the APAC region and European counterparties.
• Most non-Japan APAC transactions were documented under the GMRA, which is an indicator of the non-domestic nature of the business surveyed.
  
  

ICMA proposal for a new post-trade transparency regime for the EU corporate bond market

8 December 2021 ICMA fully supports the establishment of a single consolidated tape for EU bond markets. ICMA views this as being the necessary vehicle for providing comprehensive, meaningful market transparency. In April 2020, ICMA published a report with recommendations for the establishment of an optimal post-trade consolidated tape for EU bond markets. This report addressed a number of fundamental questions relating to the context, relevance, comparability, scope, design, and governance of a potential consolidate tape.

In summer of 2021 as an important follow up to this work, ICMA, through its Transparency Taskforce (Taskforce), began extensive discussions and analysis to determine what should be the appropriate ‘transparency regime’ to support the consolidated tape. That is, what information should be made available on the tape, and when? While in many, if not most cases, full and immediate disclosure of transactions can be considered desirable, there is also a broad recognition that there are instances where it would be beneficial to the overall integrity and efficiency of the market to delay the dissemination of certain details, and possibly of the transaction itself.

This proposal summarises the Taskforce’s findings and sets out ICMA’s bond market transparency regime proposal and position for EU corporate bond markets.

The European repo market in 2021 – ICMA publishes survey showing outstandings of EUR 8,726 billion at half year

30 November 2021 The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 41st semi-annual survey of the European repo market. The survey, which calculated the amount of repo business outstanding on 9 June 2021, from the returns of 59 financial institutions sets the baseline figure for European market size at a record high of EUR 8,726 billion up by 5.3% from EUR 8,285 billion in the December 2020 survey.

The increase was driven by new issuance by many governments, which was up in both gross and net terms compared to the second half of 2020. Higher issuance was reflected in increased secondary cash bond market turnover in several countries, feeding into the repo market. Increased repo trading also reflected heavy shortselling in anticipation of possible interest rate rises in the UK and a start to the ‘tapering’ of QE in the eurozone.

Among the key findings of the survey:

• Increased share of GBP in the survey sample in line with the growth of repos of UK government securities, which now provide the largest share of European repo market collateral.
• Reduced role of German government securities as collateral, attributed to scarcity created by asset purchases by the Eurosystem and friction in the official securities lending programme. Scarcity of many eurozone government securities means that turnover in the repo market is driven largely by the search for specific securities.
• Share of securities issued by EU institutions being used as collateral stands at just 0.3% of the survey total but this is equivalent to 8% of the total EUR 259 billion outstanding at the time of the survey, indicating that the repo market has been playing a significant role in the distribution of these securities.
• The value of automated D2C trading electronic repo trading continued to grow strongly reflecting the continued impact of working from home.
• Tri-party repo continues to be crowded out by central bank liquidity. The survey contains a detailed analysis of tri-party repo data from all the surveys since 2004.

Download the 41st ICMA ERCC European Repo Market Survey

For more information about the European repo market and the repo product please see FAQs on repo.

Participate in the December 2021 ICMA ERCC Repo Survey

ICMA publishes preliminary thoughts on EC's CMU package

29 November 2021 The International Capital Market Association (ICMA) welcomes the concrete steps that have been taken towards enhancing Europe’s capital markets in the European Commission’s recent Capital Markets Union Package. ICMA outlined its preliminary thoughts on the Package in a publication today.

Resilient and well-functioning bond markets are critical to funding sustainable economic growth and development in the EU and beyond. ICMA is particularly pleased to see progress on some of the key points it raised previously that are crucial to supporting the further development of the cross-border bond market. This includes:

• suggested amendments to MIFIR facilitating the emergence of one consolidated tape for each asset class including bonds;
• amendments to the MiFIR bond transparency regime that mean liquidity and investment grade (IG) or high yield (HY) classification would be taken into account when deferrals are determined;
• the removal of the MiFID II Article 27(3) best execution reporting requirement;
• the ESAP proposals demonstrating progress towards a truly integrated European platform for companies’ public financial and non-financial documents; and
• the proposed review of the ELTIF Regulation to strengthen the role of securitisation.

Within these proposals, there are some points that ICMA considers require further consideration, in particular the calibration of the MiFIR transparency regime. In relation to the AIFMD Review, ICMA’s buy-side community is concerned by certain aspects of the proposals and considers it to be important that improvements that may result from the ELTIF Regulation Review are not outweighed by changes that may be made under the AIFMD Review.

For further information, please see ICMA’s publication.

Delay to the EU CSDR mandatory buy-in regime

25 November 2021 ICMA very much welcomes the news of the delay to the CSDR mandatory buy-in regime. ICMA has long taken the position that this regulatory initiative contained a number of critical design flaws as well as ambiguity around scope and process, not only from an implementation perspective, but also with respect to the potential implications for EU bond market liquidity and stability. ICMA looks forward to engaging further with the European Commission and ESMA as they review the role of regulatory buy-ins in the European bond markets, and how this sits with the objectives of CMU. Meanwhile, the ICMA Buy-in Rules, part of the ICMA Secondary Market Rules & Recommendations, will remain an effective and accessible contractual remedy for settlement fails in the international bond markets.

ICMA first published an impact study of mandatory buy-ins (MBI) for bond market pricing and liquidity in 2015, which first drew attention to the risks embedded in the regulation. Its 2017 position paper supported the implementation of CSDR Settlement Discipline (SD), but recommended that MBIs not be implemented; rather the provisions should be reviewed while the impact of other SD measures, such as cash penalties, be assessed. ICMA also called for the European Commission to undertake a robust impact assessment of MBIs on market functioning. In recent years, other associations, both European and global, have joined ICMA’s calls to postpone and review the EU MBI regime and in 2019, ICMA published an updated impact study, which importantly highlighted the growing concerns of investors, who would be the most adversely impacted by the regime.

Green Bond Principles and Social Bond Principles Executive Committee announces 2020/2021 Advisory Council composition

23 November 2021 The Green Bond Principles and Social Bond Principles Executive Committee is pleased to announce the 2021/2022 Advisory Council composition.

Amendments to the ICMA Primary Market Handbook published November 2021

19 November 2021 Amendments to the ICMA Primary Market Handbook have been published today. For more information, see the ICMA Primary Market Handbook - Amendments/archive page.

The associated circular to members is available here for ICMA members and ICMA Primary Market Handbook subscribers only (login details required).

UN Women, International Capital Market Association (ICMA) and the IFC lead the way on public and private sustainable debt for gender equality

16 November 2021 UN Women, IFC and the International Capital Market Association (ICMA) today launched a new practical guide to using sustainable bond issuances to advance gender equality, entitled Bonds to Bridge the Gender Gap: A Practitioner’s Guide to Using Sustainable Debt for Gender Equality.

Gender inequalities persist in every country and society around the world but COVID-19 has revealed how the crisis has disproportionally affected women. With less than a decade remaining to achieve the 2030 Agenda for Sustainable Development, financing solutions that drive gender equality must be accelerated.

Global debt capital markets can play an important role in financing progress toward gender equality in both the public and private sectors. For issuers, these bonds offer an opportunity to lead on advancing gender equality, diversify their investor base, as well as to define and communicate their commitment to the market.

The guide provides both the public and private market useful information on how to use sustainable bonds to finance projects and strategies that advance gender equality and offers illustrative examples of gender-related use of proceeds, as well as key performance indicators (KPIs) and sustainability performance targets (SPTs) in the case of sustainability-linked bonds.

This guide will support the ecosystem of the debt market including new and existing bond issuers, borrowers, underwriters, arrangers, and external reviewers to take action to integrate gender equality objectives into sustainable debt products. It is also a resource for investors seeking to understand and support projects and strategies that are designed to advance gender equality.

“The achievement of gender equality and women’s empowerment, as embodied in Sustainable Development Goal 5, is critical for humanity to progress and realize its full potential. UN Women is proud to be working alongside capital market actors to ensure that financing from both the public and private sectors is sustainable and inclusive. This global guide is a foundational first step in this journey”, said UN Women Executive Director Sima Bahous.

Bryan Pascoe, Chief Executive, ICMA said: “We believe that bond markets have tremendous untapped potential to fund the advances in gender equality which are so essential for sustainable economic development. This new practical guide, based around the use of the established Social Bond Principles and Sustainability-linked Bond Principles, is an important step forward in encouraging issuers and investors to integrate gender into sustainable bond issuances and investment”.

Similar to the way in which the introduction of green bond standards and guidelines facilitated the growth of the green bond market and the development of a separate asset class, these global guidelines on gender will provide the support needed to capital markets to significantly increase the volume and quality of financing for gender equality and lead to lasting impact.

Makhtar Diop, Managing Director, IFC said: “With less than a decade remaining to achieve the 2030 Sustainable Development Goals, we must accelerate financing solutions that drive gender equality. While investor appetite for products that address social issues is growing rapidly, sustainable finance markets have struggled to keep up with demand. The guide we are launching today will help address this by making it easier for issuers to raise funds for these innovative financial instruments”.

“We hope that the public and private sectors will join us in supporting women around the world—and creating better economic outcomes for us all”.

ICMA statement on HK SFC consultation on conduct requirements for bookbuilding and placing activities

2 November 2021 ICMA’s cross-industry membership supports the efforts of the Hong Kong Securities and Futures Commission (SFC) to encourage leadership and deliver accountability in line with international debt capital market (DCM) accepted market practice standards and was pleased to provide input to the consultation on conduct requirements for bookbuilding and placing activities.

Following publication of the consultation conclusions we look forward to reviewing the amended Code in detail, and will convene our member firms to determine next steps in implementation for DCM. We aim to facilitate standard practices and documentation to ensure efficient and fair international bond syndication in line with the Code and will work with our membership, as well as the SFC and other market stakeholders, over the next several months to help ensure that the amended Code is fully understood and properly followed in the international debt capital markets.

EU Taxonomy Regulation Article 8 and unintended negative consequences for the development of the green bond market

28 October 2021 ICMA has today published commentary on the proposed treatment of green and sustainability bonds issued by central governments, central banks and supranational issuers under the Article 8 of the EU Taxonomy regulation, highlighting unintended negative consequences for the further growth of green and sustainability bond issuance by these issuers and for the development of the overall market.

On 6 July 2021, the European Commission issued a draft Delegated Act supplementing Article 8 of the Taxonomy Regulation. It specifies among other measures, the methodology for calculating the Green Investment Ratio (GIR) and the Green Asset Ratio (GAR) to be reported notably and respectively by asset managers and banks. Central governments, central banks and supranational issuers are excluded from both the numerator and the denominator of these ratios (subject to review by June 2024).

As a result of this exclusion green and sustainability bonds partially or fully aligned with the Taxonomy from sovereigns and supranationals (e.g. past issuance, existing and future Next Generation EU bonds, future issues aligned with the EU Green Bond Standard from Member States) will not be able to contribute to the GIRs and GARs which are to be reported under the new disclosure requirements of the Taxonomy Regulation which come into force as early as January 2022. This could have several potential negative consequences, including: discouraging issuance by sovereigns and supranationals, lowering demand from investors and hindering growth of the market.

ICMA is recommending either the urgent review of the exclusion of green and sustainability bonds of central governments, central banks and supranational issuers from the calculation of the GIR and GAR in the draft Delegated Act supplementing Article 8 of the Taxonomy Regulation. This can be done with reference to the proposed methodology included in the draft RTS on taxonomy-related product disclosures of the ESAs. Alternatively, if the exclusion in the Article 8 DA of central governments, central banks and supranational issuers from the calculation of the GIR and GAR is not changed, we call for a firm commitment to develop and finalise as soon as possible a Taxonomy alignment assessment methodology for sovereign and supranational exposure with a deadline of 30 June 2024.

Access the full ICMA commentary.

Deadline extended: IOSCO AMCC member survey on corporate bond market microstructure and participant behaviour

21 October 2021 IOSCO Affiliate Members Consultative Committee (AMCC) Bond Market Liquidity Working Party launched in September its market survey on corporate bond market microstructure and participant behaviour. The purpose of the survey is to help to build a picture of corporate bond market microstructures across different regions and to identify different stakeholder behaviours and motivations in times of market stress. This is intended to help inform and complement the work being undertaken by the IOSCO Financial Stability Engagement Group (FSEG) Corporate Bond Market Liquidity Working Group. ICMA, in its role of Chair of the AMCC BML WP, has played a key role in developing this survey.

There are two surveys, one targeted at market-makers and liquidity providers (sell-sides) and one at investor and asset managers (buy-sides). Responses will be collated by the IOSCO AMCC Secretariat and aggregated by relevant region. Responses will remain confidential and all the data will be automatically anonymized. The AMCC BML WP will produce a report of the data to be shared with the IOSCO FSEG and also the AMCC membership. ICMA will make this report available to its members.

ICMA encourages its members active in the corporate bond markets to participate in this important market initiative. The deadline for responding has been extended to 29 October 2021.

The surveys can be accessed here:

Sell-side:
https://www.iosco.org/surveys/2021/amcc-bond-market-liquidity-working-party-sell-side/
 
Buy-side:
https://www.iosco.org/surveys/2021/amcc-bond-market-liquidity-working-party-buy-side/

ICMA ERCC releases updated SFTR reporting recommendations

21 October 2021 The ERCC has today published an updated edition of the ICMA Recommendations for Reporting under SFTR.

The ICMA Recommendations were initially published in February 2020 to help members interpret the regulatory reporting framework introduced by SFTR and to set out complementary best practice recommendations which provide additional clarity and address ambiguities in the official guidance.

The updated Recommendations published today reflect recent updates to the SFTR validation rules and reporting schemas published by both ESMA and the FCA, other official guidance that has been released, in particular ESMA's Q&As, but also many lessons learned during the first year of SFTR reporting.

For ease of comparison, a blackline version has been published alongside the Guide itself which highlights all the changes that have been made compared to the previous public edition which was released in February 2021.

Going forward, the document will continue to evolve to reflect ongoing discussions in the ERCC SFTR Task Force as well as any additional guidance received from regulators. The ICMA Recommendations are supplemented by other best practice documents available to ICMA members, which include a collection of nearly 50 SFTR sample reports and an overview of repo life-cycle event reporting, as well as ICMA’s SFTR Quick Guide.
 
Further information and resources on SFTR reporting, including ICMA's recent analysis of the first year of data on repo from SFTR reporting are available on our SFTR webpage.

ICMA publishes paper on the new model for syndicated closings in the ICSDs

20 October 2021 On 21 April 2021, the two International Central Securities Depositories (ICSDs), Euroclear and Clearstream, announced that implementation would go ahead of a new model for the delivery vs payment (DvP) closing of syndicated bond issuance settling within the two ICSDs.

This paper aims (i) to very briefly describe the new model (in contrast to the current model) and particularly (ii) to suggest how transaction documentation can be consequently modified for a vanilla Reg S bond involving an underwriting syndicate and their issuer client.

ICMA responds to FCA CP 21/29 on proposed decisions on the use of LIBOR (Articles 23C and 21A BMR)

20 October 2021 ICMA has responded to FCA CP 21/29 on proposed decisions on the use of LIBOR (Articles 23C and 21A BMR). ICMA welcomed the FCA’s proposal to grant a broad permission to use synthetic LIBOR because it will avoid significant legal and practical uncertainty arising in the legacy LIBOR bond market. ICMA also highlighted related considerations on the length of availability of synthetic sterling LIBOR and contract continuity when synthetic LIBOR is introduced.

ICMA launches its 2022 scholarship programme

Number of scholarship places increased and geographic coverage extended

Following the successful launch of its first programme in 2021, ICMA is now offering scholarships for 2022 to individuals from a number of countries in Sub-Saharan Africa and Asia-Pacific who are unable to pursue a financial qualification due to their economic circumstances.

As part of ICMA's mission to raise standards and support inclusion in financial markets we have extended the number of scholarships available in 2022 from 25 to 35.

Scholarships will be available to young people who are interested in a career in finance from the following countries in Sub-Saharan Africa: Ethiopia, Ghana, Kenya, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. And in 2022 the programme will also be offered in the following countries in Asia Pacific: India, Malaysia, Mongolia, Philippines, Indonesia, Thailand and Vietnam.

ICMA has been active in the aforementioned countries through its efforts to develop the local repo markets alongside capacity-building in partnership with a number of development institutions such as Frontclear in Africa and the Asian Development Bank in Asia.

The scholarships provide an opportunity to study for one of the ICMA Diplomas, namely:

• ICMA Diploma in Debt Capital Markets
• ICMA Diploma Securities & Derivatives
• ICMA Diploma in Financial Market Operations

Each diploma pathway includes taking the prescribed foundation and advanced level courses along with two specialist courses and/or ICMA workshops. This executive education programme is delivered in partnership with the ICMA Centre, Henley Business School, University of Reading.

These diplomas are internationally recognised qualifications taught by experienced market professionals which can kick-start a career in financial markets.

All the courses which make up the diplomas can be studied online over 12 months as a mix of self-study and virtual classroom programmes, and they include online exams. The ICMA scholarship will fully cover the course and examination fees for the relevant Diploma.
 
Candidates must be between 19 and 30 years old at time of application and may be in full-time education, working in finance already or looking to move into it.

A good level of education (but not necessarily a University degree), interest in financial markets and proficiency in English are necessary application criteria.

How to apply

For information on the eligibility criteria, how to apply and the selection process, please view the ICMA Scholarship Programme page on our website. The deadline for submissions for the 2022 intake is 15 January 2022.

We would like to encourage ICMA members and academic institutions to share this information with students who may wish to apply.

ICMA to launch GMRA Clause Library and Taxonomy Project

13 October 2021 ICMA today announces the launch of a four-month initiative with global lawtech and legal data consulting firm, D2 Legal Technology (D2LT), to develop ICMA’s Global Master Repurchase Agreement (GMRA) Clause Taxonomy and Library. This is aimed at standardising and improving efficiencies in the process of negotiating and managing Repurchase (“repo”) transaction documentation.

The primary objective of the ICMA Clause Taxonomy and Library Project is to build an industry-wide, foundational clause taxonomy that - through digitisation - will further support the association’s primary goal of promoting resilient well-functioning international and globally coherent cross-border debt securities markets, essential to fund sustainable economic growth and development.  

Once in place, the clause library will help to reduce legal risk by:

• introducing industry validated clauses, which will reduce scope for error and problematic or inconsistent drafting;
• improving the efficiency of negotiations by allowing lawyers and negotiators to focus on the most substantive and consequential clauses and issues;
• allowing for greater visibility in meeting business, regulatory and operational requirements as and when they arise.

Increased standardisation and digitisation will drive more accurate data capture and more efficient repo trade processing, both within firms and across the market. It will also support the development of technology enabled contract delivery solutions which will facilitate more efficient and cost-effective client onboarding. Finally, the adoption of common standards will be a catalyst for the development and adoption of technology by providing clear product and legal specifications for market participants and technology providers to build towards.

Invitation to participate

We are inviting colleagues from legal and documentation functions within ERCC Council firms to participate in the Clause Library & Taxonomy Working Group. This is an opportunity to get involved in the development stages of this important work and to gain an insight into the documentation practices of the market. In order to ensure a meaningful output from the initial phase of this project, we would expect participating firms to provide examples of market variants of specified GMRA clauses and to attend weekly working group calls until the end of Jan 2022. If you are interested in participating or would like to suggest a colleague, please contact Georgia.Cacavelas@icmagroup.org by COB 20th October.

Introducing Bryan Pascoe – ICMA’s new Chief Executive

Bryan joined the International Capital Market Association (ICMA) in September following a 28 year career in financial services mostly with HSBC.

Here he talks about what he is bringing to the role, the relevance of ICMA’s mission particularly at this critical time and his vision for the future.

“Looking ahead, I am very excited to work alongside the excellent ICMA staff and all of you to build on previous achievements and embed the Association even more at the core of positive and transformational capital markets developments.”

ECB Publishes breakdown of PEPP purchases up until the end of September 2021

8 October 2021 The ECB has published its ninth bi-monthly breakdown of holdings under its Pandemic Emergency Purchase Programme (PEPP), covering the period from August through September 2021. ICMA has consolidated the data into a short briefing note.

ICMA directories list over 200 post-trade and 20 repo trading solutions

6 October 2021 ICMA has updated both its Operations FinTech directory for repo and cash bonds (previously ‘FinTech mapping directory’) and Repo trading technology directory in the last quarter. In parallel with the review, ICMA is gathering the views of ICMA European Repo and Collateral Council (ERCC) members on current market trends and developments, challenges and opportunities for post-trade repo solutions – a link to access additional commentary will be available in the upcoming ICMA Quarterly Report.

Key takeaways

• The post-trade environment has recently seen multiple mergers, acquisitions, and collaborative ventures.
• These developments appear to be driven by demand for cross-asset expansion, extending capabilities to buy-side participants, and leveraging data management and communication capabilities.
• Simplicity and ease of onboarding is a key consideration for selecting vendor firms. The level of connectivity between the vendor and the market ecosystem is of equal importance.
• The normalisation of internal and external data flows is a key challenge firms continue to focus on.
• It remains to be seen how many providers the market can maintain in a fragmented ecosystem.

Operations FinTech directory

The Operations Fintech directory now includes over 200 solutions, compared to 165 solutions from the June 2020 review and 87 solutions when first launched in November 2017. It is divided into 10 categories comprising collateral management, corporate actions, exposure agreement, intraday liquidity monitoring and reporting, matching, confirmation & allocation, reconciliations but also ancillary areas such as static data and SSI, workflow and communication and KYC onboarding.  

The 47 new solutions listed since last publication correspond to offerings from 9 providers, including 7 newly listed vendors. The highest category increases, as seen from newly listed solutions, were for collateral lifecycle & margin management (10 additions, 50 in total), and intraday liquidity monitoring & reporting (8 additions, 24 in total). Solutions for exposure agreements (6 additions, 23 in total) and matching, confirmation & allocation (5 additions, 19 in total) saw moderate increases. The review also captured 6 additional workflow and communication offerings, bringing the total to 25 in this category.

Repo trading technology directory

The Repo trading technology directory now includes a total of 20 platforms, compared to 9 trading venues upon launch in April 2020. The scope was first revised in June 2020 to include other front-office trading tools and now includes details for 6 order and/or execution management systems (O/EMS) providing connectivity to multiple repo trading venues. The directory also provides details on market type (such as D2D, D2C), clearing and collateral management configurations, and other information such as regulatory status, MIC codes, and other services offered, among other items.

Given the importance of platform connectivity and interoperability with current financial market infrastructure, the updated technology directories include information on supported electronic communication protocols and standards. Unsurprisingly, the majority of trade platforms support FIX and API connectivity. Similarly, post-trade solutions mostly support FIX and API connectivity, in addition to Swift and additional protocols such as SFTP, Flat Files, with several providers supporting blockchain protocols.

The directories do not constitute an exhaustive list of providers in the market. Relevant providers that are not yet included and wish to join are very welcome to do so.

Download the ICMA Operations FinTech directory
Download the ICMA Repo trading technology directory

ICMA AMIC statement on ESG transparency of Asset-Backed Securities

5 October 2021 ICMA AMIC has set up an ad hoc working group to discuss ESG transparency of Asset-Backed Securities. As a first step the working group has issued a statement laying down current challenges for this specific asset class and identifying key performance indicators for auto-loans and RMBS/CMBS which could then be embraced by market participants and/or regulators. ABS investors and originators who would like to join these conversations can contact the AMIC secretariat.

ICMA publishes overview of the European commercial paper market and recommendations for future market development

29 September 2021 ICMA has today published a white paper on the European commercial paper and certificates of deposits markets, detailing the structure of the markets, assessing their performance under stress during the Covid-related turmoil of March-April 2020, and outlining recommendations for future developments to market structure to enhance its resilience.

There is no single pan-European market for commercial paper. The market in Europe consists rather of the multi-currency Euro Commercial Paper market, largely based in London, the NEU CP market and multiple smaller domestic markets within Europe each with its own legal framework for issuance, market structure, participants and market dynamics. The turmoil of 2020 exposed areas where market functioning and resilience could be improved.

The paper, which has been overseen by the newly constituted ICMA Commercial Paper (and Certificates of Deposit) Committee, consisting of issuers, dealers, investors and financial market infrastructures, highlights the benefits in the creation of a more harmonised, single, multicurrency and pan-European market, consistent with the aims of the Capital Markets Union. Measures to underpin secondary market liquidity and resilience are also identified as key structural enhancements.

ICMA Chief Executive Bryan Pascoe said: “There is a clear opportunity for industry participants to work with central banks and other regulators towards the common goal of developing and strengthening the European short-term credit markets. ICMA looks forward to further engagement with its members and broader market stakeholders in this very important area.’’

ICMA publishes analysis of the first year of data on repo from SFTR reporting

28 September 2021 Reporting under the EU’s Securities Financing Transactions Regulation (SFTR) went live on 13 July 2020. Based on the first full year of SFTR reported data, ICMA has published today an analysis of the key market features and trends in the European repo market.

The analysis relies on the summary statistics which authorised trade repositories (TRs) are required to provide under SFTR on a weekly basis. Since the start of reporting, ICMA has been collecting this data from the TRs, consolidating it and publishing the information in an aggregated form on the ICMA website.

The first part of the report looks at the initial six months of reporting for the whole EU-28 repo market, while part two focuses on the time period between January and July 2021, distinguishing between the EU-27 and the UK market segments. This reflects the split of SFTR reporting into separate EU and UK regimes following the end of the Brexit transition period. In addition, the report also reflects on some of the remaining issues with the quality of the SFTR public data, which are highlighted in the final chapter.
 
ICMA will continue to work with members of the ERCC SFTR Task Force, including reporting firms, TRs and the relevant service providers, to identify and address outstanding issues with SFTR reporting, helping to improve the quality of the reported data. At the same time, we will continue aggregating and publishing SFTR public data on a weekly basis, complemented by more detailed analysis on an ad-hoc basis, as part of our commitment to supporting an efficient and transparent repo market.

The report was authored by Richard Comotto, who also produces ICMA's semi-annual European repo market survey.

NAFMII and ICMA jointly release handbook on financing and investment in the China interbank bond market

24 September 2021 The International Capital Market Association (ICMA) and the National Association of Financial Market Institutional Investors (NAFMII) today launched two publications intended to encourage understanding and participation by international institutions in China’s interbank bond market.

Investing in China’s Interbank Bond Market: A Handbook and Panda Bonds: Raising Finance in China’s Bond Market (Case Studies) (also available in Chinese) provide guidance for international investors and issuers on investing and on raising finance in China’s interbank bond market. The Handbook contains an overview of developments in China’s bond market and the case for international investment; descriptions of the market infrastructure and oversight; and details of the process required for international investors to access the market via the three different channels Bond Connect, CIBM Direct and the QFI regime, while the panda bond case studies present successful transactions by international issuers in the panda bond market.

ICMA Chief Executive, Bryan Pascoe said: "ICMA has worked very closely with NAFMII and market participants in providing its technical expertise in the cross-border bond markets to support reforms making the Chinese bond market more accessible to international issuers and investors. The guides we are launching today both reflect the progress that’s been made in opening up this important market and we look forward to our continuing engagement as it evolves."

ICMA responds to HM Treasury Wholesale Markets Review

24 September 2021 ICMA has now published its response to the HM Treasury Wholesale Markets Review Consultation Paper. The response was drafted primarily by ICMA’s MiFID II transparency taskforce but a few responses also take into account the views of ICMA’s other working groups and committees, such as repo and primary markets.
 
The ICMA MiFID II transparency taskforce member response is based on consensus view from a varied group of buy- side and sell-side investment firm bond trading participants, representing EU 27 countries, the UK and the US. There is a unique value in conveying a broad view from across buy-side and sell-side communities and we hope this response is informative and useful. Taskforce members welcome the efforts of HMT to seek out stakeholder views concerning a review of wholesale markets. However, this response is related solely to cash bonds.

ICMA responds to HM Treasury’s UK Prospectus Regulation Regime Review

23 September 2021 ICMA has responded to HM Treasury’s consultation on the UK Prospectus Regulation on 23 September. ICMA members’ overarching concern is to ensure that the currently well-functioning and efficient pan-European primary wholesale bond market is not disrupted or subjected to unnecessary additional or disproportionate costs. HM Treasury’s proposed approach does not give rise to these concerns immediately, although much will depend on the precise approach taken with respect to exemptions from the public offer regime and the approach taken in relation to “wholesale” disclosure for bonds admitted to trading on UK markets. ICMA looks forward to engaging on these issues and related matters with the UK authorities as the UK Prospectus Regulation regime evolves.

ESMA writes to the European Commission supporting a delay of mandatory buy-ins and asking for urgent clarification

23 September 2021 Anneli Tuominen, interim Chair of ESMA, has written an open letter to Commissioner McGuiness, copying representatives from the European Parliament and Council, supporting a postponement of the mandatory buy-in regime and requesting urgent action to provide a signal that a modification of the current implementation timeline is considered. The letter asks for clarification of a delay, ideally, by the end of October 2021.

ICMA publishes an update on the EU sustainability disclosure regime

22 September 2021 New and amended EU legislation is introducing significant sustainability and ESG related disclosure requirements that are impacting all participants in the European capital markets.

This publication provides a summary of these various requirements, how they interact with each other and most importantly what they mean for ICMA’s constituencies such as issuers and investors.

The paper aims to give a comprehensive and practical overview, covering the following regulations:

• The Taxonomy Regulation, article 8 reporting obligations and – including the delegated act adopted on 6 July 2021
• The Sustainable Finance Disclosure Regulation (SFDR) and the Regulatory Technical Standards (RTS).
• The Non-financial Reporting Directive (NFRD) and proposed Corporate Sustainability Reporting Directive (CSRD)
• The Low Carbon Benchmark Regulation.
• Credit Rating Regulation

ICMA’s ERCC publishes summary report following market consultation on the role of repo in green and sustainable finance

20 September 2021 ICMA’s European Repo and Collateral Council (ERCC) has published a summary report on the role of repo in green finance, following its consultation to reflect feedback received in response to a market consultation on the role of repo in sustainable finance which took place earlier this year. The consultation paper, issued in April 2021, was intended to serve as a starting point for promoting a broader discussion in the repo community on sustainability, as well as to explore the existing opportunities and potential risks in this area.
 
The report published today summarises the consultation feedback, highlighting the key themes raised in the 20 responses that have been submitted. Building on the consultation results, ICMA is considering with the ERCC next steps regarding potential guidance on repo and sustainability in close coordination with the Executive Committee of the Green & Social Bond Principles.

ICMA AMIC responds to EC consultation to review the EU securitisation regulation (SECR)

17 September 2021 ICMA’s Asset Management and Investors Council has responded to the EC consultation to review the EU securitisation regulation (SECR). The response highlights that the low level of securitisation issuances since the entry into application of the SECR is mainly due to the accommodative monetary policies of central banks, but that there is still merit in introducing amendments to the SECR and related prudential rules measures to grow both the investor and the issuer base and contribute to the CMU objectives.

ICMA notice: Pricing references for new sterling Eurobonds

10 September 2021 ICMA Recommendation R7.3 on pricing references for new sterling Eurobonds was introduced into the ICMA Primary Market Handbook in February 2015 and last updated July 2016. The purpose of the Recommendation is to clarify the appropriate gilt to use when pricing new sterling Eurobond issues.
 
ICMA will shortly be amending the ICMA Primary Market Handbook’s related item 7.3A with the inclusion of the following text.

It seems likely that primary market practitioners will choose to apply this pending Handbook change from Monday 13 September 2021.

ICMA responds to UK FCA CP21/18: Enhancing climate-related disclosures by standard listed companies and seeking views on ESG topics in capital markets

10 September 2021 ICMA has submitted its response to the UK FCA CP21/18: Enhancing climate-related disclosures by standard listed companies and seeking views on ESG topics in capital markets. It focuses on the parts that are relevant to the international bond market and reflects the views of ICMA and its constituencies, primarily feedback from the Executive Committee of the Principles (Green & Social Bond Principles, Sustainability Bond Guidelines and Sustainability-Linked Bond Principles); the ICMA Legal and Documentation Committee (LDC); the ICMA Asset Management and Investors Council (AMIC) and the ICMA Corporate Issuer Forum (CIF).

ICMA AMIC responds to UK FCA CP21/17: Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers

10 September 2021 ICMA’s Asset Management and Investors Council has submitted its response to the UK FCA CP 21/17: Enhancing climate-related disclosures by asset managers, life insurers and FCA regulated pension providers. AMIC welcomed the FCA’s proposals and noted that that the sequencing of the disclosure requirements should be first on the issuer side at international level (upcoming IFRS standard), followed by the buyside, and that in the meantime the proposed approach is applied on a “as far as they are able” approach, with accepted use of proxies and estimated data.

ICMA submitted its feedback on the draft Report of the EU Platform on Sustainable Finance for an extended taxonomy to support economic transition

3 September 2021 ICMA submitted its feedback on the draft Report of the EU Platform on Sustainable Finance for an extended taxonomy to support economic transition.

ICMA responds to FCA CP 21/19 on the proposed decision under Article 23D BMR for 6 sterling and yen LIBOR settings

25 August 2021 ICMA responded to UK FCA CP 21/19 on the FCA’s proposed decision under Article 23D BMR to require the administrator of LIBOR, ICE Benchmark Administration (IBA), to change the way six identified LIBOR settings (namely the 1-month, 3-month and 6-month sterling and Japanese yen LIBOR settings) are determined after 2021 to secure an orderly wind-down. Following the announcement by the FCA on 5 March 2021 that the six identified sterling and yen LIBOR settings will no longer be representative and representativeness will not be restored immediately after 31 December 2021, ICMA’s response supported the exercise by the FCA of its powers under Article 23D(2) in order to introduce “synthetic LIBOR” for the six identified LIBOR settings. ICMA noted that, in order for synthetic LIBOR to meet its aim of supporting an orderly wind-down of LIBOR, all parties will need to take the same view as the FCA that “synthetic LIBOR remains LIBOR”. The legislation that HM Treasury is expected to introduce in order to support contract continuity further will therefore be very important. It will also be very important for synthetic LIBOR to be published in the same manner (using the same screens and at the same time) as LIBOR.

New ICMA members in August 2021

ICMA welcomes the following new members in August 2021:

• Ediphy Markets Ltd, London
• Federal Home Loan Mortgage Corporation, McLean
• Joint-Stock Commercial Bank of Support to Commerce and Business, Yekaterinburg 
• International Fund for Agricultural Development, Rome
• Kaizen Reporting Ltd., London

Click here to view the full list of ICMA members.

ICMA AMIC responds to IOSCO’s consultation on Sustainability-Related Practices, Policies, Procedures and Disclosure in Asset Management

13 August 2021 ICMA’s Asset Management and Investors Council has submitted its comments on IOSCO’s consultation on Sustainability-Related Practices, Policies, Procedures and Disclosure in Asset Management. AMIC expressed its support for IOSCO’s recommendations and highlighted the key priority areas in needing to address the risk of market fragmentation, mitigating data gap challenges and ensuring global alignment across jurisdictions.

ICMA, ISDA and ISLA sign MoU on the Common Domain Model, laying the foundations for a digital future for financial markets

2 August 2021 ICMA, ISDA and ISLA have signed a Memorandum of Understanding (MoU) to strengthen collaboration between them on the future development of the Common Domain Model (CDM), the single, common digital representation of trade events and actions across the lifecycle of financial products. This cross-industry initiative marks an important step in the Associations’ commitment to defining and promoting the development of a digital future for financial markets, as set out in a joint letter a year ago.

The MoU establishes a framework for closer collaboration between the three Associations, providing a path for joint governance and setting out arrangements in relation to the open-source components of the CDM and associated intellectual property for market-specific components. The MoU is intended to unlock further synergies in the development of the CDM across financial markets, creating efficiencies for market participants and setting digital standards which will enable the use of innovative technologies in future.

ICMA, together with its CDM Steering Committee, has recently concluded the initial phase of its CDM project for repo and bonds, which provides a single, unambiguous representation of the execution, clearing and settlement of a fixed-term repo transaction, as well as a bond transaction. For more information please see the virtual showcase event held on 21 July.

ISDA is accelerating the pace of adoption of the CDM via digital regulatory reporting, specifically for new rules required by the Commodity Futures Trading Commission and the European Securities and Markets Authority. Industry participants are coding reporting rules into machine readable and executable models for these regimes in the CDM, for production implementation as early as 2022 in the case of CFTC. In the area of collateral processes and legal documentation, CDM development will be implemented into ISDA Create, facilitating output of executed representations of the various Credit Support Annexes and other documentation in CDM format, for consumption on collateral infrastructure platforms. In terms of risk management, ISDA has pointed to the potential for the CDM to automate and streamline the preparation and collection of risk, capital and margin data in a recent whitepaper and imminent pilot project.

At the beginning of July, ISLA’s CDM Working Group, comprising some 35 member firms, made major contributions and enhancements to the extensive foundations laid by ISDA, including enhancements to the allocation function, the ability to associate more than one legal agreement with a transaction, updates to the transfer function critical for physical settlement, and the very first concept of a bill within the CDM.
 
“The CDM contributes directly to digitising common standards and best practice, practically assisting our members in their journey towards digitisation. It has the potential not only to facilitate interoperability and cross-industry efficiencies but to facilitate regulatory reporting and create the foundation for innovation in years to come. We look forward to continuing our collaboration with our members and counterparts at ISDA and ISLA.”
Martin Scheck, Chief Executive, ICMA.

“ISDA is committed to building out the CDM to promote a consistent and scalable taxonomy to develop a more automated and cost-effective financial services infrastructure. We will work to align our product definitions, digital legal agreements and operations with the CDM and we are excited to be working closely with ICMA and ISLA to develop this digital infrastructure.”
Scott O’Malia, Chief Executive Officer, ISDA.

“The completion of this MoU marks an important milestone on the journey to deliver digital standards to our collective members and other stakeholders including the regulatory community. The basis of this collaboration will now allow us to set an ambitious forward-looking agenda over the coming months that will progressively deliver real benefits to our joint communities.”
Andrew Dyson, CEO, ISLA.

Further information on the CDM can be found via the below links:

ICMA resources on the CDM for repo and bonds
ISDA resources on the CDM
ISLA resources on the CDM

ICMA response to FCA CP22/11 on winding down ‘synthetic’ sterling LIBOR and US dollar LIBOR

1 August 2022 ICMA has responded to FCA CP22/11 on winding down ‘synthetic’ sterling LIBOR and US dollar LIBOR. The key points in ICMA’s response are:

US dollar LIBOR

1. It is important that synthetic US dollar LIBOR is published from end-June 2023 in order to reduce the risk of a disorderly wind-down in the international bond market when panel-bank US dollar LIBOR ceases to be published. The FCA should also grant permission for synthetic US dollar LIBOR to be used for all outstanding legacy US dollar LIBOR bonds, as it has done for synthetic sterling LIBOR.
2. Synthetic US dollar LIBOR is required in the bond market because there are considered to be insurmountable barriers to transitioning all legacy US dollar LIBOR bonds (including securitisations) before end June 2023. This is primarily because there are a very high number of legacy US dollar LIBOR bonds governed by English and other non-US laws with traditional (Type 1) fallbacks that are considered to be inappropriate. This number is significantly higher than the number of legacy sterling LIBOR bonds outstanding at the time that synthetic sterling LIBOR was introduced. It will be very challenging to transition all those legacy US dollar LIBOR bonds away from LIBOR before end-June 2023. The challenge is particularly acute because US dollar LIBOR bonds are held by a wide range of different types of investors, including retail investors, located around the world, some of whom may have limited (or even no) awareness of LIBOR transition. There may also be other difficulties with transitioning legacy US dollar LIBOR bonds (including securitisations).
3. Synthetic US dollar LIBOR could ensure international alignment between the UK market and the US market for as long as it is published, giving more time for active transition of legacy US dollar LIBOR bonds governed by English law with traditional (Type 1) fallbacks, where feasible, and more time for bonds to mature, where it is not. In particular, synthetic US dollar LIBOR would avoid US dollar LIBOR bonds governed by English law with traditional (Type 1) fallbacks falling back to a fixed rate after 30 June 2023 when most US dollar LIBOR bonds governed by a US law remain on a floating rate pursuant to US federal legislation. The synthetic US dollar LIBOR rate should be the same as, or as close as possible to, the rate expected under US federal legislation (ie term SOFR plus a spread). As with synthetic sterling LIBOR, synthetic US dollar LIBOR should help to minimise the risk of market disruption and litigation that could otherwise arise when panel-bank US dollar LIBOR ceases on 30 June 2023.

Synthetic sterling LIBOR

4. The current publication of synthetic sterling and yen LIBOR is helpful for bond market participants that are unable to transition legacy sterling and yen LIBOR bonds actively.
5. The FCA needs to be clear beyond doubt that there are no significant remaining risks of market disruption and litigation before it takes the decision to withdraw synthetic sterling LIBOR in a particular setting.
6. It would be very difficult for the FCA to be clear beyond doubt this year in the case of the 3-month setting, and much better to be prudent by conducting another review next year. The risks in the bond market are likely to be lower in the case of the 1- and 6-month settings, as there are fewer legacy bonds referencing those settings

Industry calls for clarity on mandatory buy-in rules

15 July 2021 On 14 July 2021, sixteen trade associations* representing buy-side, sell-side and market infrastructures, wrote to ESMA and the European Commission regarding the timeline for implementation of the mandatory buy-in rules as part of the Central Securities Depositories Regulation (CSDR) Settlement Discipline Regime.

The Joint Associations welcome the Report from the Commission on the CSDR Review published in July 2021 and fully support the Commission’s intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment.

In light of this, the Joint Associations request ESMA and the Commission to take action to ensure that the mandatory buy-in rules for non-CCP transactions are not subject to application on 1 February 2022, when the relevant RTS is currently set to enter into force, and to provide clarity to market participants on the matter on an urgent basis.

The Joint Associations remain committed to further improving settlement efficiency in Europe’s capital markets.

Download the Joint Associations' letter

*The sixteen trade associations include: the Association for Financial Markets in Europe (AFME), L’Association Française des Professionnels des Titres (AFTI), the Association of Global Custodians European Focus Committee, the Alternative Investment Management Association (AIMA), l’Associazione Italiana Intermediari dei Mercati Finanziari (Assosim) the, European Association of Co-operative Banks (EACB), the European Association of Public Banks (EAPB), the European Banking Federation (EBF), the Electronic Debt Markets Association (EDMA), the European Fund and Asset Management Association (EFAMA), the European Venues and Intermediaries Association (EVIA), the Futures Industry Association (FIA), ICI Global, the International Capital Markets Association (ICMA), the International Swaps and Derivatives Association (ISDA), and the International Securities Lending Association (ISLA).

ICMA commentary on the new EC sustainable finance strategy

15 July 2021 On 6 July 2021, the European Commission (EC) published its Strategy for Financing the Transition to a Sustainable Economy.

The International Capital Market Association (ICMA) supports the overall ambition and key objectives of the new strategy: (1) financing the transition, (2) inclusiveness, (3) financial sector resilience and contribution to the EU Green Deal target and (4) global ambition. ICMA agrees that the capital markets can help the EU deliver on these key objectives, especially through the growth and further development of sustainable finance that the strategy aims in turn to foster.

ICMA welcomes the strategy’s emphasis on transition that echoes the recommendations of the Transition Finance Report of the Commission’s Platform on Sustainable Finance of which ICMA is a member. We also strongly support the priority given to adopt a delegated act under the EU Taxonomy covering the remaining four environmental goals, i.e. water, biodiversity, pollution prevention and circular economy by Q2-2022.

We are concerned however that other initiatives relating to the Taxonomy focus essentially on widening its scope as a classification tool rather than enabling it as a transition financing resource. We caution that expanding the Taxonomy to defining economic activities that “do not have a significant impact on environmental sustainability” and to those “that significantly harm environmental sustainability” are unlikely to stimulate the supply of transition finance.

We comment on the proposed EU Green Bond Standard summarising the points we have made in a separate publication. We identify a risk of duplication of market initiatives in the strategy’s proposal to launch official labels for sustainability-linked or transition bonds. Conversely, we agree that European labels for sustainable fund products can address the emerging risk of fragmentation in this area in the EU.

We otherwise comment in this paper on other initiatives in the strategy relating to disclosures.

Generally, we set out below key points of attention that may require further consideration in order to effectively achieve the goals envisaged by the strategy.

We also provide in the annex an infographic summary of the new actions under the EU’s strategy highlighting the main areas of focus for ICMA.

Access the full ICMA commentary

SFTR reporting one year on

15 July 2021 Since the start of SFTR reporting on 13 July 2020, ICMA has been collecting and aggregating the SFTR public data on a weekly basis. Following the buy-side go-live in October 2020 and the start of reporting for non-financial counterparties in the EU  in January 2021, the data now covers the entire population of firms required to report under SFTR. ICMA has been publishing separate figures for the UK and the EU since SFTR was split into two separate reporting regimes after the post-Brexit transition period, which ended on 31 December 2020.

Under EU SFTR, firms reported on average per week new SFTs with a loan value of around 18 trillion EUR before Brexit (including the UK), which decreased to around 12 trillion EUR on average after the split of the two regimes. Out of this total, repos (both repurchase transactions and buy/sell backs) accounted for over 95% of the value. On the other hand, under UK SFTR the weekly average loan value of newly reported SFTs has been around 9 trillion EUR with a similar breakdown of SFT types. The two parts are larger than the previous total due to the significant overlap between both regimes. It is also important to note that there are still some data quality issues and inconsistencies, especially around the collateral figures which we hope will improve over time.

The SFTR public data complements existing ICMA publications, such as the European Repo Survey, which ICMA has been publishing on a semi-annual basis since 2001. The latest 40th landmark edition of the Repo Survey released in March 2021 included a detailed analysis of the available SFTR public data, based on the first six months of reporting. ICMA is currently reviewing the European Repo Survey in light of SFTR in order to assess the synergies between the two and help to achieve a more efficient and automated data collection process.

ICMA has led the industry’s SFTR implementation effort for repos through the ERCC SFTR Task Force, which brings together more than 150 firms across the repo market. Based on the Task Force discussions ICMA developed its detailed Recommendations for Reporting under SFTR which complement and supplement the regulatory framework and aim to ensure consistency in firms’ implementation efforts.

Further information on SFTR and ICMA’s related work is available on our SFTR webpage. For the full set of SFTR public data since the reporting start, please visit our SFTR public data page.

ICMA AMIC co-signs joint trade association letter

15 July 2021 ICMA’s Asset Management and Investors Council has co-signed on a joint trade association letter calling for regulatory stability for investment funds in the context of the AIFMD review.

ICMA analysis of the EU Commission proposal for a regulation on European green bonds

8 July 2021 On 6 July 2021, the European Commission published its proposal for a Regulation on European green bonds (“EuGBs”), which will be negotiated in the European Parliament and among Members of the Council of the European Union as part of the co-legislative process.

ICMA welcomes the proposed voluntary nature for the EuGB and the Commission’s intention to ensure its co-existence with the existing European and international green bond market. We also note that many of the recommendations of the Technical Expert Group (TEG) to which ICMA contributed as a member have been adopted. The provision allowing for Taxonomy alignment within a 5-year period is a strong positive allowing for the use of EuGBs in transition-enabling projects.

There are however areas of concern notably the absence of any of the flexibility provisions recommended by the TEG for alignment with the Taxonomy. We believe this may hinder among other things the potential for international uptake of the label. There is also only partial grandfathering for an EuGB if the Taxonomy criteria change during the life of the bond. This creates a number of significant challenges that we detail in this paper, which could very likely hinder the success of the label.

Access the full ICMA analysis of the draft EuGB regulation

Common Domain Model (CDM) for repo and bonds

2 July 2021 ICMA is cooperating with ISDA, ISLA and REGnosys to extend the Common Domain Model (CDM) to include repo and, by extension, outright bond transactions.

The CDM is a standardised, machine-readable and machine-executable blueprint for how financial products are traded and managed across the transaction lifecycle. ICMA is developing the CDM to provide an unambiguous, digital representation of repo and bond transactions in the form of code. It builds on legal definitions from the Global Master Repurchase Agreement (GMRA) and the ERCC Guide to Best Practice in the European Repo Market .

The CDM for repo and bonds is designed for use by repo market participants transacting in various repo structures and currencies, using different execution venues, protocols, and vendor solutions and by market and also for market infrastructures and vendor firms in repo and collateral markets.

Member firms have actively contributed to this cross-industry initiative by providing guidance and test data through regular ICMA CDM Steering Committee (SteerCo) meetings. The initial focus of the group has been to model a standard fixed-term repo, with a single ISIN as collateral, which is the most commonly transacted repo structure. Lifecycle events in the initial phase comprise trade execution, clearing and settlement. Modelling work has also included the mapping and ingestion of FIX 4.4 messages to CDM. Additionally, a bond transaction has been modelled so that the fundamental data points required for settlement can be represented in the CDM.

Implementation of the CDM will deliver industry wide efficiency gains for many internal processes eg trade execution and confirmation, risk management, regulatory reporting, reconciliations and settlement; improve interoperability between market infrastructures, and lay the foundation for innovation using technologies such as distributed ledger and cloud services.


ICMA fact sheets – CDM for repo and bonds at a glance

Further information on the CDM for repo and bonds can be found on ICMA's website.

The International Capital Market Association announces new Chief Executive

1 July 2021 The Board of the International Capital Market Association (ICMA) has announced today that Bryan Pascoe has been appointed as Chief Executive of the Association, succeeding Martin Scheck, who has been Chief Executive since 2009. Bryan will formally take up the role on September 6. Subsequently, during a transition period, Martin will remain with ICMA in a non-executive capacity as President, reporting to the Chief Executive.

Bryan Pascoe has 28 years of international experience spanning investment and corporate banking in London, Hong Kong and Dubai. He was most recently Global Head of Client Coverage in HSBC’s Commercial Banking Division, having previously held the role of Group Treasurer and Head of Asset, Liability and Capital Management through 2015 and 2016. Prior to that, Bryan’s career focused on capital markets as HSBC’s Global Head of Debt Capital Markets from 2011 to 2015 and Global Head of Debt Syndicate prior to that.

Mandy DeFilippo, Chair of the ICMA Board, commented: “I am delighted that we have been able to appoint an individual of Bryan’s reputation and experience to lead the Association. On behalf of the Board and the Association, we feel that he is the right person to succeed Martin and lead ICMA as our new Chief Executive. We are all looking forward to working with him.”

She added: “I would like to thank Martin for his excellent work over the last 12 years. He has led ICMA through an incredibly dynamic and, at times, turbulent period, which has included the global financial crisis, Brexit, and most recently, the COVID-19 pandemic. Throughout his tenure, he has worked tirelessly to increase ICMA’s relevance to its members and its engagement with the authorities, both regionally throughout Europe, and globally. He has extended the Association’s membership to include members from the issuer and buy-side investor communities, he has overseen the establishment of ICMA’s presence in Asia, and he has also driven the Association’s pioneering work in sustainable finance. He ends his tenure with ICMA’s membership at a 20 year high, which is a tremendous achievement.”

Martin Scheck, Chief Executive, commented: “It has been a privilege to serve ICMA and its members through a period of immense change and growth, both for the Association itself and the markets in which it is involved. I look forward to welcoming Bryan and to supporting him as he guides ICMA into the next phase of its development.

Bryan Pascoe commented: “I am very excited to be joining the ICMA team. The Association has a long track-record and history as an agent for positive change and development in the debt capital markets and I look forward to working with colleagues, members and all our stakeholders to further broaden its influence, impact and relevance over the coming period of such great opportunity and critical transformation for the industry.”

ICMA responds to ESMA consultation on potential reforms of the EU Money Market Funds Regulation (MMFR)

30 June 2021 ICMA has today responded to ESMA's consultation on potential reforms of the EU Money Market Funds Regulation (MMFR). Our Asset Management and Investors Council (AMIC), the buy-side voice of ICMA, mainly drafted this response. It also draws on the work done by ICMA’s Commercial Paper Committee and its upcoming white paper on the European Commercial Paper and Certificates of Deposit Market.

ICMA elects new board members at 2021 AGM

24 June 2021 Four existing board members were re-elected at the 2021 ICMA AGM:

• Amine Bel Hadj Soulami, BNP Paribas, Bahrain
• Marc Lewell, J.P. Morgan Securities Limited, London
• Jean-Marc Mercier, HSBC Bank plc, London
• Chris Muyldermans, KBC Bank N.V., Brussels

The following new board members were elected:

• Virginia Laird, Citigroup Global Markets Limited, London
• Per-Åke Nyberg, Swedbank AB (publ), Stockholm

The ICMA board consists of 22 members, 21 of which are normally elected by the general meeting and one of which, the Chief Executive, is appointed by the board. The term of office of the 21 elected board members is three years.

View the full list of ICMA board members.

ICMA AMIC responds to FCA consultation on UK MiFID research and best execution

23 June 2021 ICMA’s Asset Management and Investors Council has responded to the FCA consultation paper CP21/9 on UK MiFID research and best execution. In its response, ICMA welcomed an exemption for FICC research from unbundling rules as well as the proposal to remove the RTS 27 and RTS 28 best execution reports.

ICMA responds to FCA CP 21/15 on use of critical benchmarks

16 June 2021 ICMA has responded to an important FCA consultation on powers over use of critical benchmarks such as LIBOR, noting the importance for the bond market of a broad permission to use synthetic LIBOR for legacy LIBOR bonds.

ICMA responds to US SEC request for public input on climate change disclosures

15 June 2021 ICMA has submitted its response to the US SEC consultation on climate-related disclosures, in which ICMA supported SIFMA’s letter and emphasised important points relating to a global coordinated approach, principles-based materiality, safe-harbour protection and a handful of other issues.

Green & Social Bond Principles 2021 edition issued

10 June 2021 The Green and Social Bond Principles are the global standard for a $1.6 trillion market representing the largest source of market finance dedicated to sustainability and climate transition available internationally to corporates, banks and sovereigns. In 2020, these standards were referenced by an estimated 97% of sustainable bonds issued globally.

This is the first update to the GBP since 2018. Over the last three years this crucial document, translated into 24 languages, has been at the centre of developments in the market as it has gone mainstream. The 2021 editions of the Social Bond Principles and Sustainability Bond Guidelines have been similarly revised.

The Green Bond Principles 2021 edition features:

• Two key recommendations on the Bond Framework and External Reviews designed to increase transparency alongside the four core components (Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds, and Reporting);
• A recommendation of heightened transparency for issuer-level sustainability strategies and commitments;
• Encouragement to supply information, if relevant, on the degree of alignment of projects with official or market-based taxonomies;
• Promotion of transparency on issuer processes to identify and manage perceived and known social and/or environmental risks;
• Links and references to the complementary guidance of the Climate Transition Finance Handbook, the Harmonised Framework for Impact Reporting, the Guidelines for External Reviews, which are supplemented by the Guidance Handbook.

The following new guidance has also been issued:

• Illustrative examples for the selection of Key Performance Indicators (KPIs) for Sustainability-Linked Bond issuers, underwriters and investors;
• A Pre-issuance Checklist for Social Bonds/Social Bond Programmes;
• Guidelines for Green, Social, Sustainability and Sustainability-Linked Bonds’ Impact Reporting Databases;
• Impact reporting metrics for circular economy and/or eco-efficient projects;
• Update of the Green Project Mapping to GBP Environmental Objectives and other Green Classifications;
• Update to the comprehensive GBP Guidance Handbook.

Denise Odaro, Chair of the Principles, Head of Investor Relations, IFC said: "The updates to the Green and Social Bond Principles ensure that the frameworks keep in step with market developments as issuance grows. The recent pandemic and ongoing climate crisis have brought sustainability needs more to the core of capital markets and the goal remains to provide issuers and investors with a compass for best practices in using sustainable bonds to access much needed capital to meet the transition to a just and low carbon economy."

Martin Scheck, Chief Executive, ICMA said: "The Principles are the foundation for the global sustainable bond market. The 2021 edition will continue to support its growth and innovation as we tackle the pressing issues of sustainability and climate transition, while also giving the issuers who are committed to financing change, further guidance on transparency and reporting as the market evolves."

Johanna Köb, Head of Responsible Investment, Zurich Insurance and Vice-Chair of the Executive Committee of the GBP SBP, said: "Many investors view the sustainable bond markets through an impact lens, and will certainly welcome this year’s updates: Impact reporting is now strongly recommended for all use-of-proceeds bonds. The impact reporting handbook has been expanded with guidance on the circular economy and eco-efficient products category, and there is new guidance for database providers seeking to support market participants with the collection and aggregation of impact data."

Tanguy Claquin, Global Head of Sustainable Banking, Crédit Agricole CIB and Vice-Chair of the Executive Committee of GBP SBP, said: "The Green Bond Principles have been a reference text for all bond market stakeholders for more than 8 years, but this is still a young market and climate and social challenges are always more urgent. There was therefore a need to further strengthen this text to reflect the evolution of best practices. Recommending a framework, an external review and more information at issuer-level will help increase the transparency of the market. Encouraging issuers to supply more information on projects’ alignment with official or market-based taxonomies will enhance the credibility and standardisation of this market. These are very important steps forward."

Illustrative overview of the Principles

Asia-Pacific to tackle USD 190 billion of tough legacy bonds as LIBOR transition looms

• ICMA-Bloomberg report that the total outstanding issuance of tough legacy bonds among APAC issuers¹ is USD 190 billion equivalent across 560 issuances², with Japan, China, Australia accounting for 95%
• In APAC, issuance of new LIBOR-linked bonds continues, in some cases without fallbacks in place
• The number of tough legacy bonds in APAC which feature inadequate fallbacks or no fallbacks at all is 447 out of 560, or 80% of the total outstanding issuance of tough legacy bonds among Asia-Pacific issuers
• Accelerated action required by issuers as transition from LIBOR to risk free rates looms

25 May 2021 A report by ICMA and Bloomberg on tough legacy bonds in APAC has found that work will need to accelerate significantly to mitigate potential for disruption of the APAC bond markets as a result of the transition from LIBOR to risk free rates (RFRs).

The announcements made by the Financial Conduct Authority on future cessation and loss of representativeness of the LIBOR benchmarks on 5 March 2021³ mark an important final step in the successful transition away from LIBOR, and globally, there is now a better understanding of the end game for LIBOR, including the dates for its cessation in different jurisdictions.

Outstanding tough legacy bonds in APAC
‘Tough legacy bonds’ as further defined in the report are debt securities which are linked to the LIBOR of any currency, due to mature after the cessation of LIBOR in the relevant currency.

Globally, tough legacy bonds comprise USD 854 billion equivalent across 4,998 issuances, according to Bloomberg data. In APAC, they comprise USD 190 billion equivalent across 560 bonds, mostly in Japan, China and Australia, which together account for approximately 95% of the total APAC volume. 74% of that is primarily concentrated among financial issuers.

According to the Bloomberg data, as at 1 February 2021, 309 of those 560 bonds (55% of tough legacy issuances) have fallback language in place. Of these, 196 bonds (35% of tough legacy issuances) have only a ‘market disruption event’ trigger, which would not contemplate the permanent cessation of LIBOR. Another 251 bonds (45% of tough legacy issuances) do not have any fallback language at all. Taken together, this figure of 447 (or 80% of tough legacy issuances) becomes quite significant.

“Prior to our report, publicly available data has been generally based on individual national markets or sub-markets, and difficult to aggregate or reconcile. We hope this new extensive analysis will help market participants and supervisory authorities develop more efficient strategies to address the tough legacy bond problem in APAC,” said Bing Li, Head of APAC, Bloomberg.

Mushtaq Kapasi, Chief Representative, Asia-Pacific, ICMA said: “The tough legacy bond problem in Asia-Pacific is not insignificant, with 80% of tough legacy bonds having inadequate fallbacks, or no fallbacks at all. The transition away from LIBOR will require issuers and investors to review their existing LIBOR-linked bond documentation to assess what kind of fallbacks they contain, and consider what actions need to be taken.”

New LIBOR-linked bonds
The report noted that the best way to minimise LIBOR transition risks is not to issue new bonds linked to LIBOR, and the GBP and USD market have responded to this with prolific use of the relevant RFRs for new issues of bonds and securitisations. But if LIBOR-linked issuance is unavoidable, fallbacks for new issuances of USD LIBOR and JPY LIBOR have been recommended. However, issuance of new LIBOR-linked bonds is continuing in APAC, in some cases without the recommended fallbacks in place. From 2019-2020, USD12 billion of new issuances had no fallback language.

New RFRs
Methodologies and conventions to accompany new RFRs are keeping pace, and publication of RFR indices may make it easier for market participants to use the various RFR compounding methodologies. And while underlying systems and infrastructure may need to be upgraded, issuers and bondholders are largely able to accommodate the new rates, including their in-arrears methodologies and associated conventions.

Bing Li added: “It is essential that market participants have adequate systems and infrastructure in place to manage the transition from LIBOR, not only for tough legacy, but also for new issuance and investment linked to RFRs, as there are important fundamental differences between IBORs and RFRs. New calculation methodologies and their associated conventions will need to be facilitated, while trading and liquidity risks have to be adequately considered.”

Solutions
In summary, the report found that 80% of tough legacy APAC bonds have inadequate or no fallbacks in place at all, and that transactions in APAC are continuing to reference LIBOR without adequate fallbacks in place.

The report also set out proposed solutions for addressing the risks of tough legacy, including the feasibility of consent solicitation under different legal systems, the application of certain legislative interventions to APAC tough legacy bonds under New York, Japanese and English law and the potential for the continuation of synthetic JPY LIBOR for one additional year after the end of 2021.

To see the full report, please click here.

                                                                                                                                                                                                                                       ¹ Defined by jurisdiction of the issuer’s country of risk
                                                                                                                                                                                                                                       ² This includes bonds with type 1, type 2 and type 3 fallbacks, all as defined and described in the report
                                                                                                                                                                                                                                       ³FCA announcement on future cessation and loss of representativeness of the LIBOR benchmarks

ICMA publishes overview of ‘taxonomies’ for sustainable finance and recommends success criteria

18 May 2021 There have been both market and official sector initiatives to develop ‘taxonomies’ (classification systems) in an effort to provide clear guidance on which activities, assets and/or projects qualify for sustainable finance, and more widely in some cases as sustainable for regulatory or prudential purposes. Progress on the development of the EU Taxonomy in particular has accelerated the discussion about taxonomies all over the world.

ICMA’s new publication Overview and recommendations for sustainable finance taxonomies compares the main features and methodologies of official taxonomies from the EU, China and other national authorities as well as influential market-based systems including the Green Bond Principles’ project categories.

Nicholas Pfaff, ICMA’s Head of Sustainable Finance said: ‘We hope that this paper will help market participants and service providers better understand and use existing taxonomies, and will provide especially the official sector with proposed success criteria to benchmark current and future taxonomy initiatives. We emphasise that taxonomies should be designed to work together with complementary approaches in the market and need to be transition-enabled’.

The key success criteria proposed by the paper recommend that taxonomies should be:

1. Targeted in their purpose and objectives.
2. Additional in relation to existing international frameworks.
3. Usable by the market for all intended purposes.
4. Open and compatible with complementary approaches and initiatives.
5. Transition-enabled incorporating trajectories and pathways.

More information on ICMA’s sustainability work.

Industry associations publish UK version of the SFTR article 15 information statement

17 May 2021 The Association for Financial Markets in Europe (AFME), FIA, the International Capital Market Association (ICMA), the International Swaps and Derivatives Association, Inc. (ISDA) and the International Securities Lending Association (ISLA) jointly published a statement to help market participants comply with requirements under Article 15 of the UK Securities Financing Transactions Regulation. The Information Statement informs users of the general risks and consequences that may be involved in consenting to a right of use of collateral provided under a security collateral arrangement or of concluding a title transfer collateral arrangement (for example, the GMRA).

New ICMA industry guide to definitions and best practice for bond pricing distribution

17 May 2021 Pre-trade information on bond pricing is currently non-standardised and often misunderstood. The term ‘axe’ is used in fixed income trading to represent a sell-side advertising buy or sell bond interests. These are traditionally tied in some form to the sell-side’s book but can also be driven by client orders and even a trader’s market view or valuation.

There is keen interest in how these axes are distributed because they are a vital source of data for bond traders. Counterparties use axes to source liquidity, as well as to negotiate improvements in quotes received, potentially bringing the traded price inside the bid-ask spread.

Even though axes (pre-trade bond pricing information) are important for traders, the way in which they are distributed is not uniform and may even in some cases have been unintentionally misleading, causing consternation amongst buy-side market participants. This new Guide to best practice to definitions for bond pricing distribution aims to set out standards and definitions agreed on by a representative group of industry participants, which we hope will be adopted by the market as the basis of further innovation and automation.

The guide to best practice will be updated throughout 2021 and thereafter, reviewed semi-annually.

ICMA AMIC publishes discussion paper on ESG KPIs for Auto-loans/leases ABS

17 May 2021 In the context of growing demands from asset owners to evaluate their ESG footprint and greater regulatory scrutiny (such as SFDR), ICMA’s Asset Management and Investors Council has set up an ad hoc working group to discuss ESG transparency of Asset-Backed Securities.

As a first step the working group (composed of buy-side firms) issued a statement laying down current challenges for this specific asset class and the buy-side. This subsequent discussion paper issued today focuses on ESG KPIs for auto-loans/leases ABS. Next steps are to identify key performance indicators for two other sub asset classes (RMBS and CLOs). The working group will engage with other market participants and regulators to promote the usage of identified KPIs.

ICMA responds to HK SFC consultation paper on its proposed code of conduct on bookbuilding and placing activities

7 May 2021 ICMA has responded to the Hong Kong Securities and Futures Commission (HK SFC) consultation on its potential code on bookbuilding and placing. ICMA’s response comes from the DCM perspective, and attempts to foster consistency in the HK SFC’s understanding of, and approaches to, international syndicated bond issuance practices.

ICMA’s Head of Sustainable Finance, Nicholas Pfaff, wins IFLR 2021 award for Outstanding Contribution to Regulatory Reform; ICMA supported standards for sustainable bonds now underpin an estimated 97% of issuance globally.

Congratulations to ICMA’s Head of Sustainable Finance, Nicholas Pfaff, on winning the IFLR 2021 award for Outstanding Contribution to Regulatory Reform for his work on developing legal and market frameworks for sustainable bonds with the Green and Social Bond Principles community, most recently for sustainability-linked bonds. ICMA supported standards for sustainable bonds now underpin an estimated 97% of issuance globally.

ICMA opens a representative office in Brussels

26 April 2021 The International Capital Market Association (ICMA) has announced that it will be opening a representative office in Brussels in May 2021. The global trade association for international securities markets currently supports its 600 strong membership of financial institutions in more than 60 countries from offices in Zurich, Paris, London and Hong Kong.

The office will be staffed initially by new hire Julia Rodkiewicz, who joins ICMA as a director in the Market Practice and Regulatory Policy team, where she will contribute to ICMA’s policy work and support ICMA’s Regulatory Policy Committee. Julia has more than a decade of experience developing policy positions on EU financial regulation in a trade association environment.

Martin Scheck, ICMA Chief Executive said: ‘The time is right for ICMA to open a representative office in Brussels as capital markets will have an increasingly essential role in funding a sustainable post-pandemic recovery. This move strengthens ICMA’s presence in the EU, and we are pleased to welcome such an experienced public policy professional to our new Brussels office. We expect further staff to join Julia in due course.’

ICMA Brussels Representative Office
Avenue des Arts 56
1000 Brussels
Belgium
Tel. +32 2 801 13 88
Email: brussels@icmagroup.org

ICMA ERCC publishes consultation paper on the role of repo in green and sustainable finance

22 April 2021 The ICMA European Repo and Collateral Council (ERCC) has published a consultation paper on the role of repo in green and sustainable finance, exploring the sustainability aspects of repo and collateral as well as assessing the existing opportunities and potential risks in this area. In particular, the paper looks at the different possible intersections between the repo and collateral market and sustainable finance: 1. Repo with green and sustainable collateral; 2. Repo with green and sustainable cash proceeds and 3. Repo between green and sustainable counterparties.

The paper has been published alongside a list of consultation questions and is intended to serve as a starting point for promoting a broader discussion in the repo community on sustainability. It reflects the complexity of the topic and the variety of views.

ICMA invites all interested stakeholders to respond and comment on the paper by filling in our online survey which will be open until 28 May 2021. The results will help the ICMA ERCC to identify areas of focus going forward and help to frame future workstreams, if required.

Please contact ercc@icmagroup.org for more information.

ICMA AMIC and EFAMA issue joint response to IOSCO consultation on fund liquidity management by open-ended funds

21 April 2021 ICMA’s AMIC and EFAMA have submitted a joint response to the IOSCO consultation on fund liquidity management by open-ended funds.

The response highlights how industry practices and existing regulatory provisions in Europe are well aligned with the Liquidity Risk Management (LRM) recommendations issued by IOSCO in 2018.

AMIC and EFAMA also acknowledge the positive impact of the LRM recommendations, as they have incentivised national supervisors to encourage and facilitate the use of LMTs, which are now available in most European jurisdictions and in all main fund domicile centres, covering almost all AuM managed by UCITS and AIFs.

The response notes that, in the context of the COVID-19 market downturn in March/April 2020, liquidity risk was well management by investment funds domiciled in Europe and refer to an ESMA report which concluded that (1) out of the 174 AIFs studied, none used substantial leverage nor had to suspend redemption and (2) out of the 459 UCITS fund studied, only 6 UCITS funds suspended temporarily (up to 13 days).

This shows that fund liquidity risk management is overall sound in European funds and that existing EU rules - including those implementing IOSCO LRM - are sufficient. However, AMIC and EFAMA reiterate the need to facilitate the access to information related to shares/units held by the different categories of underlying investors to better appraise liability risks.

ICMA publishes 2021 legal opinions on global master repo agreement

15 April 2021 ICMA is pleased to announce the publication of the 2021 ICMA GMRA legal opinions. While all 2021 GMRA opinion updates cover, as a minimum, companies, banks and securities dealers, most opinions now additionally cover insurance companies, hedge funds and mutual funds as parties to the GMRA. Where relevant, each opinion also covers the central or national bank of the relevant jurisdiction as a party to the GMRA.

Please see ICMA circular No. 2 of April 15, 2021 for further information (ICMA members only).

ICMA updates repo best practices to support post-trade efficiency

30 March 2021 ICMA’s European Repo and Collateral Council (ERCC) has published an updated version of the ERCC’s Guide to Best Practice in the European Repo Market. The targeted updates published today were prepared jointly by the ERCC Operations Group and the ERCC’s Guide Working Group and specifically aim at improving processes related to intraday liquidity management and settlement efficiency. Over the past months, the ERCC Operations Group has undertaken a detailed analysis of the various drivers and challenges around firms’ intraday liquidity management and, closely related, the implications for settlement efficiency. The recommendations published today are a first tangible outcome of this work.

Today’s updates include the following:

• Existing recommendation for market participants to shape settlement instructions at 50 million nominal value has been clarified and strengthened (paragraph 2.69);
• Recommendations on partial settlement have been significantly extended to explain remaining obstacles and encourage the use of partialling wherever practicable (paragraphs 2.70 – 2.76);
• New paragraph added to acknowledge the importance of auto-partialling facilities offered by (I)CSDs and to encourage their use (paragraph 2.78);
• Additional paragraphs on the use of hold and release facilities offered by CSDs, to discourage any potential misuse of this tool, and to stress the importance of introducing complementary partial release functionality to facilitate auto-partialling (paragraphs 2.60 – 2.66).

Along with the updated Guide itself, the ERCC released a blackline version which highlights all the latest changes.

The updated recommendations published today are an important step towards a more consistent application of the relevant tools, but settlement efficiency remains a major focus for the industry, particularly in view of the upcoming implementation of CSDR settlement discipline measures. The ERCC is currently discussing the scope for additional measures and recommendations to support a further reduction in the level and impact of settlement fails. On 26 February, the ERCC hosted a cross-industry workshop to discuss the issues at stake with a wide range of stakeholders, including sell-side, buy-side, market infrastructures and custodians. Based on those discussions, a number of additional recommendations are currently being finalised and will be communicated in due course. Cross-industry collaboration will continue to be an important element, as we are keen to build a broad market consensus around any recommendations. Another key supporting factor will be data, which is needed to quantify the problem, but also to help develop appropriate measures to monitor progress going forward. The ERCC collaborates closely with the ECB, CSDs and ICSDs on these quantitative elements, which also complement extensive related analysis that is being undertaken by T2S stakeholders.

The challenges around settlement efficiency and the related ERCC recommendations will be discussed in more detail in today’s ERCC Annual General Meeting with a panel of market experts.

ICMA publishes landmark 40th survey of the European repo market

23 March 2021 The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 40th semi-annual survey of the European repo market. The survey, which calculated the amount of repo business outstanding on 9 December 2020, from the returns of 60 financial institutions sets the baseline figure for the outstanding size of the European market at EUR 8,285 billion compared with EUR 7,885 billion in June 2020 and down from the record high of EUR 8,310 billion in the December 2019 survey.

The December survey is a snapshot of the market at the end of an unusual year, with the COVID-19 pandemic having triggered market turbulence in February and March, and just before the end of the Brexit transition period. Survey results show the market tending to revert to long-term trends, for example the share of electronic trading on automatic trading systems (ATS) like BrokerTec, MTS and Eurex fell back from the all-time highs measured in the June survey. Activity in tri-party repo which had benefitted from the COVID ‘dash for cash’ also fell back to an 8.8% share of the survey sample in the second half as central bank funding became available in response to the COVID crisis.

On the other hand, a few changes have persisted. One of these is the recent resilience of share of business done through voice-brokers. Periods of market stress, such as that triggered by the COVID pandemic, have interrupted the steady decline over 20 years of the survey of voice-brokered business, reflecting the support which voice-brokers can offer their clients in difficult market conditions.

Another change that continues to run counter to the longer-term trend is the sharp recovery in the share of core eurozone government securities used as collateral as a result of increased issuance and notwithstanding continuing strong demand for high-quality assets. At the same time, peripheral eurozone securities have declined in share as ECB facilities have reduced the need of peripheral eurozone banks to refinance themselves in the market.

“The data from the ICMA survey over the last 20 years is a rich source for analysis of development in the European repo market, current trends and changing business models. The 40th survey adds to this with data on the response of the market to the challenges of the past year.” said ICMA Chief Executive, Martin Scheck, adding that, “The successful introduction of SFTR reporting gives us a new source of market data, but the depth of information and commentary provided by market participants themselves through the survey provides additional insight. Today’s publication is a milestone and an opportunity to thank all those involved over two decades in contributing to this vital, but often little-reported market”.

Download the 40th ICMA ERCC European Repo Market Survey

For the first time the survey features a more detailed analysis of the Securities Financing Transition Regulation (SFTR) data published by the trade repositories and aggregated by ICMA. The first reporting by EU-based and located users of securities financing transactions (SFTs) started in July 2020.

ICMA Podcast: 40th edition of ICMA’s European Repo Survey On the occasion of the 20th anniversary of the European Repo Market Survey, ICMA’s Alex Westphal speaks to Richard Comotto, author of the Survey, to discuss the evolution of the survey, long-term trends in the European repo market, as well as the results of the current survey and the outlook for the repo market post Brexit transition.

For more information about the European repo market and the repo product please see FAQS on repo.

Establishment of a new ICMA region for Ireland

16 March 2021 ICMA member firms in Ireland have worked independently within ICMA’s regional structure for many years in the form of an Irish chapter with its own chair and committee members, while technically remaining part of the ICMA United Kingdom, Ireland and the Americas region. In recognition of this and of the growing number of members in Ireland, ICMA is pleased to confirm that the region for Ireland will now officially operate as an autonomous region, bringing the number of ICMA regions to sixteen.

ICMA Ireland regional committee:

Mark Whelan (Chairman)
Allied Irish Bank plc

Maedhbh Clancy
Arthur Cox LLP

Fergus Gillen
McCann FitzGerald

Cormac Kissane
Arthur Cox LLP

Anthony Linehan
National Treasury Management Agency

Dave McEvoy
National Treasury Management Agency

Sean O’Connor
NBC Global Finance Limited

Redmond O'Leary
Bank of Ireland

Brendan Smyth
Central Bank of Ireland

Peter Walker
A&L Goodbody

Brendan Wallace
ICMA Future Leaders Committee representative
Arthur Cox LLP

ICMA has established sixteen dedicated ICMA regions and one regional chapter to service its global membership across 61 countries.

ICMA responds to ESMA consultation paper on algo trading

12 March 2021 The ICMA algo taskforce (Taskforce) member response is based on consensus view and relates solely to bonds. The Taskforce represents buy-side and sell-side investment firms, trading venues and software and technology providers.

The motivation for regulating algo trading is the mitigation of risks such as market-wide disruption or destabilisation. However, unlike equity markets, the bond market use of technology often does not fit the execution algorithm definition and does not carry the same systemic risk or disruption potential. Even if the terminology of an ‘algorithm’ is used, it is often automations without the ability to generate new orders / child orders (parent orders sliced into smaller 'child' orders electronically through algorithms) or to trigger executions.

ICMA and other associations write to European Commission and ESMA on implementation of the CSDR Settlement Discipline Regime

11 March 2021 ICMA and 14 trade associations¹ representing a wide range of stakeholders in the European and global financial markets have written to the European Commission and ESMA raising concerns about the implementation of the mandatory buy-in requirement under the EU’s CSDR² Settlement Discipline Regime. The current mandatory buy-in requirement, part of CSDR Settlement Discipline, which is due to come into force on 1 February 2022, is widely felt to require a thorough reassessment as to its appropriateness and is currently the subject of a European Commission Review. Any proposed legislative amendments to the mandatory buy-in requirement are not expected until the end of 2021.

Given the significant global implementation effort required to support the CSDR mandatory buy-in requirement, 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.

¹ The contributing associations are AFME, AGC, ASSOSIM, EACB, EAPB, EBF, EDMA, EFAMA, EVIA, FIA, FIA EPTA, ICI GLOBAL, ICMA, ISDA and ISLA.
² Regulation (EU) No 909/2014 and the Commission Delegated Regulation (EU) 2018/1229 (together, ‘CSDR’).

ICMA Women’s Network joins the world in celebrating International Women’s Day 2021

At ICMA Women’s Network (IWN), we celebrate and support women in the financial industry throughout the year. For this International Women’s Day, IWN is pleased to back the #IWD2021 #ChooseToChallenge campaign in solidarity with women around the world.

“I choose to challenge and support this terrific initiative to raise awareness and encourage greater diversity across the capital markets” Mandy DeFilippo, Chair of ICMA.

“I choose to challenge and my challenge is to ensure that we have an even stronger gender diversity at all levels of ICMA” Martin Scheck, Chief Executive of ICMA.

Happy International Women’s Day 2021!

Click here or the image below to play the video.

Joint industry letter on the reporting of issuer LEIs under SFTR

8 March 2021 ICMA, in association with ISLA, AFME, and AMAFI sent a joint communication to ESMA, various NCAs, and the FCA to reiterate concerns around the lack of availability of Legal Entity Identifiers (LEIs) for issuers outside of Europe. The letter was sent ahead of the end of a 12-month forbearance period in April for the reporting of non-EEA issuer LEIs that had been granted by ESMA. As part of the letter the associations submitted the results of a joint study joint study to quantify the gap in the issuer LEI coverage for active ISINs. Although the industry has been trying proactively to help encourage LEI issuance, in some major non-European markets the gap is still very significant. The letter proposes possible solutions and seeks further guidance on the issue from ESMA.

ICMA Scholarship Programme – first students from Sub-Saharan Africa

ICMA is delighted to welcome the first cohort of students from Sub-Saharan Africa to its new scholarship programme. The 25 successful individuals from Ghana, Kenya, Nigeria, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe were selected from an extensive number of applications received, based on their academic attainments and a personal statement on their suitability for their chosen course of study. The ICMA scholarship programme is part of ICMA's mission to raise standards and support inclusion in financial markets.

The new students will study online for an ICMA Diploma in either debt capital markets, securities & derivatives or financial market operations, starting next month.

We wish them all the best in their endeavours!

Recipients of ICMA’s 2021 Scholarship Programme

Information about the 2022 ICMA scholarship programme will be available on our website in October.

Asian International Bond Markets – new report from ICMA

3 March 2021 The International Capital Market Association (ICMA) has today launched a new report on developments in Asian bond markets, supported by the Hong Kong Monetary Authority (HKMA).

Asian International Bond Markets: Development and Trends focuses on the international, offshore bond market in Asia, which is most easily accessible to international market participants. It looks at both primary and secondary markets, examining trends in issuance from China, India, ASEAN, and Japan as well as assessing the market structure and dynamics of bond trading in the region.

As domestic capital markets in Asia have matured, seasoned issuers have entered the international bond market in greater numbers, resulting in significant growth over the past 15 years. Issuance in the Asian international bond market amounted to USD 575 billion in 2020, a more than five-fold increase from 2006. However, cross-border issuance still accounts for only 20% of all the bond issuance in Asia, while 40% of global bond issuance is cross-border.

Martin Scheck, ICMA Chief Executive said: "Rising cross-border capital flows in Asian countries highlight the potential for a future pan-Asian bond market of a depth and size comparable with those of Europe and the US."

Much of this rapid development is due to Chinese issuers increasingly tapping the international bond markets. Recent years have also seen increasing issuance from countries where domestic markets have historically dominated, such as India and the ASEAN nations. Along with the growth of the markets, Asian financial centres and exchanges have also gained market share as the locations where cross-border bonds are arranged and listed, and Asian investors have become increasingly important in the primary distribution of Asian international bonds.

In secondary markets the report identifies an increase in the uptake of e-trading which has traditionally lagged behind US and European markets and a move to secondary market liquidity supply by a number of global banks that support flow trading on a pan Asian basis. Continuing illiquidity in the repo and securities lending markets limits the availability of financing for securities trading. However, sentiment remains positive, and investor demand for Asian bond issuance in the international market continues to grow.

The report draws upon extensive quantitative data from Bloomberg, Dealogic, EquiLend, IHS Markit and MarketAxess, as well as qualitative research and interviews with market participants.

ICMA responds to IOSCO survey on bond ETF in the context of March/April 2020 market meltdown

1 March 2021 ICMA has responded to IOSCO survey on bond ETF in the context of March/April 2020 market meltdown. ICMA’s response involved members representing issuers, investors and authorised participants and market makers. The recent crisis shows that overall the ETF ecosystem functioned well despite extreme circumstances but that there is a need to continue improving the resilience and liquidity of corporate bond markets via its further electronification and appropriately calibrated regulation.

New ICMA members in March 2021

ICMA welcomes the following new members in March 2021:

• ANZ Bank New Zealand Limited, Auckland
• Barclays Bank (Suisse) SA, Geneva
• Eversheds Sutherland (International) LLP, London
• Hengeler Mueller Partnerschaft von Rechtsanwälten mbB, Frankfurt am Main
• HPC SA, Paris

Click here to view the full list of ICMA members.

ICMA issues a note following the publication of the ESAs' final recommendations for the regulatory technical standards (RTS) of the Sustainable Finance Disclosure Regulation (SFDR)

22 February 2021 ICMA has issued a note following the publication of the ESAs' final recommendations for the regulatory technical standards (RTS) of the Sustainable Finance Disclosure Regulation (SFDR). The note explains the next steps regarding the decision making process and points out implementation challenges which members and policy makers may want to consider.

Sustainability-linked bonds – new Q&As and other resources published by the Green & Social Bond Principles

17 February 2021 The Executive Committee of the Green and Social Bond Principles has published new Q&As for sustainability-linked bonds (SLBs). These are designed to promote understanding of this important new financial instrument and its place in an issuer’s overall sustainability strategy, as well as encourage development in this rapidly evolving new market. The Q&As support the Sustainability-Linked Bond Principles published by the Green & Social Bond Principles in June 2020 and now available in 21 languages. This publication was made possible thanks to the efforts of the members of the SLB working group.

The Guidelines for External Reviews have also been updated to include sustainability-linked bonds. The new provisions in the Guidelines are the result of a collaboration between the SLB working group and the external reviewers consulted prior to the publication of this update who have also voluntarily confirmed their alignment with these recommendations.

Finally, to complete the range of resources designed to enable the SLB market’s growth and promote its transparency, two forms are now available online, the Market Information Template and External Review Form. These forms, based on the same model as those available for green, social and sustainability bonds, allow on the one hand the issuer to confirm that its bond is aligned with the SLBP and on the other hand, the external reviewer to confirm the scope of its review. It should be highlighted that the Market Information Template contains a section allowing the issuer to evidence the compliance of its SLB with the eligibility requirements of the European Central Bank for its asset purchases and collateral programmes.

SLB issuers and reviewers are invited to complete the forms which will be made publicly available on the ICMA Sustainable Bonds Database which now tracks SLB issuances.

Sixth version of the ICMA SFTR Recommendations published

17 February 2021 The ICMA European Repo and Collateral Council (ERCC) has released the sixth edition of the detailed ICMA Recommendations for Reporting under SFTR. Compared to the previous version published on 29 October 2020, the updated edition of the guide reflects the end of the Brexit transition period on 31 December and the resulting split of SFTR into an EU and a UK version, which the recommendations continue to cover both. The new version also incorporates further guidance released by both ESMA and the FCA, in particular ESMA’s Q&As. A number of sections have been substantially revised as a result, including the guidance around the reporting of settlement fails (see e.g. section 9.16 of the Guide). To allow for an easier comparison, ICMA published a blackline version alongside the guide itself which shows all the changes that have been made since the last publication in late October. The SFTR Recommendations will continue to evolve to reflect ongoing discussions within the ERCC’s SFTR Task Force as well as any further official guidance published by regulators. Further updates will be made available on the ICMA website.

• ICMA Recommendations for Reporting under SFTR (updated version: 17 February 2021)
• Blackline version (showing all changes compared to the previous version published on 29 October 2020)

Results of the 2021 ICMA ERCC elections

We are pleased to announce the results of the 2021 ICMA ERCC elections. The 19 individuals that were elected to the new ERCC Committee are listed below. The term of office of the new Committee will be approximately one year starting immediately and ending on the day that the results of the 2022 ERCC elections are announced.


ICMA ERCC Committee 2021-2022

Charlie Badran
AXA Investment Managers Ltd

Thomas Hansen
Banco Santander S.A.

Nick Dent
Barclays Capital Securities Limited

Emma Cooper
BlackRock Investment Management (UK) Limited

Eugene McGrory
BNP Paribas

Peter Fejfer Nielsen
Citigroup Global Markets Limited

Jean-Robert Wilkin
Clearstream Banking

Andreas Biewald
Commerzbank Aktiengesellschaft

Romain Dumas
Credit Suisse International

Marije Verhelst
Euroclear Bank S.A./N.V.

Ned Taylor
HSBC Bank plc

Lav Lukic
J. P. Morgan Securities plc

Antony Baldwin
LCH Limited

Daniel Bremer
Merrill Lynch International (trading as Bank of America Merrill Lynch)

Amandine Triadu
Mizuho International plc

Paul Van De Moosdijk
PGGM Vermogensbeheer B.V.

Sylvain Bojic
Société Générale S.A.

Gareth Allen
UBS AG

Harald Bänsch
UniCredit Bank AG

ICMA submits its response to the Targeted consultation on the review of CSDR

2 February 2021 ICMA’s response focuses exclusively on the section relating to Settlement Discipline, in particular the provisions relating to mandatory buy-ins, which ICMA points out is market regulation, not post-trade regulation. In its response ICMA provides data and analysis to illustrate the expected impacts of the mandatory buy-in regime on EU bond market pricing and liquidity, and the costs that will be incurred by investors and potentially issuers. The response also seeks to evidence the procyclical and destabilizing effects the regime would have had during the March-April 2020 COVID-19 market turmoil.

As well as noting extensive cross-industry work to improve settlement efficiency in the EU, ICMA recommends that the CSDR cash penalty mechanism be implemented as soon as practicable, and that the regulatory authorities monitor its impact on both settlement efficiency rates and market liquidity over an appropriate time period, then recalibrate as required. During this time, mandatory buy-ins should not be implemented. Requiring investment firms to have in place contractual arrangements to remedy settlement fails (such as those that already exist in the international bond and SFT markets), could be an effective alternative consideration.

ICMA AMIC responds to EC consultation on the review of the alternative investment fund managers directive (AIFMD)

29 January 2021 ICMA's Asset Management and Investors Council has responded to the EC's consultation on the review of the Alternative Investment Fund Managers Directive (AIFMD). AMIC argues in favour of legislative stability given (1) the findings of the recent COVID-19 crisis (no suspension for the 174 AIFs scrutinised by ESMA in its report to ESRB) and (2) the recent complementary measures already adopted at EU level (eg. Liquidity Stress Testing guidelines; crossborder distribution of funds package) which are yet to be fully implemented and assessed. AMIC calls on the EC to focus on vehicles which, with changes, could foster growth in European capital markets (eg the ELTIF ongoing review consultation) rather than those which have been successful in ensuring EU’s competitiveness and attractiveness.

ICMA AMIC responds to EC consultation on the review of the European long-term investment funds (ELTIF) regulatory framework

28 January 2021 ICMA's Asset Management and Investors Council has submitted its response to the European Commission's consultation on the review of the European Long-Term Investment Funds (ELTIFs) Regulation. AMIC welcomes this review and encourages the EU to have a bold approach given that no more than 28 ELTIFs were launched since 2015. Among AMIC members, who oversee assets classes that could be eligible to ELTIFs, only three members have launched ELTIFs (9 in total).

First edition of the ICMA Corporate Issuer Forum Newsletter

We are pleased to launch the ICMA Corporate Issuer Forum’s newsletter which will provide a periodic snapshot of the CIF’s key priorities, initiatives and workstreams.

ICMA Corporate Issuer Forum Newsletter - January 2021

To receive future editions of this newsletter, sign up here or update your ICMA mailing preferences by ticking the Primary markets box.

ICMA responds to SFC Consultation Paper on the Management and Disclosure of Climate-related Risks by Fund Managers

15 January 2021 ICMA has responded to the SFC Consultation Paper on the Management and Disclosure of Climate-related Risks by Fund Managers.

The internationalization of the China corporate bond market – new report from ICMA

14 January 2021 Recognising the increasing importance of China in the global bond markets, and in light of significant reforms and initiatives to attract foreign investors, as well as the inclusion of China in major global bond indices, the International Capital Market Association (ICMA) has published a new report focusing on the trends, opportunities, and challenges related to the internationalization of the China corporate bond market, both onshore and offshore.

China’s onshore bond market, at approximately $15 trillion equivalent of outstandings, is the second largest in the world, after the US. ICMA estimates the overall size of the outstanding onshore credit bond market to be approximately valued at $5.8 trillion of which $3.7 trillion is non-financial corporates and $2.1 trillion are financial bonds.

Market participants interviewed for the report indicate that one of the main motivations for investing in China’s corporate bond markets is the continuing strong economic backdrop and in the onshore market the relatively high nominal returns in comparison to global bond markets where yields are close to zero or negative. A major catalyst for foreign inflows into the onshore bond market since 2019, particularly passive investment flows, has been the inclusion of China in various global bond indices. Among the barriers to foreign investors entering the onshore market are challenges with assessing the credit quality of underlying corporates, which require investors to dedicate time and resources to their own proprietary credit analysis and the incidence and outcomes of corporate defaults. The lack of a liquid secondary bond market is also perceived as a major obstacle to internationalization of the onshore credit market.

ICMA estimates the size of the offshore China corporate bond market to be approximately $752 billion of equivalent nominal outstanding, or around 30% of the total APAC international corporate bond market and 38% of APAC international USD issuance, this issuance is skewed towards financials predominantly in real estate financing. Much of the impetus for Chinese corporates to tap the international debt markets is the result of China’s rapid global economic expansion, and the need to fund overseas investment and acquisitions, primarily in USD. The investor base in this market has diversified in recent years, with more regional and global asset managers looking to diversify their portfolios while seeking out higher returns.

Martin Scheck, ICMA Chief Executive said: “China is rapidly establishing itself as an important part of the global cross-border bond markets, and it is inevitable that the onshore credit market will increasingly attract interest from international investors”.

The report concludes that while there are multiple challenges for international investors who wish to enter the $5.8 trillion onshore credit market, that are likely to persist in the short-term, they are not insurmountable. The potential for transforming the China onshore credit market into a truly global market is significant.

The European repo market at 2020 year-end

13 January 2021 The ICMA European repo and Collateral Council (ERCC) has published a report on the performance of the European repo market at year-end 2020, focused on the euro, sterling, US dollar and Japanese yen markets and based on market data and accounts provided by market participants (both sell-side and buy-side). This is the 5th in the series of annual reports, which began with an analysis of the unprecedented dislocations in the euro denominated repo market at the end of 2016.

Download 'The European repo market at year-end 2020'

After the past three relatively uneventful year-ends, concerns about potential year-end dislocations began to build as early as October 2020, following the largely unexpected drop in rates at the September quarter-end. Market participants were wary of a potential collateral squeeze, citing significant excess reserves (which had increased from €1.7 trillion at the end of 2019 to €3.2 trillion by the end of October 2020) and a reduced supply of collateral (euro sovereign issuance less central bank purchases had taken €300 billion of collateral out of the market during 2020). A longer than usual (four-day) turn compounded any unease.

In fact, the general view is that the turn was relatively subdued, with the buy-side looking to execute as much of their funding requirements as early as possible, while the banks went into year-end with more balance sheet than usual to play with. A common concern, however, relates more to conditions over the next twelve months, particularly in the case of the EUR market, given the widening of the PEPP envelope and the prospect of an even smaller EGB collateral pool; more so than the perennial uncertainty related to banks’ balance sheets and dealer capacity. A further consideration for the immediate future is the impact of Brexit on repo market liquidity, as well as for euro denominated derivatives, particularly in light of the migration of the euro equity markets from the UK to the Eurozone on 4 January 2021. The end of the pension fund industry’s exemption for mandatory clearing could also increase demand for euro collateral transformation, an issue currently under discussion with the relevant authorities.

The ICMA ERCC will continue to monitor closely market developments, highlighting potential risks and dislocations to the smooth and orderly function of the market. In doing so, it will remain in close contact with the relevant authorities and regulatory bodies.

New ICMA members in January 2021

ICMA welcomes the following new members in January 2021:

• Bird & Bird LLP, London
• ICICI Bank UK Plc, London
• Jane Street Netherlands B.V., Amsterdam
• Origin Primary Limited, London
• Standard Chartered Bank (China) Limited, Shanghai

Click here to view the full list of ICMA members.

ICMA responds to the UK Listings Review call for evidence

18 December 2020 ICMA’s primary market community has responded to the UK Listing Review call for evidence, suggesting changes that could be made to the UK Prospectus Regulation while protecting the overall smooth functioning of the pan-European wholesale bond issuance process. The response also raises the idea of developing a suitable regulatory framework to allow a UK retail bond market to develop.

ICMA responds to the draft Delegated Act supplementing the EU Taxonomy Regulation

17 December 2020 ICMA today published its response to the draft Delegated Act supplementing the EU Taxonomy Regulation.

Overall, ICMA believes that while Substantial Contribution and DNSH are recognised as fundamental concepts of the Taxonomy, the Delegated Acts or associated commentary could go further to acknowledge that implementation will take time, even for advanced actors, and that some criteria remain undefined. Further dialogue with the market on usability is desirable to make this a success. The same is true for work needed to establish internationally comparable criteria – something the International Platform could contribute to. Finally, more guidance on the application of the taxonomy, e.g. how to report investments outside the EU referenced by an EU Green Bond, would be helpful.

Amendments to the ICMA Primary Market Handbook published December 2020

17 December 2020 Amendments to the ICMA Primary Market Handbook have been published today. For more information, see the ICMA Primary Market Handbook - Amendments/archive page.

The associated circular to members is available here for ICMA members and ICMA Primary Market Handbook subscribers only (login details required).

ICMA publishes updated Electronic Trading Platform (ETP) directory

16 December 2020 ICMA has updated its mapping of Electronic Trading Platforms (ETPs) available for cash bonds. The directory now includes 49 technology solutions, up from 41 in the November 2019 publication.

Key observations

• The latest review shows increased coverage of order and execution management systems (OMS/EMS), with 11 solutions which assist with the aggregation of records, quotes, and trade orders.
• Clarity on the regulatory status of trading/execution venues is particularly important in the context of the potential impact of Brexit. The mapping includes the regulatory status of each provider where relevant, highlighting for example MTF or OTF status in the EEA or UK, or RMO status in Singapore.
• The directory now features coverage of MIC and LEI codes of providers where relevant.

Background

Bond market structure and liquidity are at the heart of ICMA’s work, and that is why in 2015 it took the initiative to map the landscape of bond market electronic trading platforms (ETPs), originally focused on the European bond markets, outlining their capabilities, target markets, and value proposition. This centralised database of venues, solutions, and protocols is provided as a unique and freely available resource to market participants and stakeholders.

As this landscape continues to evolve, ICMA has undertaken to update this mapping directory on a regular basis, expanding its scope both in terms of regions and solutions, for example including Organised Trading Facilities (OTFs, and, more recently the expansion of Order and Execution Management Systems (OMS & EMS) have been listed. The revised ETP mapping directory is available here.

The directory does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the directory and wish to join are very welcome to do so. Please contact us for further details.

ICMA AMIC responds to third EC consultation on the EU Ecolabel for financial products

11 December 2020 ICMA's Asset Management and Investors Council has today published its response to the third EC consultation on the EU Ecolabel for financial products. While AMIC continues to support the idea of an EU sustainable label for retail investments funds, it also warns that, at best, only a residual portion of the greenest of sustainable funds will be able to meet the proposed requirements. Based on studies conducted by the EC itself and members of the UNPRI, AMIC therefore recommends to recalibrate the green thresholds, strictly align the EU Ecolabel on the EU Taxonomy framework, and review requirements for bond funds as they are not in line with current market practices and need to include more broadly bonds aligned with the Green Bond Principles.

Green & Social Bond Principles launch new guidelines on climate transition finance

9 December 2020 Major economies are now striving to meet the objectives enshrined in the Paris Agreement, limiting the global temperature increase this century to lower than 2°C above pre-industrial levels by cutting greenhouse gas emissions. Capital markets play a critical role in this climate transition process by ensuring the efficient flow of financing from investors to issuers who want to change their businesses to address climate change risks.

To support the growth of climate transition finance, the market community behind the Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines and Sustainability-Linked Bond Principles has launched clear guidelines on the disclosures that should be made by issuers on their climate change strategy when raising funds in debt capital markets.

The new Climate Transition Finance Handbook clarifies the information that should be made publicly available to investors in connection with the issuance of ‘use of proceeds’ bonds aligned with the Green and Social Bond Principles or Sustainability Bond Guidelines, or general corporate purpose bonds issued in line with the Sustainability-Linked Bond Principles.

The recommended disclosures in the new Handbook are based on the work of the Climate Transition Finance Working Group made up of representatives from more than 80 entities participating in the capital markets, under the auspices of the Green and Social Bond Principles Executive Committee. They reference existing climate change disclosure frameworks developed by relevant industry groups, regulatory bodies and the scientific community.

The recommendations have four key elements:

• Issuer’s climate transition strategy and governance;
• Business model environmental materiality;
• Climate transition strategy to be ‘science-based’ including targets and pathways; and,
• Implementation transparency.

The Handbook specifies that relevant disclosures can be included in the issuer’s annual report, framework document, or investor presentation, as long as they are publicly accessible to investors. Concurrently, the recommended independent review, assurance and verifications can be included as either a Second Party Opinion or provided in the context of an issuer’s ESG reporting.

A dedicated Q&A has also been released to further guide market participants.

“With only a decade left to meet the goal of halving greenhouse gas emissions globally, the Climate Transition Finance Handbook is a timely document,” said Denise Odaro, Chair of the Green and Social Bond Principles Executive Committee. “The Handbook comprises disclosure recommendations to facilitate the necessary flow of capital to issuers required to decarbonize and implement a climate transition strategy on the basis of a science-based alignment with the Paris Agreement.”

Martin Scheck, ICMA Chief Executive, added: “The Climate Transition Finance Handbook is essential complementary guidance for issuers that wish to position their green, sustainability or sustainability-linked bonds within a transparent and science-based climate transition strategy.”

Download Climate Transition Finance Handbook

Download Related Questions

Access ICMA’s 2020 podcasts and webinars from our new media library

We are pleased to announce the ICMA Media Library which features our extensive offering of webinars and podcasts covering a variety of current issues and themes relating to capital markets, including sustainable finance, the transition to risk free-rates, repo & collateral and the effect of COVID-19 on markets. We also have ‘in conversation’ pieces with influential industry figures and also look at some broader themes relating to career development and inclusion.

ICMA AMIC responds to ESMA's public consultation on Article 8 of the Taxonomy regulation

4 December 2020 ICMA AMIC submitted its response to ESMA's public consultation on Article 8 of the Taxonomy regulation which requires companies in the scope of NFRD (i.e. large listed companies ) to disclose their level of taxonomy alignment (turnover, capex, opex) in their non-financial statement. This consultation focuses on non-financial issuers and asset managers as EBA and EIOPA are looking at banks, insurers and pension funds in separate consultations. Regarding asset managers, ICMA’s response recommends a look-through approach focusing on investment funds with sustainability claims, the consideration of all green bonds (including the ones aligned with the Green Bond Principles) and other relevant assets which can be assessed against the taxonomy, and the optional use of proxies for non-listed issuers.

ICMA responds to ESMA Consultation Paper on MiFID II/ MiFIR review on the functioning of Organised Trading Facilities (OTF)

25 November 2020 ICMA has provided feedback regarding ESMA’s surprisingly wide scoped consultation on the functioning of the Organised Trading Facility regime. The response was based on the views of members ICMA’s OTF taskforce representing buy-side and sell-side investment firms, trading venues and software and technology providers, conveying a broad view from across the industry. The consultation covers OTFs and potentially forcing software and tech providers to be authorised as trading venues.

First edition of the ICMA ERCC's Repo and Collateral Newsletter – read about our work and other market news

We are pleased to launch the ICMA ERCC’s new Repo and Collateral newsletter which will provide you on a monthly basis with updates on the key initiatives and workstreams undertaken by ICMA’s European Repo and Collateral Council (ERCC) as well as other relevant repo market developments.

Inaugural ICMA ERCC Repo and Collateral Newsletter - November 2020

To receive future editions of this newsletter, sign up here or update your ICMA mailing preferences by ticking the Repo and collateral markets box or contact us.

Joint trade association letter regarding the third country transitional provisions of the EU Benchmarks Regulation

20 November 2020 ICMA and several other trade associations have endorsed a paper calling for an extension to the end of the transition period for third country benchmarks under Article 51 of the EU Benchmarks Regulation (BMR) from the end of 2021 to the end of 2025.

ESG, finance, and building back better: a silver lining for COVID-19?

Conference gathers pivotal stakeholders in the global and in particular Asian green, social, and sustainability bond markets in Tokyo and online via Zoom to exchange views and practical expertise on how to foster and develop the market for sustainable financial instruments, with a particular focus on the ways the market has changed under COVID-19.

(TOKYO, Japan) 13 November 2020 The International Capital Market Association (ICMA) and the Japan Securities Dealers Association (JSDA) held their joint conference on the “Developments in bond markets contributing to sustainability under COVID-19 – globally and in Japan”— this time in a hybrid format.

Since 2017, the ICMA and JSDA have been jointly hosting full-day conferences on developments in green, social, and sustainability bond markets in Tokyo, and this year’s fourth iteration of the conference was adapted to respond to the COVID-19 pandemic — both in format and in content. The hybrid conference attracted more than 700 registrants (both virtually and in person), which highlights the broad reach of and overwhelming interest in these markets.

This year’s event came at a trying time for financial markets, where COVID-19 tested the limits of capital market resiliency. While the pandemic brought with it market disruption, it too highlighted the necessity and critical role of financial market involvement in addressing social challenges. Against this backdrop, the potential for sustainable financial products found their way into the spotlight, as evidenced by the immense growth of sustainable debt markets to surpass USD250bn in issuance in H1 2020 alone (vs. USD341bn for the full year of 2019; Source: Climate Bonds Initiative). Part of this growth was due to the issuance of COVID-19 social bonds, a testament to the ways in which the capital market can be tapped into to finance socially- and environmentally conscious recovery in times of crisis.

Whether this trend is permanent or only temporary remains to be seen. However, there are distinct achievements and changes in the landscape — such as the ICMA’s updates to the Social Bond Principles, the new Sustainability-Linked Bond Principles, and regulatory movements in the official sector — that indicate this is not just a fleeting development.  

In this context, the conference served as an arena for an exchange of expertise and information sharing amongst the practitioners in the rapidly-growing area of sustainable finance, in particular addressing how this space has been propelled to the forefront since COVID-19. The event connected key stakeholders in the markets for sustainable finance — including issuers, underwriters, investors and policymakers — who offered their unique perspectives on the prospects and challenges for these markets going forward, as well as the movements in both the public and private sectors to promote these bonds in practice.

Shigeharu Suzuki, Chairman and CEO of the co-host JSDA, had this to say about the event: “It is my great hope that green and social bonds serve as effective tools for overcoming the global challenges brought about by the pandemic, toward the realization of a sustainable world.”

Speaking at the event, Martin Scheck, ICMA’s Chief Executive, remarked: “As countries and regions develop their funding and investment programmes to rebuild their economies it has been gratifying to see that environmental considerations have been hard wired into these both on the funding and disbursement sides. So, the green bond market continues to grow rapidly, and the pace is only increasing.”

While the precarious circumstances brought about by COVID-19 poses immense challenges for all market participants and stakeholders, it too provides an opportunity for discussion — a silver lining for how to transform finance to truly build back better. The 13 November conference confirmed that while the growth of the market for sustainable finance is still nascent, there are lasting effects of the move of the markets toward a greener, and more socially aware, type of finance that are expected to develop further over time.

The JSDA and ICMA will continue to build upon the growing interest in the field of sustainable finance, including but not limited to supporting all the stakeholders of green, social, sustainability, and sustainability-linked bonds going forward.

Download the press release.

ICMA SFTR checklist for non-European firms

13 November 2020 ICMA has prepared a checklist for non-European firms to help them assess their reporting obligations under the EU’s SFT Regulation as well as the UK’s SFT Regulation post-Brexit. The document looks at not only the geographical scope of SFTR, but also the different instruments that it applies to.

ICMA publishes European and Asian repo surveys

The European repo market in the aftermath of COVID-19 – ICMA publishes June repo survey

12 November 2020 The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 39th semi-annual survey of the European repo market. The survey, which calculated the amount of repo business outstanding on 10 June 2020, from the returns of 61 financial institutions sets the baseline figure for European market size at EUR 7,885 billion down from the record high of EUR 8,310 billion in the December 2019 survey.

The latest survey took place after the market turbulence triggered by the COVID-19 pandemic, in February and March (for a detailed assessment see ‘The European repo market and the COVID-19 crisis April 2020’) which stabilised in April following the fiscal response by governments and emergency liquidity support from central banks. However, the June survey shows clear traces of the impact of central bank asset purchases and other demand for high quality assets during the crisis. The repo market plays a key role in collateral transformation from one type of security to another. During the market turbulence, despite regulatory constraints, the repo market also provided a resilient source of funding and safe-haven for investors.

Increased asset purchases by the ECB and enhanced financing under TLTRO III facility contributed to a reduced use of a number of EU government securities as collateral, which was reflected in the fact that UK government securities, which have been subject to relatively less purchases by the Bank of England, now provide the largest pool of collateral in the European repo market.

While the survey showed continued contraction of the share of automatic electronic trading, data reported directly to the ICMA by the trading platforms showed 30% growth, suggesting that there has been strong growth in electronic repo between firms not in the ICMA survey, which probably means smaller banks, who are either new or previously light users of electronic trading. There is anecdotal evidence to support the suggestion that automation was accelerated by the hectic trading which was triggered by the Covid crisis. This is also evident in the strong growth in automated trading (using requests for quotes), which is reported in the survey as direct trading.  

Compulsory reporting under the EU Securities Financing Transaction Regulation (SFTR), began on 13 July for virtually all entities established or located in the EU of all securities financing transactions (SFTs), including repos. ICMA aggregates and publishes the data from the trade repositories on its website. By October, this aggregated figure had reached EUR 13 trillion. While the SFTR data covers the whole EU market, the ICMA data covers a significant part of the European market and gives a great deal more detail on market structure. The advent of SFTR reporting may also have contributed to increased use of electronic trading platforms, which provide a convenient way of digitizing transaction details for processing into reports.

Gareth Allen, Chair of ICMA’s ERCC said: “The ERCC Repo Survey has been the main window onto the European repo market for twenty years, providing a comprehensive overview of market trends, structure, and dynamics. In the wake of SFTR it is great to see that the headline numbers from the ERCC Survey align. The relatively limited public data coming from SFTR also highlights the importance of the ERCC Survey and suggests that it will remain a key market resource for many years to come.”

Download the 39th ICMA ERCC European Repo Market Survey

For more information about the European repo market and the repo product please see FAQS on repo.

Participate in the December 2020 ICMA ERCC Repo Survey

Results of second survey of Asia repo markets published

12 November 2020 ICMA’s European Repo and Collateral Council (ERCC) and ASIFMA have published the results of a second survey of the Asia-Pacific repo market. Using similar methodology to the long-established ICMA ERCC 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.

Download the ICMA ASIFMA Asia-Pacific repo market survey

Commenting on the survey Martin Scheck, ICMA Chief Executive said: “Building on the lessons of the pilot in 2017 this current survey is intended to be the start of a regular annual survey of the cross-border Asian repo market which together with semi-annual European repo surveys will give a broad and detailed picture of this developing and increasingly vital financial product for our global membership”.

Philippe Dirckx, Managing Director - Fixed Income, ASIFMA said “This report provides a unique mapping of the Asian repo landscape for ASIFMA and its industry members to identify, discuss and advocate how secured funding can become more prominent in the region and enable seamless access to collateral and liquidity”

Main survey findings

• For reporting banks outside Japan, most of their counterparties were located in Europe and other regions outside Asia (probably the US) and the bulk of reported repo business outside Japan was cross-border.
• The overwhelming share of reported repos was executed directly between parties by telephone and electronic messaging. Voice-brokers played a more significant role in Japan than elsewhere in APAC. Automatic and automated trading was very limited.
• CCP-clearing accounted for most of the Japan survey but little of the remaining APAC survey.
• The Japanese yen predominated in the Japan survey, with the remaining business mainly in US dollars, euros and Australian dollars. While the yen was important in the rest of APAC, the predominant currency was the US dollar, with significant business also in Australian dollars and euros.
• The Japan survey was dominated by gentan repo, which means it was very different to the composition of the Japanese market as reported by the Bank of Japan and the JSDA (mainly gensaki). The non-Japan Asia survey was overwhelming in repurchase transactions and most of the remainder was documented buy/sell-backs. Chinese pledged repo had a small share.
• Almost 89% of APAC transactions (excluding Japan) were documented under the GMRA.
• All the reported transactions in the Japan survey were fixed-rate. In the rest of APAC, the proportion of floating-rate and open repos were similar to that in Europe.
• The maturity distribution of the Japan survey was similar to that of the ICMA European repo survey with two exceptions: forward repos were even more prominent in the Japan survey; and there was minimal business beyond three months in the Japan survey.
• As expected, Japanese securities dominated the Japan survey with small shares in US Treasuries and eurozone non-government securities. In the rest of APAC, Japanese securities were also the largest component but there was a much more diverse pool of collateral, with significant shares in Australian securities and US Treasuries, and material business in bonds issued by IFIs, other APAC issuers, eurozone governments, Chinese issuers, US non-government issuers and Singaporean issuers as well as in equity.

ICMA Electronic Trading Council (ETC) publishes paper on Axe Distribution Best Practice Standards

3 November 2020 The ICMA ETC has published a paper on axe distribution best practice standards. To some outside the fixed income trading world, the term ‘axe’ is an odd name to use for advertising buy or sell bond interests. In equities the self-explanatory term that is used to advertise buy or sell interests is “Indication of Interest” (IOI). Whereas in fixed income the common term used to advertise buy or sell interests is ‘axe’.

For many years in fixed income, and particularly in the sphere of electronic trading, there has been keen interest in axe distribution practices. This is because axes are vital to bond trading. Yet not all distribution behaviour is uniform and this is causing much consternation amongst buy-side market participants.

Through discussion and investigation into acceptable and less acceptable axe distribution practices, ICMA’s Axe Standard Working Group aims to address this situation and stabilise axe distribution practices.

ICMA ERCC publishes fifth edition of its SFTR recommendations

29 October 2020 The ICMA European Repo and Collateral Council (ERCC) has published today an updated version of the ICMA Recommendations for Reporting under SFTR. This is the fifth public edition of the document, which was initially released on 24 February and last updated on 7 September.

The Recommendations aim to help members interpret the regulatory reporting framework specified by ESMA and set out complementary best practice recommendations to provide additional clarity and address ambiguities in the official guidance. Compared to the previous edition, the new version of the guide includes a number of further updates to address reporting issues raised by members since the initial go-live on 13 July, and it also covers a number of specific buy-side questions and important lessons learnt since the buy-side reporting go-live on 12 October. In addition, the latest version of the guide now also includes a detailed breakdown of the post-Brexit reporting obligations under SFTR and MiFIR for UK, EU and non-EU counterparties.

For ease of comparison, ICMA published, alongside the new guide, a blackline version which shows all the changes that have been made since the last publication in September. Going forward, the document will continue to evolve to reflect ongoing discussions in the ERCC SFTR Task Force as well as any additional guidance received from ESMA and/or the National Competent Authorities (NCAs). In addition to the detailed recommendations, ICMA has also developed a number of complementary best practice documents, including a comprehensive set of over 50 SFTR sample reports, which are available on the ICMA website.

• ICMA Recommendations for Reporting under SFTR (updated version: 29 October 2020)
• Blackline version (showing all changes compared to the previous version published on 7 September)
• ICMA SFTR sample reports (last updated: 16 September 2020)

ICMA AMIC responds to ESA's survey on templates for Environmental and/or Social financial products under SFDR

16 October 2020 ICMA AMIC submitted its response to the ESAs' survey on templates for Environmental and/or Social financial products under SFDR.

ICMA AMIC publishes position paper on ESMA's letter on AIFMD review

12 October 2020 ICMA's Asset Management and Investors Council published a series of first views on the review of AIFMD following ESMA's letter and ahead of the upcoming EC consultation. AMIC argues that the current framework, which was continuously enhanced over the years has proven to be fit for purpose in light of the crisis and that re-writing AIFMD and the UCITS directive on key aspects (such as  delegation, leverage/liquidity, reporting) as suggested by ESMA would be a major distraction for policy makers, supervisors and asset managers at a time when collective energy should be devoted to the post-COVID 19 recovery, the Sustainable Finance Action Plan and the Capital Markets Union. AMIC believes a lot of the points raised in ESMA's letter can be dealt with by the European authority and NCAs by making use of their existing and recently reinforced powers (i.e. Guidelines, Q&As, Common Supervisory Action) or via targeted level 2 measures and calls the EC, to focus on vehicles which, with changes, could foster growth in European capital markets (e.g. ELTIF) rather than those which have been successful in ensuring EU’s competitiveness and attractiveness.

Buy-side starts reporting under SFTR

12 October 2020 The third phase of SFTR reporting has gone live. As of today, SFTR reporting obligations will apply to investment funds, pensions funds and (re-)insurance undertakings, who will join sell-side firms, CCPs and CSDs, who have already been reporting for 3 months. The first few months of SFTR reporting have certainly exceeded expectations with consistently high acceptance rates reported by the trade repositories. It is hoped that the buy-side firms that start reporting today can build on and replicate this success.

ICMA has been leading the implementation process for SFTR reporting of repos in a collaborative effort coordinated by the ERCC’s SFTR Task Force. The Task Force brings together around 700 individuals representing more than 150 firms, including most of the key players on the buy-side. It has also consulted with buy-side associations, in particular, the Investment Association in the UK.

Based on feedback from the Task Force, ICMA has put together detailed best practice recommendations for the industry which complement and supplement the regulatory framework and aim to ensure consistency in firms’ implementation efforts (and a Quick Guide mapping recommendations to data fields). Over the past weeks, in the run-up to today’s go-live, discussions have focused on a number of specifically buy-side questions, including reporting issues for multi-managed funds, particularly for the reporting of reuse and variation margining, but also the classification of investment managers. These discussions have led to a few last-minute updates to the ICMA recommendations.  

In addition to the best practices, ICMA has published a set of sample reports, some of which show how buy-side repos should be reported. ICMA is also publishing, on a weekly basis, consolidated SFTR data released by the TRs. Figures and charts from the first 3 months of reporting are available on the SFTR public data page. We will continue to publish and analyse the data and will of course track the impact of today’s expansion of the reporting population on the statistics.

Download this ICMA statement.

Green Bond Principles and Social Bond Principles Executive Committee announces 2020/2021 Advisory Council composition

9 October 2020 The Green Bond Principles and Social Bond Principles Executive Committee is pleased to announce the 2020/2021 Advisory Council composition.

Amendments to the ICMA Primary Market Handbook published

6 October 2020 Amendments to the ICMA Primary Market Handbook have been published today. For more information, see the ICMA Primary Market Handbook - Amendments/archive page.

The associated circular to members is available here for ICMA members and ICMA Primary Market Handbook subscribers only (login details required).

Translations of the Sustainability-Linked Bond Principles are published

6 October 2020 Sustainability-Linked Bonds aim to further develop the key role that debt markets can play in funding and encouraging companies that contribute to sustainability from an environmental and/or social and/or governance perspective.
 
In June of this year, the Green and Social Bond Principles launched the Sustainability-Linked Bond Principles (SLBP), voluntary process guidelines that outline best practices for financial instruments to incorporate forward-looking ESG outcomes and promote integrity in the development of the Sustainability-Linked Bond (SLB) market by clarifying the approach for issuance of an SLB. Intended for use by market participants and designed to drive the provision of information needed to increase capital allocation to such financial products, the SLBP are applicable to all types of issuers and any type of financial capital market instruments.

In order to raise further awareness of these recently launched Principles and to encourage issuance and local adoption of SLBs, the SLBP has been translated into the following languages: Arabic, Bahasa Malay, Chinese, Danish, Dutch (Netherlands), German, Hausa (Nigeria), Italian, Japanese, Norwegian, Portuguese, Romanian, Spanish and Swedish. Access to these translations is freely available from the ICMA website. Additional translations will be made available in the coming months (Finnish, French, Greek, Russian and Turkish).

The coordinator of the translation exercise, Marilyn Ceci, Managing Directing, Global Head of ESG Debt Capital Markets, J.P. Morgan and member of the Green Bond Principles and Social Bond Principles Executive Committee said: “We are grateful to the volunteers, many of whom are Green & Social Bond Principles members and observers, who responded swiftly to the request for help in translating the Sustainability-Linked Bond Principles into 19 languages. The overwhelming support we received is evidence of the community’s commitment to reinforce the contribution of the debt markets to the sustainability agenda”.
 
The SLBP are collaborative and consultative in nature based on the contributions of Members and Observers of the Green Bond and Social Bond Principles and of the wider community of stakeholders. The Principles are coordinated by the Executive Committee. The SLBP will be updated from time to time in order to reflect the development and growth of the global Sustainability-Linked Bond market.

ICMA and the GBP SBP SLBP Executive Committee wish to extend special thanks to the following institutions which provided or reviewed translations: Actiam, Applied Logic Ltd, Athens Exchange Group, Bank of China, CaixaBank, Clifford Chance, Clifford Chance Badea, Citi Bank, CMS Francis Lefebvre Avocats, Dentons, European Investment Bank, Enel, GCA Capital Partners, HSBC Bank, Iberdrola, J.P. Morgan, Kommunalbanken AS, Luxembourg Stock Exchange, LBBW, Mizuho Securities, Nasdaq, Nordea, OP Corporate Bank, Pinebridge, Rating-Agentur Expert, Rabobank, RAM Sustainability, Securities Commission Malaysia, SMBC Nikko Securities, Union Investment, VEB.RF.

New ICMA members in October 2020

ICMA welcomes the following new members in October 2020:

• Davis Polk & Wardwell LLP, New York
• Flow Traders B.V., Amsterdam
• Frontclear Management B.V., Amsterdam
• Neptune Networks Limited, London
• TransFICC Limited, London

Bringing the total number of ICMA members to 601 members spanning 62 countries. Click here to view the full list of ICMA members.

ICMA responds to the EC consultation on the EU Green Bond Standard (EU GBS)

2 October 2020 ICMA has responded to the EC consultation on the EU Green Bond Standard (EU GBS).

Who is automating the primary bond markets? ICMA publishes new edition of technology directory

2 October 2020 In light of a rapidly expanding competitive marketplace, ICMA is publishing the third edition of its primary markets technology directory. It was initially launched in 2018 and seeks to compare the key features and capabilities of technology solutions available to automate all or part of the process of issuing debt securities. The directory now references a total of 35 technology solutions, up from 28 in last year’s review.
 
This unique directory comprises new technology offerings, as well as new features of previously included solutions. It helps compare the different solutions and understand whether they are aimed at underwriters, investors, issuers or others, at what stage of the issuance process they can be utilised, the scope of debt instruments and supported issuance methods. The latest edition also includes a new search filter to identify solutions more easily based on product focus.
 
Key observations
New solutions, expected to go live in Q4 2020, are targeting the new issue process of syndicated bonds, aiming to enhance workflow and streamline communication between issuers, banks and investors, and enable connectivity to order management systems. Straight-through-processing appears to be a key theme also for private placements, as evidenced by new functionalities of platforms, for example, to automate the creation of final terms, or by extended connectivity options. The number of platforms for the issuance of Schuldscheine has further increased and in some instances, the product scope has been expanded to bonds, or sustainability-linked debt instruments.
 
Download directory
 
This initiative complements ICMA’s directories of Electronic Trading Platforms, Repo Trading technologies and FinTech solutions for repo and cash bond operations.
 
The directory does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the mapping directory and wish to join are very welcome.

ICMA publishes preliminary thoughts on the new Capital Markets Union Action Plan

1 October 2020 ICMA is pleased to share its preliminary thoughts on the European Commission’s new Capital Markets Union Action Plan highlighting the importance of Europe’s debt capital markets in funding the recovery from the COVID-19 pandemic. There are a range of associated issues that European authorities may wish to consider such as the importance of secondary bond market liquidity (and associated regulatory issues), repo collateral fluidity, a consolidated tape for bonds and other key matters.

ICMA’s Head of Sustainable Finance, Nicholas Pfaff appointed to the Platform on Sustainable Finance

1 October 2020 We are delighted that ICMA’s Head of Sustainable Finance, Nicholas Pfaff has been appointed to the Platform on Sustainable Finance.

ICMA working with the Green and Social Bond Principles has been a major supporter of the sustainable debt markets and looks forward to joining all the members of the European Commission’s Platform to further develop the Taxonomy and ensure its usability.

You can read the official press release and find the full list of members here.

ICMA publishes discussion paper on Transparency and liquidity in the European bond markets

29 September 2020 The state of liquidity in the European bond markets has been hotly debated for a number of years, with the growing realization that due to a culmination of factors market liquidity has been in serial decline for more than a decade. There is an ongoing parallel discussion on the issue of transparency in the European bond markets. While it is broadly recognized that a degree of price transparency is fundamental for market efficiency and integrity, the intersection of transparency and liquidity is a far more complex consideration, yet an important one from the perspective of market development.

ICMA has been at the forefront of industry work related to both bond market liquidity and the design and implementation of the European transparency framework for bonds. This paper attempts to pull those two workstreams together in order to explain how bond market structure and dynamics are very different to those of equity markets, that this is the basis for how liquidity is created in bond markets, and why this is central to any considerations around the framework for European bond market transparency, including any proposed future regulation related to the provision and design of a consolidated tape for bonds.

ICMA publishes updated Guide to Best Practice in the European Repo Market

24 September 2020 The ICMA European Repo and Collateral Council (ERCC) is the principal industry standards setting body for the European repo market. To this end, the ERCC publishes, and routinely updates, the Guide to Best Practice in the European Repo Market. The Guide provides recommended practices, conventions, and clarifications intended to support the orderly trading and settlement of repos.

The latest version of the Guide, published today, introduces a number of new guidelines intended to address issues that have arisen since the last publication (in December 2018) as the market continues to evolve and develop. These include best practices for the termination of open repos late in the day, the calculation of transaction exposure for forward dated trades, and defining stale prices.

The ERCC will continuously review the Guide and make further updates in line with future market evolution and agreed understanding of best practice.

The ERCC also provides and maintains specific best practices for repo transaction reporting through its Recommendations for Reporting Under SFTR.

ICMA responds to ESMA consultation on calculation of positions under SFTR

15 September 2020 ICMA’s ERCC submitted its response to the ESMA consultation on draft Guidelines on calculation of positions under SFTR. The aim of the Guidelines is to ensure consistency of position calculations across TRs. In its response the ERCC commented on many areas of the consultation, including the time of calculations, the scope of the data used in calculations, the data preparation, the recordkeeping of data and the calculation methodologies. Please access the full response for further details.

ICMA AMIC responds to EC consultation on investment research

11 September 2020 AMIC submitted its response to the EC consultation on investment research. The response explains that partially reviewing unbundling rules will not contribute to reviving SME research to a meaningful extent as a majority of members would practically not be able to make use of the options proposed by the EC. AMIC therefore recommends that the EC consider other policy options to support SME research and funding in the context of post-COVID recovery (free-trial and issuer-sponsored research).

ICMA ERCC publishes fourth edition of its SFTR recommendations

7 September 2020 The ICMA European Repo and Collateral Council (ERCC) has published today an updated version of the ICMA Recommendations for Reporting under SFTR. This is the fourth public edition of the document, which was initially released on 24 February and previously updated on 30 June.

The aim of the Recommendations is to help members interpret the regulatory reporting framework specified by ESMA and to set out complementary best practice recommendations to provide additional clarity and address ambiguities in the official guidance. Now at close to 300 pages, the updated version of the guide covers a number of new questions, as well as additions and revisions to existing recommendations, partly to reflect members’ feedback and important lessons learned since the SFTR reporting go-live on 13 July.    

For ease of comparison, ICMA published, alongside the new guide, a blackline version which shows all the changes that have been made since the last publication in June. Going forward, the document will continue to evolve to reflect ongoing discussions in the ERCC SFTR Task Force as well as any additional guidance received from ESMA and/or the NCAs. Further updates will be made available on the ICMA website.

• ICMA Recommendations for Reporting under SFTR (updated version: 7 September 2020)
• Blackline version (showing all changes compared to the previous version published on 30 June)

ICMA publishes a briefing note on CSDR mandatory buy-ins and the requirement to appoint a buy-in agent

7 September 2020 The CSDR-SD regulatory technical standards require that in the case of failing non-cleared transactions, at the start of the mandatory buy-in process the purchasing party must appoint a buy-in agent. This may not be possible, particularly since a buy-in agent may not be available (noting that the ICMA Buy-in Rules currently do not require the appointment of a buy-in for this very reason). If a buy-in agent cannot be appointed, it would seem likely that the buy-in cannot be effected, resulting in mandatory cash settlement (“cash compensation”). As ICMA has highlighted in an earlier briefing note, it is not clear how, or even if, the cash compensation provisions can be applied in the case of bonds.

View the briefing note

ICMA AMIC responds to ESMA consultation on guidelines for NCAs when they consider potential financial stability risk associated with leverage in AIFs

1 September 2020 In its response AMIC, the buy-side voice of ICMA, recommends focusing on funds with substantial leverage as a first screening phase and  conducting an analysis of  relevant parameters related to a given fund. AMIC strongly recommends analysing funds individually and not in groups: similar AIFs may have leverage tolerance according to clients' profiles, dealing cycles and recent performances. Finally the response suggests that the implementation of these guidelines should rely on data already reported under LST guidelines, AIFMD, EMIR, SFTR and should not lead to further reporting by asset managers.

ICMA AMIC responds to ESAs' consultation on the Sustainable Finance Disclosure Regulation

1 September 2020 In its response AMIC, the buy-side voice of ICMA, highlighted several challenges with the implementation measures proposed by the three European authorities, including both firm and product disclosure requirements. For instance, the proposed quantitative disclosure of asset management companies' ESG footprints would not only be of little relevance to investors who invest in products, but it will give them an inaccurate picture of the principal adverse impacts of assets under management (AUM), as many asset classes (sovereign bonds, green bonds, money markets and cash equivalents, currency, some commodities) cannot be evaluated against the proposed KPIs and given that this approach does not consider the materiality concept. In light of the expected delay in adopting the implementation measures and the scale of the issues to be resolved, AMIC once again urges the EC and the ESAs to postpone the application date of SFDR.

Amendments to the ICMA Primary Market Handbook published

21 August 2020 Amendments to the ICMA Primary Market Handbook have been published today. For more information, see the ICMA Primary Market Handbook - Amendments/archive page.

The associated circular to members is available here for ICMA members and ICMA Primary Market Handbook subscribers only (login details required).

ICMA responds to EBA consultation on contractual recognition of stay powers under BRRD

14 August 2020 The ICMA Legal & Documentation Committee and the ICMA European Repo and Collateral Council submitted a response to the EBA’s consultation paper on draft RTS on the contractual recognition of stay powers under Article 71a(5) of Directive 2014/59/EU (BRRD) expressing concerns with certain elements of EBA’s proposed RTS and urging EBA to consider further alignment with the FSB’s Principles for Cross Border Effectiveness of Resolution Actions.

Update on netting enforceability in the People's Republic of China

5 August 2020 Earlier this year the China Banking and Insurance Regulatory Commission (CBIRC) issued a consultation draft of a notice, “Notice on Issues Relating to the Rules for the Measurement of Default Risk Assets of Counterparties in the Trading of Derivatives”. We understand that the notice, which describes the position in relation to netting enforceability in the People’s Republic of China (PRC), is the result of consultation with various PRC authorities, including the People’s Bank of China (PBOC), the China Securities Regulatory Commission (CSRC) and the Supreme People’s Court (SPC). In particular, the notice (i) clarifies that there is no conflict between Chinese Bankruptcy Law and close-out netting; and (ii) provides an overview of the key steps preceding the commencement of bankruptcy proceedings against a PRC Bank.
 
ICMA has, for many years, obtained an industry opinion on the GMRA for the People’s Republic of China (PRC opinion). The PRC opinion is authored by JunZeJun and is available to ICMA members on the ICMA website¹. In consultation with JunZeJun, ICMA are closely monitoring developments in relation to the CBIRC notice, anticipating that there may be an impact on the analysis in the PRC opinion. Counsel expect that in some aspects, the position can be further strengthened in relation to the enforceability of close-out netting under the PRC law. We will keep the membership informed as the CBIRC consultation progresses and, if appropriate, will commission an update of the PRC opinion.
 
For further information, please do not hesitate to contact ICMA’s APAC office or ICMA’s legal team.

1. You will need your ICMA user name and password to access this document. If you do not have these, please contact the ICMA Membership department or your firm's Principal Delegate.

Joint association letter on digital future for financial markets

29 July 2020 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.

View the letter.
 

New ICMA members in July 2020

The following firms were admitted to ICMA membership in July 2020:

• Barclays Bank Delaware, Wilmington
• Hunton Andrews Kurth (UK) LLP, London 
• Lord, Abbett & Co. LLC, Jersey City
• Moody's Corporation, New York
• Simpson Thacher & Bartlett LLP, London 

Bringing the total number of ICMA members to 596 members in 62 countries. Click here to view the full list of ICMA members.

ESMA preparing new RTS to further postpone CSDR Settlement Discipline to 1 February 2022

28 July 2020 ESMA has announced that it is working on a proposal to possibly delay the entry into force of the CSDR settlement discipline regime until 1 February 2022. ESMA confirms that this is due to the impact of the COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by CSDs, and came as a request from the European Commission.
 
Of note, as well as identifying the implementation challenges being created by Covid-19, the European Commission states in its letter: Other stakeholders have also noted that market developments during this crisis would have been significantly worse in terms of available market liquidity (especially in the non-cleared bond and repo markets) if the mandatory buy-in regime was in place.
 
ESMA aims to publish the final report on further postponing the date of entry into force of the RTS on settlement discipline by September. Following the endorsement of the RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.

Almost 1.5 million trades reported under SFTR in week one

22 July 2020 In the first week of reporting under the Securities Financing Transactions Regulation (SFTR), firms reported 1,435,727 SFTs with a cash value of EUR 14.3 trillion and collateral value of EUR 17.8 trillion. Repo (both repurchase transactions and buy/sell-backs) accounted for 398,006 transactions (27.7% of the total), a total cash value of EUR 13.5 trillion (94.7%) and collateral value of EUR 17.5 trillion (98.4%). For a detailed statistical breakdown, please visit our webpage.

Since 13 July, EU-incorporated and located banks and investment firms, as well as CCPs and CSDs, have had an obligation to report all new SFTs and subsequent life-cycle events to authorised trade repositories (TRs), who are responsible for validating the reports, reconciling the data and making the results available to regulators. All TRs authorised under SFTR - currently these are DTCC, Regis-TR, UnaVista and KDPW - are required to publish, every Tuesday, a set of summary statistics for the previous week.

While exercising caution in interpreting the data at this early stage, the figures from the first week of operation, broadly confirm some of what is already known about the European SFT markets. The repo market is shown to be the largest by value, while securities lending is the largest by number of transactions, with 398,006 transactions in new repo but 1,031,434 in new securities lending and average deal size in repo of about EUR 34 million but only some EUR 666,000 in securities lending. It also indicates that a large percentage of repo business is CCP-cleared and that much of it is executed across trading venues, although not all of this is electronic and the OTC market remains significant. For repo market size the amount outstanding of EUR 7.4 trillion derived from the intial reported data substantiates the results of ICMA’s own long-standing European repo survey (although as reporting improves this market size figure should become larger than that in the survey since SFTR reporting is wider in scope).

ICMA will be collecting, aggregating and tabulating this data each week, and will provide regular detailed analysis in the form of charts and commentary, which will contribute to enhanced transparency of the repo market. The SFTR data will also be used to enrich other ICMA publications on repo, such as the twice yearly European repo survey, which will continue. However, it is important to note that, as not all aspects of SFTR have been finalised, the quality and consistency of the reported data is expected to gradually improve over time.

Based on extensive input from its SFTR Task Force, representing more than 150 firms across the repo market, ICMA has put together detailed best practice recommendations and sample repo reports which complement and supplement the regulatory framework and aim to ensure consistency in firms’ implementation efforts.

ICMA responds to EC consultation on the Renewed Sustainable Finance Strategy

15 July 2020 ICMA has responded to the EC consultation on the Renewed Sustainable Finance Strategy.

SFTR goes live

13 July 2020 Reporting under the EU’s SFT Regulation (SFTR) has started. Banks and investment firms, as well as CCPs and CSDs have an obligation to report all SFTs executed from today to authorised trade repositories, who in turn will validate and reconcile the reports and pass the data on to regulators. Reporting by banks and investment firms was due to go live on 13 April, but this was postponed by ESMA in March in response to the global COVID-19 pandemic. As a result, phases 1 and 2 of the SFTR reporting regime both went live today.  

Today’s go-live is the culmination of several years of intensive cross-industry discussions and preparations. ICMA has been driving this collaborative effort through its SFTR Task Force which brings together around 650 individuals representing more than 150 firms across the whole market spectrum, including sell-side and buy-side participants, but also market infrastructures, trade repositories and other service providers. Based on extensive input from Task Force members, ICMA has put together detailed best practice recommendations for the industry which complement and supplement the regulatory framework and aim to ensure consistency in firms’ implementation efforts. The ICMA recommendations for reporting under SFTR were initially published in February 2020 and continue to evolve. A third version of the document was issued on 30 June, ahead of today’s go-live, but this is not the end of the journey. The implementation of the highly complex SFTR reporting regime will be an iterative process as not all aspects of SFTR have been finalised and the quality and consistency of the reported data is expected to gradually improve over time. Discussions in the SFTR Task Force will continue as firms learn the lessons from the first weeks of reporting. The ICMA recommendations will be updated to reflect those discussions, but of course also to incorporate any additional guidance expected from ESMA, e.g. in the form of Q&As. The open and constructive dialogue with regulators, including ESMA and the NCAs, has been at the core of the implementation work from the start and will continue to be central.

ICMA would like to congratulate all market participants and service-providers involved in this unique cross-industry effort and is looking forward to further supporting its members on the path to a more transparent, resilient and efficient repo market.

For more information: www.icmagroup.org/SFTR

ICMA submits response to ESMA Survey on Topics for the CSDR Review

10 July 2020 On behalf of its members, ICMA has submitted its response to the ESMA Survey on Topics for the CSDR Review. The ICMA response focuses on Article 7, Measures to address settlement fails, and in particular the mandatory buy-in (MBI) provisions. ICMA’s strong recommendation is ‘delay and review’. ICMA’s members feel that the MBI regime, as currently designed, would be extremely damaging for European capital market liquidity, efficiency, and stability, creating undue risks for market participants, in particular investors, and undermining the objectives of capital markets union. While pursuing other measures to promote settlement efficiency, including cash penalties, the authorities should undertake a rigorous impact assessment, firstly to conclude whether a mandatory buy-in regime is warranted, and secondly, to the extent that it is, to inform the design of any framework.

• ICMA recommends that with respect to Article 7 of CSDR, the implementation of the mandatory buy-in provisions be suspended to allow for a rigorous market impact assessment. In the meantime, the authorities should implement the other elements of the Settlement Discipline regime, including cash penalties, as soon as practicable to do so. The impacts of these measures should be monitored, and their application recalibrated as appropriate.
• ICMA further recommends that the proposed impact assessment be used firstly to conclude whether a mandatory buy-in regime is warranted, and secondly, to the extent that it is, to inform the design of any framework, noting  that the current regime, as outlined in Article 7, is not fit for purpose.
• ICMA remains supportive of all constructive initiatives to improve settlement efficiency in Europe’s capital markets, whether regulatory or market-driven. These initiatives should not create undue risks for market participants, in particular investors, nor should they undermine the objective of efficient and stable European capital markets that are attractive for European and international investors and capital raisers. The CSDR mandatory buy-in framework threatens to do precisely this.

ICMA AMIC submits response to the EC consultations on the integration of sustainability risks in UCITS, AIFMD and MiFID

6 July 2020 AMIC submitted its response to the EC consultations on the integration of sustainability risks in UCITS, AIFMD and MiFID. In its reponse AMIC fully supports the integration of sustainability risks among other risks to be considered by fund managers and investors, which can indeed affect the return of assets and portfolios. It also recalls the urgent need to review NFRD in order to provide fund managers with audited and reliable data from issuers and argues that until this is completed the assessment of sustainability risks to be presented to end-clients should be allowed on qualitative basis. Finally, the response urges the EC not to limit the scope of sustainable products available to investors via distribution rules and recall the need for a certain degree of flexibility to meet different needs and preferences from investors (notably from a risk management perspective).

ICMA publishes updated FinTech Mapping Directory

2 July 2020 ICMA has updated its mapping directory of technology solutions for repo and cash bond operations. The directory now lists a total of 159 solutions, compared to 130 solutions last year and 87 solutions when it was first launched in November 2017. It is divided into 10 categories comprising collateral management, corporate actions, exposure agreement, intraday liquidity monitoring and reporting, matching, confirmation & allocation, reconciliations but also ancillary areas such as static data and SSI, workflow and communication and KYC onboarding.  

There has been a marked increase in the number of solutions listed, though only a minority represent new entrants or firms not previously listed. The majority of new solutions originate from known providers extending their services across other market segments. The review shows an increased focus on matching, confirmation & allocation (5 additions), collateral lifecycle management (4 additions), and exposure agreements and reconciliation services (3 additions each). Ancillary categories such as workflow & communication have also seen an increase in diverse tools to manage operational and legal processes (6 additions).

To make the directory more user friendly, the latest revision includes a brief ‘At a glance’ tab which provides an overview of listed solutions and helps filter each category.

The mapping directory does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the mapping directory and wish to join are very welcome to do so. Please contact us for further details.

Download the ICMA FinTech Mapping Directory.

ICMA responds to the European Commission call for feedback on the Report from the High Level Forum (HLF) on Capital Markets Union

30 June 2020 ICMA has responded to the European Commission call for feedback on the Report from the High Level Forum (HLF) on Capital Markets Union.

ICMA ERCC publishes second update to its SFTR recommendations

30 June 2020 The ERCC has today published a further update to the ICMA Recommendations for Reporting under SFTR. The document was initially published on 24 February, followed by a first comprehensive update on 22 April. The third public version published today includes a number of updates resulting from the ongoing discussions in the ERCC’s SFTR Task Force. Importantly, it also incorporates the latest guidance received from ESMA on 25 May in response to some outstanding ICMA queries on the final SFTR Guidelines (initially submitted to ESMA in late January). On the two key topics, the reporting of settlement fails and bilateral variation margining, ESMA decided unfortunately not to follow the ICMA proposals which were based on an established industry consensus and reflected in the previous recommendations. Aligning to the latest guidance therefore required extensive changes to some of the recommendations. While the current version of the Recommendations is in line with ESMA’s latest response, it is worth noting that ICMA has followed up with ESMA separately to reiterate its concerns with the guidance and to ask ESMA to reconsider. For reference, ICMA published a blackline version of the recommendations which highlights all the changes made since the previous published version (dated 22 April).

The ICMA Recommendations for Reporting under SFTR aim to help members interpret the regulatory reporting framework specified by ESMA and set out complementary best practice recommendations to provide additional clarity and address ambiguities in the official guidance. The recommendations are complemented by additional best practice documents developed by ICMA, including a set of SFTR sample reports and an overview of lifecycle event reporting for repos. Both documents have also been updated today to reflect the changes to the recommendations.

• ICMA Recommendations for Reporting under SFTR (updated version: 30 June 2020)
• Blackline version (showing all changes compared to the previous version dated 22 April)

Related best practice documents:

• SFTR sample reports (version: 30 June) – changes compared to the April version are listed in the “changes” tab
• Overview of repo lifecycle events reporting (version: 30 June)

ICMA expands scope of Bond Market Transparency Directory

30 June 2020 ICMA has expanded its Bond Market Transparency Directory to include pre-trade reporting obligations, in addition to post-trade obligations across multiple jurisdictions from Europe, the Americas and Asia-Pacific. The purpose of the mapping 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.

This is a non-exhaustive overview and is intended to be a living document with periodic reviews.

Download the ICMA Bond Market Transparency Directory.

Transition to risk-free rates: an official sector panel discussion from ICMA

In this panel discussion held on 25 June, the official sector panellists discuss three main issues during the panel: first, progress on the transition to risk-free rates so far, despite the market impact of the coronavirus pandemic; second, remaining challenges to complete implementation of the transition in time, including legacy issues; and third, the importance of international coordination, how this works and what it involves.

Transition to risk-free rates: an official sector panel discussion

Moderater: Paul Richards, Managing Director, Head of Market Practice and Regulatory Policy, ICMA.

Speakers:
Edwin Schooling Latter, Director of Markets and Wholesale Policy, UK Financial Conduct Authority
Nathaniel Wuerffel, Head of Domestic Markets, Markets Group, Federal Reserve Bank of New York
Cornelia Holthausen, Deputy Director General, Directorate General Market Operations, European Central Bank
Roman Baumann, Head of Money Market, Swiss National Bank
Bertrand de Mazières, Director General, Finance, European Investment Bank.

ICMA responds to European Commission Consultation on a new digital finance strategy for Europe / FinTech Action Plan

25 June 2020 ICMA has responded to the European Commission’s Consultation on a new digital finance strategy for Europe / FinTech Action Plan, notably to questions on the use of identifiers (LEI, UTI, UPI), access to publicly available data, areas for AI-applications in the financial sector, and standardising concept definitions and reporting obligations.

ICMA statement on decision of UK government not to implement CSDR-SD measures

24 June 2020 On 23 June 2020 the UK Treasury published a Written Ministerial Statement from the Chancellor of the Exchequer, Rishi Sunak. The Statement outlines a number of areas where the UK is looking to tailor the implementation of EU financial regulation. Of note, the UK has stated that it will not implement the EU CSDR-SD regime from February 2021:

“The Government is committed to regulation that supports and enhances the functioning of UK capital markets. It will therefore consider the future approach to the UK’s settlement discipline framework, given the importance of ensuring that regulation facilitates the settlement of market transactions in a timely manner while sustaining market liquidity and efficiency. As such, the UK will not be implementing the EU’s new settlement discipline regime, set out in the Central Securities Depositories Regulation, which is due to apply in February 2021. UK firms should instead continue to apply the existing industry-led framework. Any future legislative changes will be developed through dialogue with the financial services industry, and sufficient time will be provided to prepare for the implementation of any new future regime.”

Whilst supporting settlement discipline overall, ICMA has long warned of the negative consequences of the mandatory buy-in element of the CSDR on the functioning of the debt capital markets. Consequently the announcement of HMT that they will not be implementing this aspect of the CSDR is a positive step, as is the comment that UK firms should continue to rely on the existing industry-led framework, and that any new regime in the UK will be developed through dialogue with industry, with sufficient time provided to prepare for implementation.

It is important to note, however, that UK trading entities, along with all third country trading entities, are still likely to be brought into scope of the EU CSDR as it applies at EU settlement level and requires trading parties to put enforceable contractual arrangements in place importing the mandatory buy-in regime.

ICMA supports integrated capital markets, and in the interests of avoiding fragmentation of regulatory requirements in Europe, as well as the functioning of markets in the EU27, will be responding to the current ESMA “Survey on Topics for the CSDR Review” recommending that the mandatory buy in regime is not implemented as planned, at least until its impact has been fully assessed and outstanding structural issues clarified. This is an evolving situation with which ICMA will continue to engage on behalf of its global membership.

Download ICMA's statement

ICMA ERCC responds to ESMA’s consultation on its First Report on Central Clearing Solutions for Pension Scheme Arrangements

15 June 2020 ICMA’s ERCC has submitted its response to the ESMA consultation on its First Report on Central Clearing Solutions for Pension Scheme Arrangements. The ERCC has limited its response to the Questions related to Section 6.3 of the report: The market-based repo solution.

ICMA responds to ESMA's consultation paper on MiFID II/ MiFIR review report on the transparency regime for non-equity and the trading obligations for derivatives

12 June 2020 ESMA recently reached out to the industry for consultation and feedback regarding effective application of transparency rules and whether the provisions in MiFID II/R have delivered on their objectives. ESMA also sought out reaction to its liquidity assessment. In particular, whether it is appropriate to move to the next stage of liquidity assessment, e.g. lowering the required number of average daily bond trades.

ESMA’s findings will be submitted in a report to the European Parliament and to the Council on the impact in practice of the transparency obligations.

ICMA welcomed the opportunity to provide ICMA member (buy-side, sell-side and trading venue) consensus feedback to ESMA. Of particular interest to members in responding to this MiFID II/R  transparency consultation were: pre- and post-trade transparency, verifiable data sets and resultant data and liquidity assessment methodology. ICMA responded solely in relation to cash bonds.

View the response.

ICMA preliminary thoughts on the Report of the High Level Forum on the Capital Markets Union

12 June 2020 ICMA has published its preliminary thoughts on the Report of the High Level Forum on the Capital Markets Union.

ICMA responds to EC consultation on the Review of the Non-Financial Reporting Directive (NFRD)

11 June 2020 ICMA today submitted its response to the NFRD review consultation. Both ICMA's Corporate Issuer Forum and the Asset Management and Investors Council support the review, which provides the opportunity to achieve a greater level of standardisation of ESG disclosures, a perequisite to deliver on the EU sustainable finance action plan.

Green & Social Bond Principles publish Sustainability-Linked Bond Principles and update the Social Bond Principles and other key guidance

9 June 2020 The Green & Social Bond Principles released Sustainability-Linked Bond Principles (SLBP) at their 6th Annual General Meeting today. These are voluntary guidelines for sustainability-linked bonds (SLBs) defined as forward-looking performance-based bond instruments where the issuer is committing to future improvements in sustainability outcomes within a predefined timeline. The financial and/or structural characteristics of SLBs can vary depending on whether the issuer achieves those predefined Sustainability Performance Targets. Within these parameters, the use of funds for SLBs are intended for general purposes rather than for underlying sustainable projects as in the case of existing green, social and sustainability bonds.

SLBs are highly versatile instruments that can be applied to many sustainability topics, in particular climate change mitigation and adaptation. Surveys conducted by the Green & Social Bond Principles have confirmed the need for a bond instrument linked to an issuer’s sustainability strategy and ambitious, credible targets, including those connected to climate transition. They also indicate that market participants expect any debt finance for climate transition to be aligned with the goals of the Paris Agreement.

The Green & Social Bond Principles further released a 2020 update of the Social Bond Principles providing expanded social project categories and additional target populations, and also incorporating recent guidance for social bonds addressing the COVID-19 crisis. Separately, a collection of Social and Sustainability Bond Case Studies has been published. The Green Bond Principles and Sustainability Bond Guidelines remain otherwise unchanged (2018 versions remain applicable).

The following publications have also been updated:

• Harmonized Framework for Impact Reporting (now including guidance for biodiversity)
• Working Towards a Harmonized Framework for Impact Reporting for Social Bonds
• High-level Mapping of Green, Social and Sustainability Bonds to the Sustainable Development Goals
• Guidance Handbook
• External Review Guidelines

Every year half of the Executive Committee of the GBP & SBP (in each of its issuer, underwriter and investor categories) is renewed through an election with a vote of its near 200 members representing the vast majority of participants in the sustainable debt capital markets. View the resulting composition of the Executive Committee for 2020.

Martin Scheck, Chief Executive of the International Capital Market Association (ICMA), said: "By publishing Sustainability-Linked Bond Principles, the GBP & SBP Executive Committee is providing guidance for a highly innovative and versatile debt instrument that can really expand the sustainable finance market while preserving its integrity. Separately, the update of the Social Bond Principles accompanies a pivotal moment for social bonds that have shown their relevance with a surge of issuance addressing the consequences of COVID-19."
 
Lars Eibeholm, Member of NIB's Executive Committee, and Chair of the GBP & SBP said: "The many key deliveries today demonstrate that the market for green, social and sustainability bonds continues to evolve and so does the need for prudent guidance. We have published new Principles for sustainability-linked bonds and delivered a market-based consensus on how climate transition is perceived. A new instrument and an important terminology, which will be key building components for further development, market integrity and transparency. All required, as sustainable finance will need to be more targeted to address the pandemic and at the same time tackle the emerging climate threats. The relevance of targeted bonds has clearly been demonstrated in the surge of social bonds, where today’s important updates of the Social Bond Principles provide new improved guidance."  

Tanguy Claquin, Managing Director, Crédit Agricole CIB, and Vice-Chair of the GBP & SBP said: "This year’s deliveries show, once again, that the Green & Social Bond Principles are the key forum where market guidance and best practices are discussed and decided for the global sustainable fixed income markets."
 
Johanna Köb, Head of Responsible Investment at Zurich Insurance and Vice-Chair of the GBP & SBP said: "Green bonds are not 'only' a debt capital instrument – they were the beginning of a transformative journey. This year the GBP & SBP took a leap forward in its vision to provide guidance for debt capital market instruments that finance progress towards environmental and social sustainability. We expanded our recommendations from the well-known family of use-of-proceeds instruments (green, social and sustainability bonds) to a new sustainability-linked performance instrument. We are committed to continue providing best-practice guidance to all market participants through an inclusive process, which is underpinned by many diligent working groups and a new advisory council, which has set a precedent in showing extraordinary commitment and enthusiasm."

ICMA publishes update memorandum to the 2020 ICMA GMRA legal opinion for Russia relating to moratorium measures introduced to the Bankruptcy Law

ICMA has published an update memorandum to the 2020 ICMA GMRA legal opinion for Russia relating to moratorium measures introduced to the Bankruptcy Law.

The document is available alongside the Russian opinion here (ICMA members only).

First edition of ICMA’s FinTech Newsletter – read about our work and other market news on FinTech and market electronification

We are pleased to share the first edition of ICMA’s newsletter focusing on our work from a FinTech and market electronification perspective. We intend to bring our members up to speed on our cross-cutting technology initiatives across our key market areas and provide insights into regulatory updates, consultation papers, news and other publications, and upcoming meetings and events.

To receive future editions of this newsletter, please subscribe or update your mailing preferences and select FinTech, or contact us at FinTech@icmagroup.org.

ICMA issues report on performance of the European investment grade corporate bond markets during the COVID-19 crisis

28 May 2020 A new report published today by the International Capital Market Association (ICMA) documents the performance of the investment grade secondary bond market in Europe during the last weeks of February through March and April 2020, as the COVID-19 pandemic caused levels of  market volatility and dislocation surpassing those seen during the global financial crisis of 2007-2008. The report is based on market data as well as interviews and surveys of buy-side and sell-side market participants.

The European investment grade corporate bond market is a major source of funding for European and other international companies: there are estimated to be over 7,000 bonds in issue with a value equivalent to €5.65 trillion¹.

As the scale of the COVID-19 pandemic became clearer towards the end of February, and as countries began to go into lockdown, predominantly passive funds sold bonds as they reassessed the risk of company downgrades and anticipated fund outflows. The sell-off gained momentum in March as market participants moved to working from home or from disaster recovery sites, creating further technical challenges and exacerbating reduced liquidity and market efficiency. Over this period bid-offer spreads, a measure of underlying market volatility, widened considerably. While bid-offer spreads have narrowed since the height of the crisis they are still not at pre-crisis levels.

Market liquidity, the ability to buy and sell bonds, became severely impaired in mid March, and by 18 March, considered to be the lowest point of the ‘liquidity crisis’ some market participants report that the market had become dysfunctional. The ECB announcement of the €750 billion Pandemic Emergency Purchase Programme (PEPP) on 18 March was critical in ensuring that the European bond markets continued to function, restoring confidence in secondary markets and setting the scene for record-breaking issuance in the investment grade primary market over the following weeks.

Among its findings, the report indicates that during the peak of the crisis, participants resorted to voice trading when the market became too volatile and too illiquid for dealers to risk providing pricing across electronic platforms. While many banks did continue providing liquidity and market-making via voice or messaging, overall dealer capacity appears to have shrunk at a time when it was needed most. Large trading volumes were however recorded through electronic platforms, using different trading protocols, for example processed trading where a price is agreed on the phone or messaging and then ‘consummated’ on a system.

There was a sizeable but temporary increase in settlement fails during the height of the crisis. This is largely attributed to the operational challenges of the relevant teams transitioning to remote-working at a time when overall trading volumes were significantly above average. This increase in structural settlement fails has accentuated concerns in the market about the EU’s CSDR mandatory buy-in provisions, due to come into force in early 2021, and raises questions as to how this would have impacted the market had it been in place during the COVID-19 turbulence.

Martin Scheck, ICMA Chief Executive commented: ‘This crisis provides a clear reminder that despite increasing electronification of trading over the last few years, the role of  market-makers in creating liquidity remains at the core of the secondary markets. Reducing the ability of market-makers to provide this service will inevitably impact market liquidity and efficiency, especially in times of market stress.”

Download 'The European investment grade corporate bond secondary market & the COVID-19 crisis'

Listen to Andy Hill's Podcast on the report.

                                                                                                                                                                                                                              1. Based on publicly listed bonds issued by financial and non-financial entities incorporated in the EEA (including Switzerland), denominated in an EEA currency (including Swiss Francs), carrying a minimum investment grade rating from at least one of the three main rating agencies.

Message from Martin Scheck, ICMA’s Chief Executive

ICMA's Chief Executive, Martin Scheck, talks about COVID-19 and its effect on capital markets, and how ICMA is adapting its approach to supporting its global membership.

Listen to the message

ESMA confirms ICMA proposals for reporting of central bank repos under MiFIR

21 May 2020 In response to an ICMA query, ESMA has provided some clarifications on the reporting of repos transacted with EU central banks. Under SFTR, SFTs transacted with one of the 27 EU central banks that are part of the European System of Central Banks (ESCB) are exempted from the reporting obligation. However, these trades have in turn been included in the scope of MiFIR transaction reporting. This requirement will apply at the same time as SFTR goes live. However, there has been only limited additional guidance as to how repos and other SFTs can be reported under MiFIR, considering that the reporting framework has not been designed to cater for SFTs and their specific characteristics. Following extensive discussions, ICMA’s SFTR Task Force developed a proposal to report repo trades under MiFIR, consisting of two sample reports and an explanatory note. Both documents were submitted to ESMA in November 2019 for review and validation.

The ESMA response received on 8 May 2020 confirms all the main aspects of the ICMA proposals and also addresses two open questions that we submitted alongside those proposals. In particular:

• The basic principle proposed by ICMA was confirmed. Under MiFIR, it is the collateral that should be reported, not the repo itself.
• Only the purchase leg needs reporting.
• Repos with multiple collateral securities should be reported as a Complex Trade, a concept introduced for certain derivatives. This means breaking up such a repo into components.
• In cases where the collateral allocation is only available after the T+1 reporting deadline, ESMA leaves it to National Competent Authorities to assess whether the delay is justified, taking into account that the reported trade is an SFT.
• Pledge-based repos (which are really secured loans, not repos) must be reported, because the rules on what to report are set by SFTR, not MiFIR, and ESMA has interpreted SFTR as including pledge-based repos.

ICMA publishes briefing note on CSDR Settlement Discipline - cash compensation in the case of bond markets

21 May 2020 ICMA has published a briefing note outlining the identified deficiencies in the CSDR provisions for cash compensation in the case of bond markets, as well highlighting some of the potential market solutions under discussion, including the not insignificant challenges associated with these. The note was produced in conjunction with the ICMA’s dedicated CSDR Cash Compensation Workstream, part of ICMA’s CSDR-SD Working Group.

ICMA submits letter to European Commission and ESMA outlining industry concerns on timely implementation of CSDR mandatory buy-in provisions

20 May 2020 ICMA has submitted a letter to the European Commission and ESMA outlining the industry concerns related to timely implementation of the CSDR mandatory buy-in provisions. The letter highlights the ongoing lack of regulatory clarification required by the industry to facilitate successful implementation, as well as asking the authorities to review the design and application of the buy-in framework in light of recent market events.

ICMA responds to European Commission MiFID II/R review consultation paper

15 May 2020 ICMA has today responded to the European Commission's MiFID II/R review consultation paper.

Primary markets can be found on the following pages:
Investor protection aspects, including product governance and inducements – p. 36-56

Secondary bond markets and fintech can be found on the following pages:
MiFID II Review – general questions in relation to bond markets – p. 8 – 12
Consolidated tape for EU bond markets – p. 14 – 27
Post-trade transparency in bond markets – p. 35
Best execution in bond markets – p. 57 – 61
Research unbundling for bond markets – p. 61 – 69
Multilateral systems in bond markets – p. 80 – 81
Non-discriminatory access in relation to bond markets – p. 84 – 86
Digitalisation and new technologies in relation to bond markets  – p. 87 - 90

ICMA issues high-level definitions for sustainable finance

11 May 2020 Sustainability has become a mainstream consideration for the financial sector. There is however a need for convergence on terminology among market participants and wider stakeholders. In this publication, ICMA is proposing high-level definitions building on current market usage and existing official sector terminology for the most commonly used terms in the sustainable finance field, for example climate finance, impact finance, green finance and social finance. The objective is to ensure that all participants and stakeholders are using a common and transparent vocabulary. It is also designed as a contribution to other ongoing efforts in the financial industry to develop a consensus around key terms and definitions in sustainable finance.

This is the second publication from ICMA’s Sustainable Finance Committee, which brings together representatives from various ICMA committees, including our buy-side arm, corporate issuer forum and legal and documentation committee, as well as the Executive Committee of the Green Bond Principles and Social Bond Principles, to address cross-cutting sustainable finance developments.

Download Sustainable Finance: High-level definitions.

ICMA publishes update memorandum on the EU’s sustainability disclosure regime

30 April 2020 New and amended EU legislation is introducing significant sustainability and ESG related disclosure requirements that will impact all participants in the European capital markets. This is arguably leading to what we are referring to as an “EU sustainability disclosure regime”. Our publication seeks to provide the market with an initial comprehensive and practical overview of these developments. Also listen to our podcast on this important topic.

Download the memorandum.

ICMA publishes an in-depth report on consolidated tape for greater post-trade transparency in the EU bond markets

29 April 2020 ICMA has today published a report into considerations surrounding the establishment of an EU consolidated tape (CT) for bond markets. This report was produced in response to a request from the European Commission’s DG-FISMA for a bespoke study assessing the feasibility of implementing a consolidated tape for EU post-trade raw bond data.

Greater transparency in bond markets and other “non-equity” asset classes was one of the key objectives of MiFID II and MiFIR, however, in bond markets, this has yet to be fully achieved. A key reason for this is the lack of a central database, which aggregates the various raw post-trade data sources into a single view, also referred to as a ‘consolidated tape’. Instead, raw post-trade bond data (date, time of execution, reported date & time [taking into account current publication and deferral obligations under MiFID II], ISIN, price, venue, volume, amendment or cancel) is currently fragmented across the different Approved Publication Arrangements (APAs) with inconsistent presentation formats and differing modes of machine readability. Inadequate data quality poses further challenges to the data that is currently available. Lastly, there is also a noticeable unlevel playing field with respect to access to raw post-trade bond data.

Commenting on the benefits to the market of a single reliable source of post-trade data, Martin Scheck, ICMA Chief Executive said: “The goal of the bond market consolidated tape is to improve post-trade transparency, assist decision-making and provide market insights to end-investors, large or small. We believe that adoption of the appropriate structure would benefit the whole market, by providing a centralised, high quality, affordable, trustworthy data source, offering a comprehensive market view.“

The post-trade CT report, the culmination of work by a taskforce of thirty-six ICMA member firms from the buy-side, sell-side, trading venues and data providers, recommends several key elements such as: the assessment of potential governance models likely to become a successful consolidated tape provider (CTP) ‘going concern’; creation of a CTP revenue sharing scheme for APAs and trading venues based on quality of cleansed aggregated data; a balanced tiered pricing model based on usage (or proportion of usage); relevant necessary changes to level one of MiFID II to alter the CTP obligation to obtain bond post-trade data, to an obligation for venues, APAs and eligible investment firm obligation to provide it to the CTP; and finally the borrowing of a number of fundamentals from Trade Reporting and Compliance Engine (TRACE), a consolidated tape for the US fixed income markets.

Download EU Consolidated Tape for Bond Markets - Final report for the European Commission.

ICMA ERCC releases updated version of its SFTR recommendations

22 April 2020 The ICMA European Repo and Collateral Council (ERCC) has today published an updated version of the ICMA Recommendations for Reporting under SFTR. The ICMA guide was initially published on 24 February and aims to help members interpret the regulatory reporting framework specified by ESMA and sets out complementary best practice recommendations to provide additional clarity and address ambiguities in the official guidance. As compared to the initial publication, the version published today includes relevant updates, including to reflect the recently granted 3-month delay to the first phase of the SFTR go-live as well as the forbearance on backloading. The updated version also covers a number of new questions, as well as additions and revisions to existing recommendations covered in the guide. For ease of comparison, ICMA published, alongside the new guide, a blackline version which shows all the changes that have been made since the initial publication. Going forward, the document will continue to evolve to reflect ongoing discussions in the ERCC SFTR Task Force as well as any additional guidance received from ESMA and/or the NCAs. Further updates will be made available on the ICMA website.

• ICMA Recommendations for Reporting under SFTR (updated version: 22 April 2020)
• Blackline version (showing all changes compared to the initial version published on 24 February)

ICMA publishes 38th survey of the European repo market and report on market conditions during the COVID-19 pandemic

21 April 2020 ICMA today published the 38th in its series of semi-annual surveys of the repo market in Europe, together with a report on market performance during the COVID-19 pandemic.

The survey measured outstandings in the European repo market on 11 December 2019 based on the returns of 58 financial institutions, recording the baseline figure for the size of the repo market as a record EUR 8,310.3 billion, compared with the total for June 2019, which was EUR 7,761.4 billion, an increase of 7.1% and a year on year rise of 5.9% (although the growth rates were smaller when adjusted for changes in the survey sample).

The survey records continued growth in the European repo market, together with the European Repo and Collateral Council's (ERCC) report on how the market coped with year-end pressures, suggesting that the market was continuing to adapt to the complex regulatory demands imposed over recent years and in particular the demand for collateral transformation to provide high quality liquid assets (HQLA) to meet regulatory ratios. But even pre COVID-19, the continuing reduction in the share of German government securities (which now account for less collateral than Italian and UK government securities) may be evidence of increasing collateral scarcity, some of which could reflect renewed bond purchases by the ECB.

The special COVID-19 market report reveals that while demand for repo subsequently increased significantly during the height of the crisis in February/March, dealers’ capacity to intermediate that demand was relatively constrained, limiting access to many firms that needed it.  A smaller snapshot survey at the end of March 2020 suggests that while most larger banks did increase their balances during the crisis, many smaller banks tended to reduce their repo footprint, in some cases dramatically. The sample data points to an overall increase in outstandings of about 8% from the December 2019 survey, but a median adjustment of -4% across the sample.

Recent market disruption has also thrown out a number of technical and operational challenges, including collateral bottlenecks, increased settlement fails, and challenges managing intraday liquidity and collateral. It also highlights the dependence of market functioning on central bank intervention in times of stress.

Gareth Allen, Chair of the ERCC said: "In the exceptionally stressed conditions experienced in February and March this year the repo market continued to perform relatively well, while showing some signs of strain in the face of greatly increased client demand. The pre COVID-19 survey results will provide the benchmark against which the next survey, in June, can be used to measure the persistent impact of the pandemic on the market. We recommend continued vigilance in monitoring the market’s performance."

Download the 38th ICMA Survey of the European repo market

Download the ICMA Report on the European repo market and the COVID-19 crisis

ICMA AMIC publishes its response to the EC consultation on the EU Ecolabel for financial products

17 April 2020 ICMA's Asset Management and Investors Council has today published its response to the EC consultation on the EU Ecolabel for financial products. While AMIC supports the idea of an EU quality stamp for ESG retail investments funds it also warns that some important changes are required to ensure the success of this new label. AMIC recommends in particular broadening the list of eligible assets for diversification purposes but also to further support companies transitioning to a lower-carbon business model.

ICMA publishes 2020 legal opinions on global master repo agreement

16 April 2020 The International Capital Market Association (ICMA) has today published the 2020 ICMA GMRA legal opinions which support the Global Master Repurchase Agreement (GMRA), the standard agreement for international repo transactions, including a new opinion for Argentina.

Please see ICMA circular No. 2 of April 16, 2020 for further information (ICMA members only).

ICMA ERCC launches webinars on key topics that have impacted the repo market

8 April 2020 The ERCC has today launched webinars to bring members and the wider market up-to-date on key topics that have impacted the repo market.

The webinars include presentations on the two important regulatory initiatives that are set to reshape the market, the EU SFT Regulation and CSDR mandatory buy-ins; a legal update highlighting developments in relation to repo documentation and the ICMA GMRA legal opinions; the results of the latest European repo survey; and a discussion on ICMA’s ongoing collaboration with ISDA to extend the Common Domain Model (CDM) to SFTs, building a standardised digital representation of repos.

View webinar recordings and presentations.

ICMA publishes Bond Market Post-Trade Transparency Directory

7 April 2020 ICMA has compiled an overview of current post-trading reporting obligations across multiple jurisdictions from Europe, the Americas and Asia-Pacific. The purpose of the mapping is to provide a consolidated view to compare both regulatory rules and best practice guidance on bond post-trade transparency regimes, as well as details on reporting fields and exceptions.

This is a non-exhaustive overview and is intended to be a living document with periodic reviews.

Download the Bond Market Post-Trade Transparency Directory.

ICMA publishes Repo Trading Technology Directory

2 April 2020 In light of increasing electronification of repo markets, ICMA has conducted a mapping exercise of electronic repo trading platforms. The directory is intended to help market participants understand what execution venues are available for repo trading (D2D or D2C, for instance), product scope, as well as differences in trading protocols, clearing and collateral configurations. The directory also provides information on the venues’ regulatory status, market identifier codes (MIC) and additional services on offer such as regulatory reporting under SFTR.

This initiative complements ICMA’s mappings of Primary markets technology, Electronic Trading Platforms as well as FinTech solutions for repo and cash bond operations.

The mapping directory does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the mapping directory and wish to join are very welcome to do so. Please contact us for further details.

Download the Repo Trading Technology Directory.

New ICMA members in March 2020

The following firms were admitted to ICMA membership in March 2020.

• BCS Prime Brokerage Limited, London
• Cantor Fitzgerald Europe, London
• China Securities Depository and Clearing Corporation Limited (CSDC), Beijing
• Etrading Software Limited, London
• Ferrovie dello Stato Italiane S.p.A., Rome
• Iberdrola S.A., Bilbao
• Pirum Systems Limited, London
• Poste Italiane S.p.A., Rome
• Reed Smith LLP, London
• Reyl & Cie SA, Geneva
• Tradeweb Europe Limited, London

Bringing the total number of ICMA members to 595 members in 62 countries. Click here to view the full list of ICMA members.

Green and Social Bond Principles with ICMA underline relevance of Social Bonds in addressing COVID-19 crisis and provide additional guidance

31 March 2020 The Executive Committee of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines (the Principles), supported by the International Capital Market Association (ICMA), underline that existing guidance for Social and Sustainability Bonds is immediately applicable to efforts addressing the COVID-19 crisis. Additional advice for issuers in the form of new Q&A and case studies has been provided.

Social Bonds finance projects that directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes directed towards a specified target population. Sustainability bonds finance both green and social projects. The global COVID-19 outbreak is a social issue that threatens the well-being of the world’s population, especially the elderly and those with underlying health problems. In addition, millions of people around the world are suffering, or will be suffering, from the resulting economic downturn.

Illustrative examples for eligible social projects can include COVID-19 related-healthcare and medical research and development of vaccine, investment into additional medical equipment, or manufacturing facilities to produce more health and safety equipment and hygiene supplies, and specific projects designed to alleviate unemployment generated by the crisis. These should especially target specific groups directly impacted by the virus outbreak, although they may also seek to support a wider population affected by the economic crisis.

Lars Eibeholm, Chair of the Executive Committee of the GBP SBP, Head of Treasury and Sustainability at Nordic Investment Bank, stated: “Based on market requests the Social Bond Working Group initiated the targeted Q&A. The aim is to provide additional information for issuers’ Social Bond framework on how to communicate their strategies and specific projects to alleviate the negative impact of the pandemic. Under these exceptional circumstances, it is important to maintain transparency and keep the long term targets on positive social impact.”

Martin Scheck, Chief Executive of ICMA, stated: “We believe that Social and Sustainability Bonds can provide an immediately actionable channel for the market to finance projects that directly contribute to alleviating the social and economic impact of the COVID-19 crisis. We strongly support the efforts of the GBP SBP Executive Committee to provide further guidance to the market for these operations”.

Download the Q&A for Social Bonds related to Covid-19

View the 2018 Social Bond Principles
View the Sustainability Bond Guidelines
View the 2018 Green Bond Principles

ICMA offers clarification of ESMA’s delay to the SFTR go-live

31 March 2020 ICMA has published a summary of the latest ESMA statements issued on 19 March (and updated on 26 March) and their practical implications for reporting parties. The conclusions set out in the note have been agreed with members of ICMA’s SFTR Task Force and are intended to provide additional clarity for member firms and other SFTR stakeholders. The conclusions already reflect a number of informal discussions with ESMA and some NCAs, with whom the note has been shared, even if neither ESMA nor the NCAs are in a position to officially endorse the note.

ESMA clarifies position on backloading

26 March 2020 ESMA issued an updated version of their initial statement (published on 19 March) which granted a 3-month delay to the SFTR phase 1 go-live to 13 July. Responding to requests by ICMA and others, the updated statement clarifies some aspects of the initial statement which were not clear, specifically in relation to the implications for the backloading requirement. The updated statement clarifies that ESMA’s expectation that NCAs will not enforce reporting obligations between 11 April and 12 July also covers the back-loading provisions, for banks and credit institutions (phase 1), but also for all other firms that will eventually become subject to SFTR reporting obligations in the remaining three phases. In effect, this clarification allows all firms subject to SFTR reporting to no longer consider backloading as a requirement.

ICMA welcomes this clarification and the rapid and pragmatic response by ESMA. Complementing ESMA’s statement, a number of NCAs have already or are planning to publish additional updates confirming their specific plans to align with ESMA’s guidance.  
 
Related announcements:
UK: FCA approach
NL: AFM approach

Amendments to the ICMA Primary Market Handbook published

25 March 2020 Amendments to the ICMA Primary Market Handbook have been published today. For more information, see the ICMA Primary Market Handbook - Amendments/archive page.

The associated circular to members is available here for ICMA members and ICMA Primary Market Handbook subscribers only (login details required).

ICMA Euro commercial paper (ECP) materials are made available to the wider market

23 March 2020 Following the announcement of the Bank of England’s Covid Corporate Financing Facility (CCFF) and in the interest of supporting the overall market, ICMA is making generally available to non-ICMA members the Euro commercial paper materials from the ICMA Primary Market Handbook previously available only to ICMA members. The Bank of England has confirmed to ICMA that it will accept commercial paper issued on ICMA standard templates, though ICMA anticipates some parties may wish to use the ICMA materials as a basis from which to develop narrower use documentation.
 
The relevant materials are:

1. Appendix A7, Part I - Dealer Agreement;
2. Appendix A7, Part II - Information Memorandum;
3. Appendix A7, Part III - Global Note;
4. MiFID II Product Governance and Euro Commercial Paper;
5. Chapter 12 - ECP Recommendations;
6. Chapter 2 - MTN Recommendations (cross-references from Chapter 12).

ICMA is considering the IBOR provisions in the standard form ICMA ECP Global Note.

Any related queries should be directed to LegalHelpdesk@icmagroup.org.

COVID-19 – ESMA postpones reporting obligations under SFTR

19 March 2020 In response to concerns raised by ICMA and ISLA in a letter on 16 March, ESMA has issued a public statement on Actions to mitigate the impact of COVID-19 on the EU financial markets – postponement of the reporting obligations related to securities financing transactions under the Securities Financing Transactions Regulation and under Markets in Financial Instruments Regulation.

The statement effectively postpones the first phase of the SFTR reporting go-live applicable to banks and investment firms by 3 months, from 11 April to 13 July. More specifically, ESMA clarifies:     
 
“ESMA therefore expects competent authorities not to prioritise their supervisory actions towards counterparties, entities responsible for reporting and investment firms in respect of SFT reporting obligations, under SFTR and under MIFIR, as of 13 April 2020 and until 13 July 2020, including regarding to SFTs concluded in that period of time, and to generally apply their risk-based approach in the exercise of supervisory powers in their day-to-day enforcement of applicable legislation in this area in a proportionate manner.
 
Further, ESMA does not consider it necessary to register any TR ahead of 13 April 2020. This will give TRs more time to cope with the emergency and be ready to support the new reporting regime at a later point in time. ESMA is also not available to record the details of SFTs. As a result, counterparties, entities responsible for reporting and report submitting entities will be unable to report by the reporting start date.”
 
While this move is broadly welcome, ICMA continues to monitor closely any further developments in relation to the COVID-19 pandemic and will liaise with ESMA as regards further action, as required. This work is done in close consultation with member firms represented in the European Repo and Collateral Council's SFTR Task Force, which brings together representatives from around 150 firms to coordinate the industry’s SFTR implementation work in relation to repo.

ICMA AMIC responds to EC consultation on improving resilience of financial services against cyberattacks

19 March 2020 Based on the ESA’s opinion issued in April 2019, the EC is considering introducing changes to the sectorial legislation (e.g. UCITS, AIFMD) to enhance cyber-resilience. In our response we argue that the regulatory framework already allows us to address cyber-risk in the asset management industry.

This has given supervisors the possibility to thoroughly test the cyber-resilience of asset managers. There is therefore no legal impediment and no need to reopen sectorial rules to enhance cyber-resilience in the asset managment sector.

ICMA responds to the European Commission's consultation on an EU framework for markets in crypto-assets

18 March 2020 ICMA has responded to the European Commission's consultation on an EU framework for markets in crypto-assets, solely in relation to selected aspects of EU legislation applying to “security tokens”, defined by the European Commission as “crypto-assets issued on a DLT and that qualify as transferable securities or other types of MiFID financial instruments”.

ICMA together with ISLA writes to ESMA to request a delay to the implementation of reporting under SFTR

16 March 2020 Amidst the escalating COVID-19 pandemic, ICMA and ISLA have sent a joint letter to ESMA to ask for a delay to the SFTR reporting go-live date, due on 11 April 2020. In support of this request, the letter includes concrete examples of the significant challenges that the COVID-19 pandemic and the related measures pose to members’ SFTR implementation projects.

ICMA AMIC publishes its first Review of 2020

10 March 2020 ICMA’s Asset Management and Investors Council (AMIC) publishes its first Review of 2020, featuring articles on Sustainable Finance, Fund Liquidity and Primary Markets. This bi-annual publication highlights the role of the buy-side community within ICMA, reminds readers of AMIC’s objectives and priorities and outlines the activities of its working groups, alongside some enduring AMIC topics.

European Commission’s TEG on Sustainable Finance releases Usability guide for the EU Green Bond Standard and the Final report on the EU Taxonomy

9 March 2020 The European Commission’s Technical Expert Group on Sustainable Finance of which ICMA is a member has released today the Usability guide for the EU Green Bond Standard and the Final report on the EU taxonomy. Both reports are designed to provide essential additional guidance to market participants on the use of the proposed future standard and on the EU’s classification of green economic activities. Martin Scheck, CEO of ICMA, said: “The EU GBS and the Taxonomy are key developments in Europe’s sustainable finance landscape. We are actively engaged in the Technical Expert Group’s efforts to advise on how they can be successfully implemented within the Commission’s ambitious Action Plan on Sustainable Finance and alongside existing best practice in sustainable financial markets”.

ICMA publishes FAQs on CSDR mandatory buy-ins and Securities Financing Transactions

5 March 2020 ICMA has today published FAQs on CSDR mandatory buy-ins and Securities Financing Transactions. The FAQs are intended to outline considerations and, where possible, to provide clarity with respect to the application of CSDR buy-ins in the case of repos and other SFTs. The FAQs will be updated in light of new guidance from ESMA and agreed market best practice.

Time to act - ICMA issues study on the state of the European investment grade corporate bond secondary market

4 March 2020 ICMA has today issued the third in its series of studies into the state and evolution of the European investment grade corporate bond secondary market. Based on quantitative market data, stakeholders surveys, as well as in interviews with market participants, the study looks at the current state of market liquidity; the evolution of market structure; and participants’ expectations for future developments in the market. It compares market conditions and developments since the previous 2016 study, as well as the 2017 reports of the European Commission’s Expert Group on Corporate Bond Markets.

The study concludes that secondary market liquidity conditions remain challenged, and have deteriorated since 2016. It also examines the key trends and developments in market structure over the past three years, including evolving market behaviour and the adoption of new trading protocols, as well as the impacts of regulation and monetary policy. Looking forward, it identifies potential opportunities through new technologies and the use of data, as well as further challenges to liquidity, not least as a result of higher capital charges for market makers, as a result of the Fundamental Review of the Trading Book (FRTB), and the implementation of the Central Securities Depositories Regulation (CSDR) mandatory buy-in regime. The report encourages policy makers, regulators, and stakeholders to build on the work undertaken by the European Commission’s Expert Group in order to prevent further declines in market liquidity and to ensure the continued development of Europe’s corporate bond market.

Download 'Time to act - ICMAs 3rd study into the state and evolution of the European investment grade corporate bond secondary market'.

ICMA publishes Quick Guide to the transition to risk-free rates in the bond market

27 February 2020 The International Capital Market Association (ICMA) has today published its Quick Guide to the transition to risk-free rates in the bond market, which is intended to highlight progress on the key issues on which ICMA is focused in this area and provide links to relevant resources on the topic.
A short podcast is also available.

The transition from the long established IBORs (including LIBOR) to alternative near risk-free reference rates (RFRs) is a major challenge for global financial markets, with the deadline for the potential demise of LIBOR set for the end of 2021. ICMA, representing the international bond market, is involved with various official sector sponsored working groups relating to this transition. The Quick Guide summarises the position as of today's date and will be updated at intervals as other developments arise.

ICMA’s ERCC publishes guide to reporting under the SFTR

24 February 2020 ICMA’s European Repo and Collateral Council (ERCC) has today published its guide to reporting repo transactions under the EU Securities Financing Transactions Regulation (SFTR). The new reporting regime introduced by SFTR will start its phased implementation in April 2020 and will require detailed reporting by EU-incorporated or located entities of all securities financing transactions (including repo and reverse repo) to authorised trade repositories.
 
The regulation introduces granular daily reporting requirements for repos and other types of SFTs. Overall, SFTR defines 155 reporting fields (118 applicable to repo) and requires most of those fields to be matched between the two sides of the report. In addition, reporting firms will have to report any modifications, terminations and corrections throughout the life cycle of a trade and on a daily basis report on collateral market values, collateral reuse and margins.
 
The ICMA guide aims to help members interpret the regulatory reporting framework specified by ESMA and sets out complementary best practice recommendations to provide additional clarity and address ambiguities in the official guidance. It is supplemented by a suite of sample reports and an overview of repo life-cycle event reporting, which have both been published today.
 
ICMA has played a leading role in guiding the industry response to the challenges of SFTR reporting, through the ERCC’s dedicated SFTR Task Force which represents over 150 firms covering the whole spectrum of the market. The group includes reporting firms from both buy-side and sell-side but also market infrastructures and third-party service providers offering solutions to help reporting firms comply with SFTR. The guide published today is based on feedback from members of the SFTR Task Force and defines a market consensus on over 70 issues.

This is not a static document and will continue to evolve as we move closer to the reporting go-live date in April and beyond. Please make sure to download the latest version from our SFTR webpage when consulting the guide.

Complementing the work on best practices, ICMA actively provides support and technical training on the requirements of SFTR, running numerous workshops and webinars, operating a well-used ‘help line’ for members and participating in industry events.
 
Martin Scheck, ICMA’s Chief Executive commented: ‘Intensive cross industry collaboration through the task force coordinated by ICMA reflects the scale of the challenge that SFTR poses to repo and other SFT markets. It has succeeded in creating a clear and authoritative ‘how to’ guide for anyone obliged to report under SFTR and will support the objective of the regulation by facilitating good data quality from the market to enhance transparency’.

Downloads:

• ICMA Recommendations for Reporting under SFTR
• SFTR sample reports
• Overview of repo lifecycle events reporting

ICMA publishes a Compendium of international policy initiatives and best market practice for sustainable finance

20 February 2020 As the international market for sustainable finance continues to grow rapidly, supported by initiatives from governments, regulators, exchanges, financial industry associations and market participants themselves, ICMA has published a Compendium intended to provide stakeholders with an easy reference point to the numerous national and international developments in the field.

ICMA has contributed actively to the policy and regulatory dialogue at the national and international level, including the G20 and continues to do so notably as a member of the European Commission’s Technical Expert Group on Sustainable Finance. Through its work in support of the Green Bond Principles and Social Bond Principles, ICMA has been a key actor in the mainstreaming of the green, social and sustainability bond market.

The Compendium is the first publication of ICMA’s Sustainable Finance Committee set up in September 2019. This Committee brings together various ICMA committees, including its buy-side arm, corporate issuer forum, legal and documentation committee as well as the Executive Committee of the Green Bond Principles and the Social Bond Principles, and aims to address cross-cutting sustainable finance developments.

The publication will be regularly updated. For more information about ICMA’s sustainability work please see our website.

Results of the 2020 ICMA ERCC elections

We are pleased to announce the results of the 2020 ICMA ERCC elections. The 19 individuals that were elected to the new ERCC Committee are listed below. The term of office of the new Committee will be approximately one year starting immediately and ending on the day that the results of the 2021 ERCC elections are announced.

ICMA ERCC Committee 2020-2021

Charlie Badran
AXA Investment Managers Ltd

Nick Dent
Barclays Capital Securities Limited

Emma Cooper
BlackRock Investment Management (UK) Limited

Eugene McGrory
BNP Paribas

Peter Fejfer Nielsen
Citigroup Global Markets Limited

Jean-Robert Wilkin
Clearstream Banking

Andreas Biewald
Commerzbank Aktiengesellschaft

Romain Dumas
Credit Suisse Securities (Europe) Limited

Marije Verhelst
Euroclear Bank S.A./N.V.

Jean-Michel Meyer
HSBC Bank plc

Lav Lukic
J. P. Morgan Securities plc

Antony Baldwin
LCH Limited

Daniel Bremer
Merrill Lynch International (trading as Bank of America Merrill Lynch)

Amandine Triadu
Mizuho International plc

Paul Van De Moosdijk
PGGM Vermogensbeheer B.V.

Sylvain Bojic
Société Générale S.A.

Richard Hochreutiner
Swiss Reinsurance Company Ltd

Gareth Allen
UBS AG

Harald Bänsch
UniCredit Bank AG

New ICMA members in February 2020

The following firms were admitted to ICMA membership in February 2020.

• Amherst Pierpont Securities LLC, New York
• Banque Centrale de Compensation (trading as LCH SA), Paris
• Ghana Stock Exchange, Accra
• Matheson, Dublin
• Nomura Financial Products Europe GmbH, Frankfurt
• Norinchukin Bank Europe N.V., Amsterdam
• OTP Bank Plc., Budapest

Bringing the total number of ICMA members to 588 members in 63 countries. Click here to view the full list of ICMA members.

ICMA AMIC and the IA write to European Commission expressing concerns about the potential bond market impacts of the CSDR mandatory buy-in provisions

30 January 2020 ICMA's AMIC and the IA have written to Executive Vice-President Dombrovskis of the European Commission, on behalf of their members, expressing concerns about the potential bond market impacts of the CSDR mandatory buy-in provisions (due to come into force in early 2021). The regulatory initiative is widely expected to have negative implications for European bond market efficiency, liquidity, and stability, creating additional, and largely unwarranted risks for investors. Representing European and global buy-side institutions, the Asset Management and Investors Council and the Investment Association encourage the European Commission to undertake a robust market impact assessment of the mandatory buy-in provisions before attempting implementation. In the absence of such an analysis, as a minimum, the associations request a cautious, phased-in approach to minimize potential disruption to the European markets.

Green Bond Principles establishes a Working Group on sustainability/KPI-linked bonds

23 January 2020 On 14 January 2020, the Executive Committee of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines (the Principles), supported by the International Capital Market Association (ICMA), decided to establish a working group on emerging sustainability/KPI-linked bond products.

The remit of the Working Group will be to (i) take stock of recent and ongoing developments in the market for sustainability/KPI-linked bond products (ii) establish their main characteristics including by using what has been developed in the Sustainability-linked Loan market; (iii) examine any concerns; and (iv) consider and potentially propose market guidance. The Working Group’s Terms of Reference are available on ICMA’s website.

Download the press release

ICMA AMIC and EFAMA update their report on Managing Fund Liquidity Risk in Europe

22 January 2020 In 2019, AMIC and EFAMA decided to update their 2016 report “Managing Fund Liquidity Risk in Europe” following important policy and regulatory developments at EU and international levels. The purpose of this updated report is to outline the practical liquidity risk management processes which fund management companies put in place when setting up a fund and implement throughout the life of the fund. Also, the report describes the existing European and international regulatory frameworks in the area of fund liquidity risk management.

Download the press release.
Download the report.

ICMA AMIC publishes discussion paper - review of the European Long-Term Investment Fund (ELTIF) Regulation

17 January 2020 In this discussion paper, the AMIC proposes concrete regulatory changes to facilitate the take-up of ELTIFs and significantly boost their contribution towards the financing of much needed longer-term investment.

The European repo market at 2019 year-end - an ICMA European Repo and Collateral Council Briefing Note

14 January 2020 The ICMA European Repo Market and Collateral Council has published a briefing note on events in the European repo market over year end 2019. The report focuses on the euro, sterling, and USD markets, and given the significant attention on the USD repo market since September 2019 and in the build-up to year-end, this is the starting point for the 2019 review. The analysis is based on market data and accounts provided by market participants (both sell-side and buy-side).

This is the fourth in the series of annual reports which began with an analysis of the stresses and dislocations witnessed in the euro denominated market at 2016 year-end, which were unprecedented, and caught market participants and authorities off guard. In many respects, the extremities of 2016 were the culmination of a perfect storm of factors, including market positioning, dislocations in the EUR/USD FX basis, an excess of euro cash in the banking system, and a reduction in the intermediation capacity of dealers due to regulatory reporting requirements.

While subsequent year-ends have not been as stretched, they have nonetheless continued to raise concerns among both liquidity providers and market users. What the 2017 and 2018 year-end reports reveal is a change in behaviour, both on the sell-side and buy-side. In the case of dealers, we observe more balance sheet being put to use over the turn (particularly by the non-GSIB community), while asset managers have stepped up preparedness, locking in financing needs early, negotiating balance sheet allocation from their dealers well in advance, or turning to alternative money market instruments to manage their liquidity. This has not, however, prevented significant price moves in both general collateral and specific issues.

In brief, compared to previous year-ends, 2019 was relatively uneventful. As one market participant commented, it was possibly the most subdued year-end of the decade. But the reasons for this are in themselves worthy of analysis and further discussion.

The European repo market at 2019 year-end - an ICMA ERCC briefing note

For more information about the European repo market and the repo product please see FAQS on repo.

ICMA responds to ESAs’ Joint Consultation Paper concerning amendments to the PRIIPs KID

13 January 2020 ICMA’s Asset Management and Investors Council (AMIC) and ICMA's primary market constituency have submitted responses to the ESAs’ 16 October 2019 Joint Consultation Paper concerning amendments to the PRIIPs KID.

View the AMIC response.
View the primary market response.

New ICMA members in January 2020

The following firms were admitted to ICMA membership in January 2020.

• Bank of Cyprus Public Company Limited, Nicosia
• Development Bank of Japan Inc., Tokyo
• Development Bank of Southern Africa (DBSA), Midrand
• european primary placement facility (eppf) S.A., Luxembourg
• London Stock Exchange Plc, London
• National Bank of Ukraine, Kiev
• Nishimura & Asahi, Tokyo
• South African Reserve Bank, Pretoria

Bringing the total number of ICMA members to 588 members in 63 countries. Click here to view the full list of ICMA members.

ICMA ERCC responds to the European Commission’s public consultation on Implementing the Final Basel III Reforms in the EU

2 January 2020 The ERCC’s response focuses on the questions in Section 2 which relate specifically to Securities Financing Transactions (SFTs). In particular, the ERCC addresses a number of issues related to the Basel provisions for minimum haircut floors for SFTs, drawing on the work previously undertaken for the 2018 GFMA/ICMA repo market report on the potential impacts for securities lending. The response also covers the treatment of counterparty credit risk for unrated entities and the lack of maturity adjustments in the corporate exposure provisions for the standardised approach.

View the response.

European bond markets still facing challenges in 2nd year of MIFD II/R implementation

20 December 2019 The International Capital Market Association (ICMA) has today published a new report on the impact and challenges of MiFID II/R for the international bond markets two years after the regulatory regime took effect.

The report is intended to provide an overview of the second year of MiFID II/R, drawing on discussions and feedback from ICMA’s diverse sell-side and buy-side members and trading venues active in the European bond market, covering primary market issuance, secondary market trading, and research unbundling.

Confirming the findings of the one-year report published in December 2018, the new report indicates that, while the implementation of MiFID II and MiFIR has not significantly impacted liquidity in the European bond markets, it has not fully achieved its objectives and challenges remain.

The main conclusions are that:

• In primary markets, unintended consequences of the product governance and PRIIPS regimes continue to adversely impact retail investors.
• In secondary markets, electronic trading has further increased in 2019, and price discovery has improved slightly, but post-trade transparency in secondary markets does not seem to have improved compared to 2018.
• Research rules have been implemented differently, both within Europe and globally, and are being reviewed by regulators.

Download the report

ICMA publishes briefing note on the political agreement on the EU taxonomy

19 December 2019 The European Council and the European Parliament reached a political agreement on the Taxonomy Regulation on 18 December 2019. The Taxonomy Regulation will introduce a complex classification system of sustainable activities based on contributions to environmental objectives and technical criteria, as well as wider social and sustainability factors. It also recognises transition and enabling activities. The Taxonomy Regulation will not only apply to sustainable financial products, but also stipulates mandatory disclaimers for mainstream fund and pension products that are not using the Taxonomy as well as reporting requirements for large firms already subject to the Non-Financial Reporting Directive.

ICMA, a member of the Commission’s Technical Expert Group (TEG) on Sustainable Finance, has produced a briefing note summarising the main provisions of the Taxonomy Regulation, including the proposed classification framework, which will become a necessary reference for future sustainable financial products when they are marketed or when they are being defined by Member States or the European Union.
 
Download the briefing note.

ICMA responds to the European Commission’s consultation on the EU Benchmarks Regulation

19 December 2019 ICMA has responded to the European Commission’s consultation on the EU Benchmarks Regulation.

View the response.

More on benchmark reform and transition to risk-free rates.

ICMA publishes Master Regulatory Reporting Agreement

19 December 2019 ICMA has jointly published the Master Regulatory Reporting Agreement (MRRA), in association with AFME, FIA, ISDA and ISLA.

The MRRA provides users with a template agreement for documenting regulatory reporting arrangements in relation to derivatives and securities financing transactions entered into under industry standard documentation, such as the Global Master Repurchase Agreement (GMRA).

EMIR (as amended by EMIR Refit) and SFTR impose delegated and mandatory reporting obligations on parties entering into derivative and SFT contracts, respectively. The MRRA has been structured on a modular basis, featuring various schedules, a Derivatives Annex (in relation to EMIR) and a Securities Financing Transactions Annex (in relation to SFTR). Parties can assemble an agreement which is appropriate for their trading relationships and reflects their regulatory obligations. An explanatory memorandum* has been published alongside the agreement.

Download the MRRA*

ICMA has been at the forefront of efforts to understand the operational impact of the SFTR and is working on detailed best practice recommendations for SFTR reporting which will be published in early 2020, following the release of ESMA’s final Guidelines. More information is available on ICMA's website.

*You will need your user name and password to access these documents. If you are a member of the SFTR Task Force or ICMA and are having difficulties accessing this content please contact membership@icmagroup.org.

View the press release.

ICMA publishes Distributed Ledger Technology (DLT) Regulatory Directory and Brief

18 December 2019 There have been a growing number of use cases of Distributed ledger technology (DLT) in the international bond markets over the last three years. While the majority of transactions have been of experimental nature, legal and regulatory uncertainty around the treatment of DLT appears to be one of the key challenges to its broader adoption. There is a consensus that regulation is generally designed to be technology neutral, however, regulators and legislators have adopted different approaches to provide greater clarity and accommodate the use of DLT in the financial sector.

The directory seeks to provide a non-exhaustive overview of recent DLT regulatory guidance, legislative initiatives, as well as related strategy papers and publications in selected jurisdictions across Europe, North America, and Asia-Pacific. Its aim is to provide a sense of the direction of travel, anticipating future regulatory DLT guidance and legislative change, which will pave the way for broader adoption of DLT.

View the DLT mapping directory and brief.
View the press release.

Amendments to the ICMA Primary Market Handbook published

17 December 2019 Amendments to the ICMA Primary Market Handbook have been published today. For more information, see the ICMA Primary Market Handbook - Amendments/archive page.

The associated circular to members is available here for ICMA members and ICMA Primary Market Handbook subscribers only (login details required).

ICMA AMIC publishes its latest Review

Ahead of the ICMA Asset Management and Investors Council (AMIC) Conference to be held at BlackRock in London today, here is the annual AMIC Review - written by experts on current asset management industry issues and trends.

Read the AMIC Review

New market buy-in regime threatens European bond market liquidity

27 November 2019 ICMA has today published a study on the expected impact of the new mandatory buy-in regime, to be introduced in 2020 under the EU Central Securities Depositories Regulation (CSDR), on bond markets in Europe.

The results of the survey of ICMA members, representing buy-side firms, sell-side firms and repo and securities lending desks, show that the new regime will negatively impact bond market liquidity and efficiency. The new measure will force a change in the behaviour of market makers, who are the principal providers of liquidity in bond markets, affecting pricing across a broad range of fixed income asset classes as well as their willingness to show offers. This effect will be felt most at the lower end of the credit spectrum, for example corporate bonds.

View the press release
View the report

ICMA publishes updated Electronic Trading Platform (ETP) mapping directory

22 November 2019 ICMA has updated its mapping directory of Electronic Trading Platforms (ETPs). The directory now lists a total of 41 electronic execution venues, Order Management Systems (OMS) and information networks. It is intended to help market participants understand what execution and non-execution venues are available for cash bonds. Included within the directory are brief descriptions of the system/platform, products in scope, price discovery mechanisms, trading protocols, geographical coverage, regulatory status and other additional services such as regulatory reporting under MiFID II/R.
 
The market has seen small movements with two additional platforms recently listed in the directory and four deletions. Two non-execution platforms are no longer supported and two MTF execution platforms were decommissioned in 2019. This may indicate a relative saturation of competition in an increasingly difficult market for new entrant platform providers. There is evidence of increased use of the transparency data produced by MiFID II requirements for analytics and new execution models. This follows the trend for platforms to increasingly leverage and enrich market data with the objective of providing the user with further insights to gain competitive advantages.
 
The mapping directory does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the mapping directory and wish to join are very welcome to do so. Please contact us for further details.

The revised ETP mapping directory is available here.

ICMA to update its buy-in rules to support implementation of EU CSDR mandatory buy-in provisions

14 November 2019 The International Capital Market Association (ICMA) will amend its Buy-in Rules to support the implementation of the EU Central Securities Depositories Regulation (CSDR) mandatory buy-in provisions. ICMA Buy-in Rules are part of its Secondary Market Rules & Recommendations which are widely relied upon by ICMA members in the international bond markets. The ICMA Rules apply automatically to trades in international securities between ICMA members.

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ICMA European repo survey sets market size at EUR 7,761 billion

13 November 2019 The European Repo and Collateral Council (ERCC) of the International Capital Market Association (ICMA) has today released the results of its 37th semi-annual survey of the European repo market. The survey, which calculates the amount of repo business outstanding on 5 June 2019, from the returns of 55 offices of 51 financial groups, sets the baseline figure for European market size at EUR 7,761 billion, down by 1.1% on the December 2018 survey figure of EUR 7,846 billion. Year on year this is an increase of 5.6% from the June 2018 survey which set the figure for market size at EUR 7,351 billion.

View the press release
Download the 37th ICMA ERCC European Repo Market Survey

New ICMA members in October 2019

The following firms were admitted to ICMA membership in October 2019.

• Bank GPB International S.A., Luxembourg
• Bank of America Merrill Lynch International Designated Activity Company, Dublin
• Bundesrepublik Deutschland Finanzagentur GmbH, Frankfurt
• Finnvera Oyj, Kuopio
• ICBC Wealth Management Co., Ltd., Beijing
• Mizuho Securities Co., Ltd., Tokyo
• Mizuho Securities USA LLC, New York
• Mizuho Trust & Banking (Luxembourg) S.A., Luxembourg
• UBS Asset Management (UK) Ltd., London
• Watson Farley & Williams LLP, London

Bringing the total number of ICMA members to 584 members in 62 countries. Click here to view the full list of ICMA members.

Green Bond Principles and Social Bond Principles Executive Committee announces 2019/2020 Advisory Council composition

11 October 2019 The Green Bond Principles and Social Bond Principles Executive Committee is pleased to announce the 2019/2020 Advisory Council composition.

Conference gathers pivotal stakeholders in Tokyo for the third time to exchange views and practical expertise on how to foster and develop the market for sustainable finance instruments

Building the infrastructure for sustainable finance

Conference gathers pivotal stakeholders in the global and in particular Asian green, social, and sustainability bond markets in Tokyo for the third time to exchange views and practical expertise on how to foster and develop the market for sustainable financial instruments.

9 October 2019 The International Capital Market Association (ICMA) and the Japan Securities Dealers Association (JSDA) held their third joint conference on the “Developments in Green, Social, and Sustainability Bond Markets—Japan and Asia” at the Hotel New Otani in Tokyo.

Building on the strong interest in the previous events in Tokyo, rising awareness of sustainable investing and the rapid evolution of the market and international guidance, the conference this year attracted approximately 700 attendees.

View the press release.

ICMA launches CSDR buy-in impact study for bond markets

30 September 2019 Following its 2015 bond market impact study, ICMA is conducting a more granular study to ascertain market awareness, preparedness, concerns, and expected impacts on bond market pricing and liquidity. The new study uses three separate online surveys, targeted at:

1. Sell-side trading desks
2. Repo and securities lending desks
3. Buy-side trading desks

As with the 2015 survey, the sell-side survey asks respondents to estimate their expected pricing adjustment for offer-side liquidity across a range of euro denominated bond asset classes (based on a ‘typical’ 5-year duration bond). As the 2015 study highlighted, the ability to quantify (and cost) the impacts of regulatory initiatives provides the most powerful basis for any request for recalibration.

The deadline for responses is 18 October 2019.

The results of the impact study will be published in a publicly available report (projected for late October). The objective of the report will be to provide useful market intelligence as firms finalise their preparations and develop business strategies for implementation in late 2020, to underpin ICMA’s ongoing advocacy work related to Level 3 guidance, and to inform ICMA’s review of its buy-in rules to support implementation and provide market best practice.

ICMA ERCC publishes updated memorandum outlining recommendations for repo market best practice to address transition from EONIA to €STR on 1 October 2019

27 September 2019 The ICMA ERCC has today published an updated memorandum outlining recommendations for repo market best practice to address the transition from EONIA to €STR on 1 October 2019.

View the memorandum.

ICMA publishes update to primary markets technology mapping directory

18 September 2019 The International Capital Market Association (ICMA) has published the second edition of its primary markets technology mapping directory which compares the key features and capabilities of 28 technology solutions (up from 22 in December last year) that are available to automate all or part of the process of issuing debt securities. Building on ICMA’s work in primary bond markets, the directory’s purpose is to keep ICMA members informed about what platforms and technology solutions are available in a rapidly expanding competitive marketplace.

This unique mapping exercise includes new technology solutions, as well as new features of previously included solutions. It explains at what stage of the issuance process they can be used and whether they are aimed at underwriters, investors, issuers or others and also provides information on the scope of debt instruments covered and to what issuance methods the technology solutions apply. The directory also includes emerging platforms using distributed ledger technology which have conducted live pilots.

Download the ICMA primary markets technology mapping directory.

This initiative complements ICMA’s mappings of Electronic Trading Platforms as well as FinTech solutions for repo and cash bond operations.

Whilst the mapping directory currently covers 28 technology solutions in total, it does not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the mapping directory and wish to join are very welcome to do so.

ICMA with the Green Bond Principles Executive Committee responds to European Commission's consultation on TEG report on EU Taxonomy

13 September 2019 ICMA with the Green Bond Principles Executive Committee has responded to the European Commission's consultation on the TEG report on EU Taxonomy.

View the response.

ICMA responds to ESMA's MiFID II/MiFIR review report on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments

5 September 2019 ICMA has responded to ESMA's MiFID II/MiFIR review report on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments.

View the response

New ICMA members in August 2019

The following firms were admitted to ICMA membership in August 2019.

• Berlin Hyp AG, Berlin
• Bombay Stock Exchange Brokers' Forum (BBF), Mumbai
• Invest Banca S.p.A., Florence
• Nomura Securities Co., Ltd., Tokyo
• Pinsent Masons LLP, London

Bringing the total number of ICMA members to 575 members in 62 countries. Click here to view the full list of ICMA members.

ICMA ERCC responds to ESMA’s consultation on SFTR Reporting Guidelines

30 July 2019 The ICMA ERCC has submitted a detailed response to ESMA’s consultation on draft Guidelines in relation to SFTR Reporting under articles 4 and 12. The response was prepared based on feedback from the ERCC’s SFTR Task Force, which brings together more than 600 individuals from over 100 member firms, including sell-side, buy-side, market infrastructures and service providers, leading the industry’s implementation effort in relation to repo. The response form itself was submitted alongside two further documents prepared by the Task Force over the past months, a list of SFTR sample reports, as well as detailed overview table on the reporting of repo lifecycle events.

• ICMA ERCC consultation response: official ESMA format or ERCC response grid format
• SFTR sample reports
• Overview of Repo lifecycle events

ICMA with the Green Bond Principles Executive Committee responds to Bloomberg Barclays MSCI Green Bond Index consultation

29 July 2019 ICMA with the Green Bond Principles Executive Committee has responded to Bloomberg Barclays MSCI Green Bond Index consultation.

View the response.

ICMA AMIC responds to ESMA’s consultation on possible short-term pressure from the financial sector on corporations

29 July 2019 ICMA’s Asset Management and Investors Council (AMIC) has today submitted a response to ESMA’s consultation on possible short-term pressure from the financial sector on corporations. AMIC refutes the idea that short termism is as a prevalent bias of asset managers and calls for a regulatory framework which can further foster capital allocation towards sustainable and long-term assets.

ICMA publishes briefing on the importance of integrated capital markets and CMU

ICMA briefing: The Importance of Integrated Capital Markets and CMU

29 July 2019 The International Capital Market Association’s (ICMA’s) mission is to promote resilient well-functioning international and globally coherent cross-border debt securities markets, which are essential to fund sustainable economic growth and development. There is a significant degree of consistency between this mission and the objectives of the European Commission’s Capital Markets Union (CMU) initiative. Given this, ICMA has supported CMU from the outset and continues to see significant value in the further development of the CMU concept. The element of integration inherent in this concept is a point that is integral to much of ICMA’s work, which strives to avoid unnecessary market fragmentation and disruption given that such aspects run counter to the development of deep, liquid, efficient markets.  

To feed the Commission’s own deliberation of the appropriate way in which to best build upon the significant efforts which have already gone into CMU, ICMA has prepared a short briefing paper on the importance of integrated capital markets and CMU.  This encompasses some high-level observations on the incremental complexity introduced by Brexit and the importance of making progress to fulfil the objectives of CMU in a way which allows the EU to achieve better outcomes in a highly competitive global environment. The paper also outlines why it is that ICMA considers there to be a big opportunity to fully exploit the synergies between each of the CMU, the sustainability action plan and the FinTech action plan. Finally, the annex to the paper includes some additional detailed observations regarding specific work to further fulfil CMU objectives.

ICMA Ops FinTech mapping directory: updated version released

10 July 2019 ICMA’s Ops FinTech Working Group (WG), a subgroup of the ERCC, has conducted a review of the FinTech mapping directory for repo and cash bond operations (and ancillary services). During Q2 2019 members of the WG reached out to vendor firms with a view to updating the referenced technology solutions or adding new applications.

The revised version has now grown to include over 125 solutions, up from 90 since its first launch in November 2017, spanning 10 categories.

View the updated FinTech Mapping Directory

ICMA responds to the ECB's market consultation on European Distribution of Debt Instruments (EDDI)

9 July 2019 ICMA has today responded to the ECB's market consultation on a potential Eurosystem initiative regarding a European mechanism for the issuance and initial distribution of debt securities in the European Union (EDDI).

View the response

New executive education program on green bonds and sustainable finance welcomed by EM issuers

8 July 2019 A landmark in international green bond and sustainable finance education was achieved recently with the delivery of a one-week in-depth executive education course centred on green bonds. It was led by the International Capital Market Association (ICMA) and Stockholm School of Economics (SSE) Executive Education, which co-developed the programme under an IFC initiative to promote the supply of green bonds from Emerging Market Financial Institutions.

View the press release

ICMA summarises and comments on EU TEG reports and status of EU sustainable finance plan

21 June 2019 Following the publication in March 2018 of the Action Plan on sustainable finance of the European Commission, the Technical Working Group on Sustainable Finance (TEG) was established in June 2018.  ICMA, with the support of the GBP SBP Executive Committee, was nominated on the TEG following a highly selective process. The TEG has held monthly working group and plenary meetings since its inception and its mandate has now been extended until the end of 2019.  

The TEG published on 18 June 2019 reports and guidelines relating to its 4 key deliverables:

• EU Taxonomy for sustainable activities  
• EU Green Bond Standard  
• EU climate benchmarks and benchmarks' ESG disclosures
• Guidelines on the disclosure of environmental and social information
 
ICMA has published a paper providing an overview and comments on these reports. It also provides in Annex 1, an update on the parallel EU legislative initiatives on sustainable finance that are under way reflecting the Commission's legislative proposals of May 2018.