ICMA looks to update buy-in rules concerning CSDR
10 October 2019 London
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The International Capital Market Association (ICMA) will look to update its buy-in rules to provide market best practice regarding the Central Securities Depositories Regulation (CSDR), according to Andy Hill, senior director at ICMA.
In ICMA’s Q3 report, Hill indicated that the new CSDR buy-in rules will be effective from the date of application of the CSDR settlement discipline, which is expected to be in November 2020.
Hill said: “ICMA remains in ongoing discussions with the European Securities and Markets Authority and the European Commission with respect to a number of questions regarding the application of CSDR mandatory buy-ins and is hopeful that much-needed Level 3 guidance will be provided to the market soon.”
He added: “ICMA would expect that open-securities financing transactions are deemed out of scope of the mandatory buy-in regime on the basis that either party can effectively terminate such transactions with less than 30 business days’ notice—in most cases only one business day is required.”
Elsewhere in the report, Arthur Carabia, director of market practice and regulatory policy at ICMA, discussed the latest changes to the second Markets in Financial Instruments Directive/Regulation (MiFID II/MiFIR) unbundling rules, implemented on 3 January 2018.
He discussed how industry participants were “vocal on how this unintended consequence would go against the European Commission’s Capital Markets Union plan to improve access to market-based finance for small to medium enterprises (SMEs)”.
Carabia suggested that both the French Autorité des Marchés Financiers and the UK Financial Conduct Authority (FCA) have looked into the implementation and consequences of the new rules.
Carabia explained that: “Most importantly, their findings suggest that most buy-side firms
can still access the research they need, with no evidence of material reduction in coverage of SMEs.”
However, he stated: “The FCA notes that research valuation and pricing are still evolving and a market for separately priced research is still emerging–which explains the wide range of sell-side research pricing levels.”
In the report, ICMA also gave an update on Brexit and industry perspectives on how to avoid capital market fragmentation on the repo and collateral markets.
In addition, it provided an update on EU legislative and regulatory initiatives on sustainable finance and covered other international capital market practice and regulatory developments in the primary markets, secondary markets and asset management as well as G20 financial regulatory developments.
In ICMA’s Q3 report, Hill indicated that the new CSDR buy-in rules will be effective from the date of application of the CSDR settlement discipline, which is expected to be in November 2020.
Hill said: “ICMA remains in ongoing discussions with the European Securities and Markets Authority and the European Commission with respect to a number of questions regarding the application of CSDR mandatory buy-ins and is hopeful that much-needed Level 3 guidance will be provided to the market soon.”
He added: “ICMA would expect that open-securities financing transactions are deemed out of scope of the mandatory buy-in regime on the basis that either party can effectively terminate such transactions with less than 30 business days’ notice—in most cases only one business day is required.”
Elsewhere in the report, Arthur Carabia, director of market practice and regulatory policy at ICMA, discussed the latest changes to the second Markets in Financial Instruments Directive/Regulation (MiFID II/MiFIR) unbundling rules, implemented on 3 January 2018.
He discussed how industry participants were “vocal on how this unintended consequence would go against the European Commission’s Capital Markets Union plan to improve access to market-based finance for small to medium enterprises (SMEs)”.
Carabia suggested that both the French Autorité des Marchés Financiers and the UK Financial Conduct Authority (FCA) have looked into the implementation and consequences of the new rules.
Carabia explained that: “Most importantly, their findings suggest that most buy-side firms
can still access the research they need, with no evidence of material reduction in coverage of SMEs.”
However, he stated: “The FCA notes that research valuation and pricing are still evolving and a market for separately priced research is still emerging–which explains the wide range of sell-side research pricing levels.”
In the report, ICMA also gave an update on Brexit and industry perspectives on how to avoid capital market fragmentation on the repo and collateral markets.
In addition, it provided an update on EU legislative and regulatory initiatives on sustainable finance and covered other international capital market practice and regulatory developments in the primary markets, secondary markets and asset management as well as G20 financial regulatory developments.
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