A cross-industry group made of up the Investment Association (IA), the Association for Financial Markets in Europe (AFME), the Alternative Investment Management Association (AIMA) and UK Finance commented: “The establishment of a UK consolidated tape for equities and Exchange Traded Funds (ETFs) would be a major step in enhancing the competitiveness, transparency and resilience of UK capital markets. We strongly support the FCA’s ongoing work to develop the tape and its goal of strengthening the UK’s position in global wholesale markets. “The ‘sell-side’ and ‘buy-side’ are aligned in their views regarding the scope and features of the tape for equities and ETFs. Namely, we urge the regulator to require the inclusion of both pre-trade and post-trade data from launch. Including real-time pre-trade data will be crucial for the tape’s commercial viability and long-term success - it would, for example, attract the widest user base and promote retail market participation. In particular, we believe the tape should include, from the outset, five layers of best bids and offers and venue attribution. This would offer market participants and regulators a complete view of market liquidity. Ultimately, it has the potential to boost trade in UK markets. “We understand that the FCA is due to provide an update on its work by the end of this year. We would welcome an acceleration in the timeline to create a UK consolidated tape for equities and ETFs and look forward to working with the FCA on the design and the development of a tape that is comprehensive, meaningful and delivers optimal outcomes.” For further information, please contact: Helen Ayres, Head of Communications:[email protected] T: +44 (0)20 7269 4620 Ellen Hodgetts, Communications Manager:[email protected] T: +44 7548841289 Ismail Abdi, Communications Executive:[email protected] T: +44 7596 872575 IA Press Office:[email protected] Notes: AFME (Association for Financial Markets in Europe) promotes fair, orderly, and efficient European wholesale capital markets and provides leadership in advancing the interests of all market participants. AFME represents a broad array of European and global participants in the wholesale financial markets. Its members comprise pan-EU and global banks as well as key regional banks, brokers, law firms, investors and other financial market participants. AFME participates in a global alliance with the Securities Industry and Financial Markets Association (SIFMA) in the US, and the Asia Securities Industry and Financial Markets Association (ASIFMA) through the GFMA (Global Financial Markets Association). For more information please visit the AFME website: www.afme.eu Follow us on Twitter @AFME_EU

The Association for Financial Markets in Europe (AFME) welcomes the Financial Conduct Authority (FCA)’s final rules for a new, simplified and more competitive listing regime, aiming to boost growth and innovation on UK stock markets. Commenting on the publication of the final rules, Gary Simmons, Managing Director of Equity Capital Markets at the Association for Financial Markets in Europe (AFME), said: “The final rules in Policy Statement 24/5 set out a simplified listings regime with a single category and streamlined eligibility for those companies seeking to list their shares in the UK. We applaud the FCA on a bold overhaul of the current listing regime, which we believe, is a significant step towards increasing the attractiveness of the UK capital market and aligning the regime with international market standards. The new regime features a more flexible, disclosure-based approach, representing a move towards economic growth and accommodating increased risk appetite within the market. The rules retain the sponsor role, but outline a recalibrated declaration requirement and will play an important role alongside the forthcoming changes to the public offers and admissions to trading regime this summer. “We thank the FCA for the continued engagement over the past three years and we look forward to further engagement with the FCA as this develops.” – Ends –

The Association for Financial Markets in Europe (AFME) is pleased to announce that Caroline Liesegang, Managing Director, Head of Capital & Risk Management, Sustainable Finance and Research, has been appointed to the European Banking Authority (EBA)’s Banking Stakeholder Group (BSG). The BSG is composed of 30 members and focuses on examining specific technical issues related to its work plan and formulating opinions to be sent to the EBA on key areas of relevance. In particular, the BSG will be consulted on actions concerning regulatory technical standards, implementing technical standards, guidelines, and recommendations. Ms. Liesegang brings a wealth of experience in micro- and macroprudential analysis and research to the BSG. As AFME’s Head of Capital & Risk Management, Sustainable Finance, and Research, she leads the Association’s efforts on the capital framework for banks. Prior to joining AFME, Caroline served as the UK Chief Risk Officer of Commerzbank London, where she designed and implemented the local risk governance framework and oversaw risk management for Commerzbank’s UK entities. Prior to Commerzbank, Caroline worked for the ECB, EBA and Deutsche Bundesbank. Adam Farkas, Chief Executive of AFME, said: “AFME is thrilled that Caroline has been appointed to the BSG. Given Caroline’s extensive experience, she is well-equipped to offer advice on any issues related to the BSG tasks and will provide valuable input on common supervisory culture, peer reviews of competent authorities, and assessment of market developments.” – Ends –

The Association for Financial Markets in Europe (AFME) welcomes the recent adoption of the European Council’s Strategic Agenda for the next institutional cycle (2024-2029) as part of its conclusions. Commenting on the conclusions reached, AFME’s CEO, Adam Farkas, said, ‘the adoption of the Strategic Agenda by EU leaders stresses the vital role of capital markets and banking union to unlock the necessary investment to ensure a more dynamic and competitive European economy. Strong and integrated capital and banking markets have an essential contribution to make in financing innovation, providing the investments needed for the green and digital transitions, and supporting the competitiveness of European companies. We look forward to seeing how the new European Commission will action this agenda in practice and recommend it focuses on a few bold initiatives which can have a transformative impact, such as streamlining the EU trading and post-trading landscapes, as well as ensuring securitisation can play a more effective role in bridging bank and market-based finance. In this context, AFME also welcomes the ongoing discussions in the Council to follow up on the Eurogroup’s CMU recommendations of earlier this year. It is encouraging to see that Member States continue to actively and regularly engage on critical issues for the CMU such as unlocking retail savings. While the exchange of best practices among Member States to grow and deepen national capital markets should be pursued, the EU dimension should continue being an important part of the different Council’s workstreams as the efficiency of capital markets in a global context requires the scale that only an integrated EU market can deliver.’ – Ends –

The Association for Financial Markets in Europe (AFME) is pleased to announce that Jacqueline Mills, Managing Director, Head of Advocacy, has been appointed to the European Securities and Markets Authority (ESMA)’s Securities and Markets Stakeholder Group (SMSG). Starting on 1 July 2024, the new members of the SMSG will begin their four-year term, during which they will provide ESMA with guidance on policy matters and be consulted on technical standards and guidelines. The SMSG may also submit opinions and advice to ESMA on its own initiative, focusing on promoting supervisory convergence and assessing market developments. Ms. Mills brings extensive sell-side experience and expertise to the SMSG. As AFME's Head of Advocacy, she is responsible for shaping and delivering the association’s advocacy efforts across external stakeholders in the EU27 and UK. Since joining AFME in 2014, Ms. Mills has played a pivotal role in coordinating the association’s policy work on a range of issues and files impacting the role of banks in Europe’s wholesale financial markets. Adam Farkas, Chief Executive officer of AFME, said: “We are delighted that Jacqueline has been recognised in this way. We firmly believe that that Jacqueline will provide important insight and perspective to the SMSG and will significantly contribute to the continued development of a robust and integrated financial market in Europe.” – Ends –

The Association for Financial Markets in Europe (“AFME”) welcomes the publication of the CRR3 and CRD6 proposals in the Official Journal of the EU (OJEU) and its upcoming entry into force in early July, which marks the implementation of the final Basel III rules in Europe. AFME supports the EU Commission’s decision to activate the delegated act for the Fundamental Review of the Trading Book (FRTB), which is highly relevant to ensure a more consistent timeline for the FRTB implementation across the world. Caroline Liesegang, Head of Capital and Risk Management at AFME, commented: “This package strengthens banks’ resilience and recognises their role in financing the economy. European banks are much better capitalised already, and the increased resilience was effectively demonstrated in 2023 following some stress events in the global banking system. AFME therefore calls on decision makers to resist further increases in capital requirements in the coming years as the banking sector goes through an important implementation phase. In fact, while the industry pools its capacity to finance, in particular, the digital and green transition, we encourage regulators to begin thinking of targeted adjustments to the regulatory framework that would also future proof the real economy”. “As we look ahead at the implementation phase, it is important that the EU level 2 legislation stays true to the political agreement to ensure not to increase the capital requirements for banks beyond what was agreed at level 1, but also to duly consider the implementation of market risk standards to ensure global consistency and avoid harming the competitiveness of EU capital markets.” “AFME supports the agreement to maintain limited set of provisions reflecting European market specificities while remaining faithful to the Basel principles. Improvements to the treatment of exposures to unrated corporates as the Output Floor is introduced are also welcome and should avoid unnecessarily restricting the funding for unrated corporates that are the backbone of the EU economy. The recognition of the floor’s impact on securitisation and the introduction of a transitional arrangement to mitigate its impact is a small, but positive development. However, a more extensive review of the capital treatment for the securitisation framework is inevitable to ensure this tool can effectively be used by all banks. This will become ever more important as the EU tries to boost its capital markets in the framework of a revived CMU project. “Unfortunately, parts of the agreement lead to a suboptimal outcome for the European Single Market. AFME regrets that the Output Floor will be applied at the solo level of consolidation, contrary to Basel’s intention. This is not in the interests of the competitiveness of the European banking sector as it adds further market fragmentation. As further integration of the EU’s banking and capital market progresses, AFME hopes the EU will focus on addressing these obstacles to the free flow of capital and liquidity to allow for more efficient capital and liquidity allocation in the EU. This will in turn support and achieve a more economically prosperous EU, able to finance individuals, companies and the green and digital transitions. – Ends –

The Association for Financial Markets in Europe (“AFME”) takes note of the agreement reached by the European Council relating to the Retail Investment Package, however, encourages further work and discussion on some key issues. Adam Farkas, Chief Executive Officer at AFME, said: “AFME notes all efforts made, and agreements reached, that are aimed at supporting retail investors who wish to invest in the EU’s capital markets. While the Council compromise is a significant improvement from the Commission’s proposal, it falls short on a number of issues, including inducements, best interest and suitability and appropriateness. Value for Money rightly continues to hold centre stage but the Council’s approach remains, in our view, unsatisfactory. We believe that further work and discussions are needed at Trilogues to reach a well calibrated, cohesive and proportionate RIS framework on these key issues”. Overall, based on our holistic assessment of the Council General Agreement, our view is that further work and discussions are needed on the following issues: Value for Money We still have reservations about many aspects of the proposed value for money framework, but support the overall acknowledgment that benchmarks are intended to be used as supervisory tools, rather than as a type of price regulation. We also welcome the additional degree of flexibility in how manufacturers and distributors may carry out their value for money analyses. However, we still have serious concerns about the interplay between benchmarks and peer group comparisons, the development and use of national benchmarks, and do not support making benchmarks and relevant data public. Inducements We are supportive of some of the inducement test criteria in Article 24a MiFID which, to an extent, alleviates our concerns that the new framework could amount to a de facto ban on inducements. However, AFME is extremely concerned that Article 24a(9) MiFID, which allows Member States discretion on the prohibition of, or restriction to, inducements, directly contradicts the objective of enhancing the EU competitiveness by harmonising and improving consistency of legislation and by reducing red tape. Best Interest We note, and strongly support, the removal of Article 24(1a) - letter c) MiFID from the new best interest test, which has been our consistent position since its introduction in the European Commission proposal last year. However, we remain concerned that the additional features concept from Article 24(1a) - letter c) has essentially been relocated to the suitability assessment. This further analysis exacerbates the complexity and granularity of the suitability assessment. Article 24(1a) - letter b) continues to present a strong focus on costs and remains ambiguous in its key elements. Timing We welcome the Council’s proposals for longer transposition (OJ + 30 months) and application (OJ + 36 months) windows, which will be necessary to implement the broad and deep set of MiFID changes. PRIIPS While we support the purpose of the reforms to increase retail investor participation and understanding, and to improve the PRIIPs KID, we do not support certain of the proposals, including those relating to page limits, performance scenarios and the inclusion of the new “Product at a Glance” and “How Sustainable is the Product” sections. We do not believe that these matters as currently proposed would serve their intended purpose. We look forward to engaging with the Co-Legislators and the European Commission as the negotiations evolve. – Ends –

The Association for Financial Markets in Europe (AFME) has today published its position paper ‘EU Securitisation back on track’ paper, which outlines its five-point plan to revive the securitisation market in the EU. In this paper, AFME aims to describe the different ways that securitisation can be used as a tool to support EU growth and strategic objectives, identify the regulatory hurdles that currently impede its impact and finally sets out a five point package of reforms to boost the trajectory of EU securitisation. These reforms importantly maintain the existing safeguards embedded within the regulation that prevents the proliferation of high leverage products under the banner of securitisation that originated in the US in the run up to the Global Financial Crisis. This package proposes measures that, when combined, should increase both the supply and demand for the product by: Increasing risk sensitivity within the bank prudential framework Reviving demand from the insurance sector by adjusting Solvency II calibrations Adjusting the treatment of securitisation within the Liquidity Coverage Ratio Introducing proportionality for investors conducting regulatory due diligence and, Fine-tuning regulatory reporting requirements and simplifying STS criteria for both traditional and synthetic securitisations. Speaking on the second day of Global ABS, the largest annual gathering of the securitisation industry and policy makers taking place this week in Barcelona, Adam Farkas, Chief Executive of AFME, said: “In recent months, we have been encouraged by the recognition shown by European policymakers of the vitally important role that securitisation can play in order for Europe to remain competitive and to be economically prosperous. We look forward to engaging with the European policy community and market participants to address and resolve current regulatory hurdles and support the return of a healthy securitisation market able to deliver the significant funding needs of Europe over the coming years”. Shaun Baddeley, Head of Securitisation at AFME, added: “As policy makers have come to acknowledge the valuable role that securitisation can play, there is increasing recognition that the combined effect of certain provisions within both the EU Securitisation Regulation and the EU Bank and Insurance Prudential Capital Frameworks have disincentivised EU investors and limited utility of the product as a funding tool by EU issuers. This consensus has grown in regard to the contribution securitisation can make to financing EU growth.” AFME’s ‘EU Securitisation back on track’ position paper is available here. – Ends –

The Association for Financial Markets in Europe (“AFME”) welcomes the opportunity to respond to the consultation by the Financial Conduct Authority (“FCA”) on Payment Optionality for Investment Research (FCA CP 24/7***). The FCA’s consultation on payment optionality for investment research seems consistent with our view that the optimal regime allows buyside firms to have the flexibility to determine how they obtain, and purchase research. However, we have concerns regarding the proportionality and workability of the proposed framework. In our view, it is characterised by unnecessary operational complexity which would result in the UK taking a significantly different approach to other financial centres. In particular, we are concerned that the guardrails proposed by the FCA are far more detailed than relevant MiFID provisions in EU legislation, or those required in the US. This may deter firms from availing themselves of the new payment optionality and inadvertently create cross-border frictions, rather than reduce them, as intended by the FCA. Adam Farkas, Chief Executive Officer at AFME, said: “AFME supports the principle of payment optionality. However, the FCA’s proposed framework may not be optimal because it is not sufficiently flexible compared to existing structures or structures available in other jurisdictions. Overall, our view is that the proposed regime would not underpin the Government’s wider commitment to enhance the UK’s ability to attract companies to list and to grow. While we support the FCA’s accelerated timeframe for this policy file, it is equally important that appropriate time is taken to consider industry feedback and that the regime delivers on the intended outcomes”. We look forward to further engaging with the FCA on this issue. – Ends –

The Association for Financial Markets in Europe (AFME) has today published the results of a survey undertaken to examine bank treasuries’ asset allocation drivers in relation to securitisation. The results of the survey demonstrate, amongst others, how various regulatory constraints prevent bank treasuries from fully utilising securitisation as part of their liquidity stress buffer. AFME has been advocating for the revision of the treatment of securitisation under the LCR and has consistently cautioned against drawing definitive conclusions about market participants’ appetite for securitisation based solely on the current (low) levels of investment activity. The LCR, which forms a critical part of the EU securitisation prudential framework, can play a key role in assisting the restoration of the EU securitisation market, if properly calibrated. Key findings of the survey are: Of the 25 respondents, 80% invest in securitisation in general and 80% of those invest in securitisation for High Quality Liquid Assets (HQLA) purposes. Reduced appetite for securitisation for HQLA purposes is predominantly due to regulatory constraints, such as haircut levels, LCR eligibility criteria and limited eligible asset availability. The sovereign debt crisis, Covid-19 and UK’s Liability-Driven Investment (LDI) crisis are all recent liquidity stress events which affected respondents’ HQLA books. Mixed views on ABS’ liquidity were expressed, likely driven by a recognition that on the one hand, lack of supply and reduced investor base create a shallow secondary market, whilst on the other hand, an investment grade floating rate product can be a strong source of liquidity in certain stressed scenarios, such as the UK’s LDI crisis during which ABS proved to be very liquid. Lastly, respondents noted that the following factors would facilitate future investments in ABS, namely (a) better treatment of securitisation under the LCR; (b) increased issuance; (c) better return on regulatory capital; and (d) a larger investor base. Speaking on the opening day of Global ABS, the largest annual gathering of the securitisation industry and policy makers taking place this week in Barcelona, Adam Farkas, Chief Executive of AFME, said: “In recent months, it has become clear that European policymakers recognise the vitally important role that securitisation needs to play in order for Europe to remain competitive and to be economically prosperous. The results of the survey give insight into one facet of the challenges arising from non risk sensitive  prudential frameworks. This is just one of a package of reforms needed to foster the return of a healthy securitisation market, which is needed to support the significant funding needs of Europe in over the coming years”. Shaun Baddeley, Head of Securitisation at AFME, added: “It is clear from the survey that lack of appetite by bank treasury functions for securitisation post implementation of LCR is directly linked to the overly onerous requirements and haircuts applied to the product in LCR and indirectly linked to the impact of overarching securitisation regulation upon supply and demand.  It is important we find regulatory solutions that ultimately create the right conditions for the return of a vibrant securitisation market.” AFME this week also published its Q1 2024 Securitisation Data report.  Key findings include: In Q1 2024, EUR 60.7 bn of securitised product was issued in Europe, an increase of 43.8% from Q4 2023 and an increase of 69.2% from Q1 2023. Of the EUR 60.7 bn issued, EUR 33.3 bn was placed, representing 54.9% of the total, compared to 67.3% of issuance in Q4 2023 and 55.4% of issuance in Q1 2023. Outstanding volumes (including CLOs) increased to EUR 1162.4 bn at the end of Q1 2024, a decrease of 1.5% QoQ and an increase of 2.4% YoY. Credit Quality: In Europe, upgrades comprised 87% of total rating actions by the main CRAs during Q1 2024, down from 90% of total rating actions during Q4 2023. STS issuance: In Q1 2024, EUR 14.4 bn of securitised product was notified as STS to ESMA and the FCA, representing 23.7% of the total issued volume in Q1 2024 (EUR 60.7 bn). Out of the EUR 14.4 bn in STS issuance, EUR 11.7 bn was placed, representing 35.1% of total placed issuance in Q1 2024 (EUR 33.3 bn). AFME’s LCR Securitisation Survey and Q1 2024 Securitisation Data report are both available.    – Ends –