AFME and Oliver Wyman have published a new report providing practical input and recommendations to improve the usability of the EU Taxonomy. The report provides an “on-the-ground” perspective of the challenges which financial institutions face in applying the Do-No-Significant-Harm (DNSH) assessment. Drawing on research conducted by Oliver Wyman, including detailed interviews with practitioners at financial institutions, corporates, sovereign and supranational organisations and investors, the report sheds light on real-world complexities. Specifically, the report explores how the DNSH assessment could bestreamlined across credit institutions’ financingportfolios with a mixture of short-, medium- and long-term policy actions. This report provides recommendations for policymakers to help ease the implementation of the DNSH component of the EU Taxonomy in a comparably short timeframe. It aggregates industry best practices to help users cope with challenges and contributes to a repository of effective strategies, policies, and frameworks for EU Taxonomy users in the financial and non-financial sectors.

Financial institutions continue to face a complex, continually evolving regulatory framework on sustainable finance and managing ESG risks. In light of the rapid rate of change and regulation increasingly taking effect, AFME is pleased to renew our partnership with Linklaters and publish an update to our report “Sustainable Finance in Europe: Regulatory State of Play” which was first published in 2021 and last updated in March 2023. This report reviews the latest developments and their impact on banks and capital markets, providing a practical guide to the wide range of initiatives in the EU, UK and Switzerland. As of December 2024, the key building blocks of EU sustainable finance legislation are in place, including the EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD), EU Banking Package, the Corporate Sustainability Due Diligence Directive (CS3D) and the Sustainable Finance Disclosure Regulation (SFDR). Banks are focusing on implementation and are preparing their first year’s reporting under the CSRD’s European Sustainability Reporting Standards (ESRS), having published their first EU Taxonomy alignment reporting in 2024. In the UK, 2024 marked a resurgence of ambition in sustainable finance regulation with a new government announcing a new sustainable finance package, the FCA’s Sustainability Disclosure Requirements (SDR) regime and anti-greenwashing rule taking effect, and announcements regarding the adoption of ISSB standards, the development of a UK Green Taxonomy, legislation regulating ESG ratings providers and the findings of the Transition Finance Market Review. AFME continues to support members as they navigate the continually evolving regulatory framework, led through our Sustainable Finance Steering Committee and dedicated working groups. We also highlight the experiences of our members through our policy engagement and consultation submissions. Our annual European Sustainable Finance conference brings together the financial services community with policymakers to evaluate the practical implementation of sustainable finance regulation across Europe and discuss what the future brings.

AFME has today published theCapital Markets in the UK Key Performance Indicatorsreport. This report is an extension of the seventh edition of AFME’s annualCapital Markets Union Key Performance Indicatorsreport, which tracks the development of the European capital markets ecosystem. The purpose of this report is to assess the UK’s progress in enhancing and expanding its capital markets against a set of benchmark indicators. We group our eight indicators into four areas which seek to measure the various features needed to develop an efficient, deep, and interconnected capital market, namely: Access to capital Availability of pools of capital for investment Transition to sustainable finance and digitalisation Efficiency of capital markets ecosystem and integration We compare the evolution of the UK’s capital market, according to our indicators, with other global regional peers such as the United States (US), China, the European Union (EU), Japan, Australia, and some selected EU Member States. Key findings This report demonstrates that the UK remains one of the leading global financial centres, however for the second consecutive year the gap between the UK and other markets continues to narrow. There remain positive indications that the UK can continue to use the advantage that exists, and the capacity that exists, to drive future growth and expand key areas such as financial technology and sustainable finance. UK capital markets have maintained their role as a pivotal hub for capital market funding. Over the past three years, UK corporates have raised a quarter of their funding via public markets. Despite the challenges faced in 2022, capital markets issuance for UK non-financial corporates experienced growth in 2024, continuing the recovery from 2023. However, a longer-term perspective reveals a significant downward trend over the past decade, with convertibles and IPO issuances declining by over 90%, and follow-on issuances decreasing by 30%. Delistings have remained consistent, averaging around 200 annually since 2019. The ability of small and medium-sized enterprises to secure equity risk financing is crucial, with the funding gap between the US and UK increasing by nearly a third to 0.36% of GDP compared to 2023. Despite a slowdown in the addition of new unicorns, the UK holds the position of having the fourth largest number of unicorns globally. UK households continue to have substantial savings invested in capital markets instruments, amounting to 145% of GDP. However, UK issuers have seen a decline in their position as originators of green bonds within Europe, falling to the fifth place from third in 2023. The UK continues to be a global and regional hub for FinTech companies, driven by innovative ideas, a supportive regulatory environment, and high levels of funding. Nevertheless, the UK might be losing its competitive edge in the FinTech sector, particularly in the emerging field of tokenised securities. Over the last two decades, the UK equity market has been consistently declining, now representing only 3.4% of the world’s market capitalisation in 2024. Additionally, the securitisation market in the UK remains underdeveloped and underutilised compared to other regions, presenting a substantial potential for growth and expansion.

The Association for Financial Markets in Europe (AFME) has published a new report entitled “AFME priorities for banking regulation for the new EU legislative cycle.” The financial system is critical to the functioning of the EU economy and banks play a key role in supporting it. In a context where Europe is facing urgent and transformational challenges, financial markets need to upgrade their ability to meet generational investment needs. As stressed by prominent voices in recent weeks, promoting financial stability and the resilience of banks should not mean setting aside the need to ensure the competitiveness of the financial sector. Several factors contribute to the reduced competitiveness of banks. In this paper we identify some of the issues that deserve consideration in the coming months. Longer term themes are also covered in this paper. With the implementation of the Basel III standards and following more than 15 years of comprehensive regulatory reform, the EU’s banking regulatory framework finds itself at an inflection point. Increasingly stricter prudential requirements cannot be considered the solution to every problem. A more risk sensitive approach is necessary, where a stocktake of the framework leads to targeted changes focused on achieving EU common goals related to the financing needs of the EU’s consumers, corporates and overall global competitive standing. The rise of geopolitical tensions and jurisdictional fragmentations make this an economic imperative. The new EU policy cycle provides an opportunity to assess the current regulatory framework to align it with the EU’s broader strategic objectives. This should be done with the objective of enabling all banks operating in the EU to remain competitive in an increasingly fragmented global landscape.

Press releaseavailable inEnglish,French,German,Italian,Spanish Individual country analysis available forFrance,Germany,Italy,Spain The Association for Financial Markets in Europe (AFME), in collaboration with eleven other European and international organisations, has today published the seventh edition of the “Capital Markets Union – Key Performance Indicators” report, tracking the progress of Europe’s capital markets against nine key performance indicators and analysing the progress over the past seven years. Among the key findings of the 2024 report on European capital markets’ performance: EU Capital Markets Falling Behind: Despite some cyclical gains, the EU lags behind the US, UK, and China in most key indicators, such as access to capital, global interconnectedness, and market liquidity. The EU’s capital markets remain fragmented, undermining economic competitiveness on a global scale. ESG Leadership, but Growth Slowing: The EU continues to lead in sustainable finance, with ESG bonds accounting for 13% of total bond issuance in 2024, ahead of the US and UK. However, growth in EU ESG issuance has not kept pace with growth in non-ESG issuance, with the overall share of ESG issuance down from 15% in 2021, signalling a potential plateau. Deteriorating Intra-EU Integration: The report highlights a worrying decline in financial integration within the EU, a trend also noted by the European Central Bank. This fragmentation threatens the EU's overall financial stability and its ability to compete globally. EU Securitisation Market Remains Underdeveloped: The EU securitisation market continues to trail behind those of the US, UK, and Australia. Currently, only 1.9% of outstanding EU loans are transformed into securitised vehicles or loan sales, compared to 7% in the US, 2.8% in Australia, and 2.2% in the UK. Issuers from only 9 of the 27 EU member states utilised securitisation as a source of funding in the first half of 2024. Widening Market Disparities: Northern European nations, such as Luxembourg and the Netherlands, boast deeper capital markets and greater access to finance, while countries in Eastern Europe lag behind. This disparity poses a significant challenge to the EU’s ambition for an integrated capital market. EU FinTech Ecosystem Stalling: Private investment in EU FinTech remains lower than in the US and UK, limiting the region’s progress in digital finance. However, the EU has taken a leadership position in the issuance of tokenised bonds, accounting for 20% of the global market in this emerging area.

AFME is pleased to partner with Linklaters in helping financial institutions navigate and implement regulatory requirementsas it relates to MiFIR/D II. Our publication covers key changes in secondary capital markets in both the EU and UK. We have analysed the key regulatory and implementation issues related to areas suchas market structure, transparency, market data, consolidated tape, investment research and execution of client orders. Our guide is primarily written for sell side firms operating in wholesale secondary markets, however, it may be of wider interest to other market participants.

AFME is pleased to have supported a comprehensive study highlightinga number of significant data gaps that might undermine the efficiency and integrity of fixed income markets across the UK and EU. The research was undertaken collaboratively by FINBOURNE Technology, AdamantiaAdvisory and Propellant Digital, and supported by AFME, BVI and EFAMA.

The AFME-led European T+1 Industry Task Force is pleased to share a report titled "High-level Roadmap for Adoption of T+1 in EU Securities Markets."

Since the publication of the 2021 report on Global Operating Approaches, AFME has continued to track key changes in banks’ operations functions. Our 2024 edition, the Future of Operations: Keeping Capital Markets on the Front Foot, sets out the latest findings by exploring recent advancements in operational strategy, models, governance, and technology. It offers an in-depth analysis of the strategies employed by operations leaders to transform operations from a traditional back-office role into a central component of a bank’s strategic framework and competitive advantage within Wholesale Capital Markets. In collaboration with PwC, AFME has explored current trends in operations within European capital markets to gauge their impact across: Operational objectives Strategy execution Risk management and compliance The role of technology Governance and the changing role of the COO The trends and developments outlined in the report are based on the collective expertise and experiences of industry Operations leaders obtained through survey responses from, and follow-up interviews conducted with, Chief Operating Officers (COOs) and heads of Operations from across AFME membership. In working with our members, AFME in conjunction with PwC aims to understand the links between Operations and advocacy. We hope this report serves as a helpful basis for discussions between Operations leaders and policymakers as we move into the next phase of strengthening financial markets.

This report is part of the European Benchmarking Exercise, a market-led initiative organised by AFME, EDW and TSI, and contains results from H2-2023. Its purpose is to highlight the quality and usefulness of disclosure in the European private cash securitisation market, both ABCP and balance-sheet financed, in order to assist market participants and reassure supervisors of the high standards of transparency that can be achieved in this market. CLOs, synthetic securitisations and public ABS are not in scope. It provides aggregated, transaction-level data gathered on a voluntary basis from 12 banks (BayernLB, BNP Paribas, Commerzbank, Credit Agricole, DZ Bank, Helaba, HSBC, ING, LBBW, Natixis, RBI and UniCredit) across 6 countries (Austria, France, Germany, Italy, Netherlands and the UK). The report shows that non-public securitisation markets are an important source of financing for the real economy. The overall private securitisation market is currently estimated at €231bn of total commitments, with the exercise-related dataset covering €79bn of those commitments. Private securitisations backed by trade receivables and auto loans/leases make up around 74% of the market, and if consumer loans and equipment leasing are included, the 4 asset classestogetherrepresent 88% of the market. This is the sixth in a series of such reports to be published biannually over time.