Press release available in English, French, German. The Association for Financial Markets in Europe (AFME) has today published a first of its kind study consolidating fixed income trading data from numerous sources for the period of March to December 2021. This shows that the majority of fixed income trades could be made transparent in near real-time, but also finds there is a clear need for a longer deferral period for the publication of larger or illiquid trades. Data provided by FINBOURNE Technology for this study demonstrates that an inadequate deferral calibration - as currently proposed by the European Commission - could have potentially significant negative implications for market liquidity. In 2021, as part of the Markets in Financial Instruments Regulation (MiFIR) review, the Commission set out changes to bond market transparency which included harmonising the deferral regime and shortening post-trade publication delays. The AFME paper analyses recent European fixed income trade data from around 5500 of the most frequently traded securities. The analysis focuses on the corporate bond landscape (rather than government bonds) to identify which types of trades could be subject to near real-time price and volume transparency, and which types of trades should be subject to deferrals. From the data set studied, AFME and Finbourne find that different deferral periods need to be applied based on the trade size and issuance volume, among other characteristics. Applying the Commission’s proposed deferral regime to all trades, especially those larger in size or illiquid, risks exposing liquidity providers to potential undue risks, which could negatively impact the amount of liquidity/pricing that market makers are able to provide. Adam Farkas, Chief Executive of AFME, said: “This report demonstrates both the value of having a high quality, consolidated view of bond trading in the EU and the potentially significant implications of inadequate deferral calibration. Current proposals to reduce the amount of time that post-trading information can be deferred from publication could have a negative impact on liquidity for corporate bonds. This is especially true for large transactions or trades in bonds that are less liquid, as this would force liquidity providers to disclose their books to the market before they have unwound or hedged their positions, resulting in negative outcomes for investors and a direct hit to liquidity provision. In turn, this could impact the availability and pricing of funding for EU corporates in primary debt markets, which is counterintuitive and not in line with the goals of the Capital Markets Union. Even the Commission proposals implicitly recognise that there can be downsides to publishing trade information too quickly because sovereign bonds will benefit from lengthy publication deferral periods. “AFME is therefore calling on the co-legislators to ensure that corporate bonds are not treated less favourably than government bonds and to avoid hardwiring the proposed price and volume deferral calibration into primary legislation. A wider range of deferral periods calibrated to the realities of the fixed income market as demonstrated in this report is needed instead.” Thomas McHugh, CEO and Co-Founder, at FINBOURNE Technology, said: “We are pleased to contribute data analysis to AFME’s study and support the formulation of evidence-based policy. Combining our data management expertise and publicly available MiFID transaction records, we have been able to aggregate over one million transaction records for this study. This includes, linking transactions to ESMA’s FIRDS database, normalising the divergent formats, and scenario-testing at a granular (ISIN by ISIN) level. Our belief is that by making the data fully transparent, we will help the market to address key issues that have hindered the successful development of a consolidated tape to date.” Key findings: Small trades (of less than EUR 500k) account for the majority (c. 70%) of the overall number of trades in the data set and can support being reported in near real-time. Therefore, making these small transactions transparent will significantly improve transparency by almost 10 fold, increasing from 8% of transactions currently being reported real-time to almost 70% of transactions becoming real-time transparent. The smaller the trade size and the more liquid the instrument, the less risk is associated with rapid dissemination of price and volume information for liquidity providers, with the ‘trade out’ (i.e. moving the risk off the bank’s balance sheet) being less than 1 day for liquidity providers. However, this 70% reflects 13% of market volume. Therefore these transactions represent a much smaller percentage of market volume than of the number of trades. Larger transactions (of more than EUR 500k) reflect a relatively small percentage of total transactions, accounting for c. 30% of total transactions but a much larger share of market volume. The data set demonstrates that the larger the transaction, the longer it takes to 'trade out' and clear the market. For trades larger than EUR 1 million, it takes on average 6 business days to ‘trade out’ of positions. For trades over EUR 5 million it takes on average 19 days to trade out, while larger trades take even longer. The deferral regime should have a conceptual link between trade size categories (i.e. real-time transparency), bond liquidity and deferral periods (i.e. for a regime with a higher trade size, or deemed illiquid the deferral period should be longer); Investors who will benefit most from increased transparency are smaller, less sophisticated investors whose trading activity will be concentrated in smaller sized trades. At the same time, longer deferrals for the small number of large transactions should limit the risk of liquidity reduction in the market for institutional investors. AFME therefore opposes a hardwiring of price and volume deferral calibration in primary legislation (as is currently proposed). Since each fixed income asset class will include a significant number of illiquid bonds, AFME urges the co-legislators to adopt a range of deferral periods, going beyond the Commission’s proposal for maximum deferral period for prices (by the end of the day) and volume (within two weeks). ESMA will then be able to calibrate the details of which bonds should go into the various deferral categories, which should be based off detailed and high-quality data. – Ends – Notes to Editors: About market makers in the fixed income market: In markets that are less liquid, such as the fixed income market, market makers play a crucial role in providing liquidity to the market. Market makers facilitate transactions by taking risk on to their balance sheet and provide ‘immediacy’ of execution to their clients, therefore facilitating liquidity in the market. Typically, when a market maker trades, especially in large size or in an illiquid instrument, they take on a position which incurs market risk. If the level of risk increases above an acceptable level, it is likely to negatively impact the amount of liquidity/pricing the market makers are able to provide.

The Association for Financial Markets in Europe (AFME) has announced that Northern Trust and State Street have joined the Association as Board members. They join 24 other leading European wholesale banking groups on AFME’s governing body. The individuals representing these Members on the AFME Board are Justin Chapman,Executive Vice President - Global Executive Securities Services and Global Head Market Advocacy & Innovation for Northern Trust and Martine Bond, Executive Vice President and Head of Global Markets Business in EMEA and GlobalLinkX for State Street. Adam Farkas, Chief Executive of AFME, said: “We are delighted to welcome Justin and Martine to the AFME Board. We are very fortunate to welcome two such highly experienced market professionals and the addition of their deep expertise which will provide valuable input, in particular, to the work of our Technology and Operations and Post Trade divisions. We now have 26 leading global and European investment banks driving the decision-making on the AFME Board, further strengthening our voice as the trade body for Europe’s wholesale capital markets.” – Ends – Biographies of the new Board Members: Justin Chapman is the Global Executive in charge of Securities Services at Northern Trust where he is responsible for strategy and profitability. Justin is also the Global Head of the Market Advocacy & Innovation Research organization which coordinates Northern Trust's engagement with key industry associations and regulatory engagements whilst researching and framing new market and technology innovations to drive profitable business growth and operational efficiencies. Martine Bond is Executive Vice President and Head of Global Markets business in EMEA and GlobalLink at State Street, responsible for electronic trading solutions, that help clients maximize efficiency while reducing trading costs for foreign exchange, cash and derivatives.

Responding to today’s proposed changes from the European Commission to the Central Securities Depositories Regulation(CSDR), Pete Tomlinson, Director of Post Trade at the Association for Financial Markets in Europe, said: “AFME members continue to support the objective of improving settlement efficiency in European capital markets in a proportionate and effective manner. AFME therefore welcomes today’s decision from the Commission to avoid immediately introducing mandatory buy-ins. “In particular, the proposed two-step approach is practical as it will provide the opportunity to assess the impact of the penalties regime and other measures. AFME remains confident this will result in a reduction in settlement fails. The proposal to clarify and simplify passporting rules is also helpful and we hope this will support increased cross-border issuance and promote further competition amongst CSDs. “However, it is not clear from today’s proposals how the Commission intends to assess whether or not settlement efficiency has reached ‘appropriate levels’. AFME recommends that a clear framework is established to measure this to provide greater certainty to market participants. “AFME does not believe mandatory buy-ins are appropriate for any asset class or transaction type and will have disproportionate negative consequences on market liquidity and efficiency that could undermine the attractiveness and competitiveness of EU capital markets. “Other tools may be more effective at achieving the settlement efficiency objective and should be considered as a second step, should this be necessary, instead of mandatory buy-in provisions. These could include increasing penalty rates or measures to increase use of partial settlement.” – Ends –

The Association for Financial Markets in Europe (AFME) has appointed Caroline Liesegang as Managing Director, Head of Prudential Regulation and Research, leading the Association’s work on the prudential framework for banks. Caroline succeeds Michael Lever, who retired at the end of 2021, after 10 years at AFME. Prior to joining AFME, Caroline was the UK Chief Risk Officer for the London branch of Commerzbank AG, where she headed the UK Risk Function since July 2018. In her capacity as CRO, Caroline designed and implemented the local risk governance framework and had the principal direct oversight of risks booked and managed in from Commerzbank’s UK entities. In addition to chairing the London Risk Committee, Caroline was part of the Branch’s Senior Management. Caroline also held a global management role in Commerzbank Group for stress testing and scenario analytics between December 2017 until February 2022 as part of the Groups’ capital management. Prior to working for Commerzbank AG, between 2014 and 2017, Caroline was Deputy Head of Division of the European Central Bank’s/SSM Analysis and Methodological Support Division, which designs and implements consistent supervisory methodologies and quantitative analyses of risks and vulnerabilities in banks. Caroline also worked for the European Banking Authority between 2013 and 2014 as a senior Stress Testing Expert, coordinating EU-wide stress tests. Before this, Caroline worked as a Senior Banking Supervisor for the Deutsche Bundesbank between 2004 and 2010. Adam Farkas, Chief Executive at AFME, said: “We are delighted to appoint Caroline as Managing Director of Prudential Regulation and have her join our senior management team. Given Caroline’s extensive experience and strong relationships, she has the right skills to lead the work of our Prudential Division. Caroline's appointment comes at a key moment for our members as the final Basel 3 rules are negotiated and implemented in the EU and UK. We look forward to working with Caroline as she leads on this important work going forward.” Caroline Liesegang, Managing Director of Prudential Regulation, said: “AFME is a well-respected voice with the regulatory and supervisory community on prudential issues, and I am delighted to be taking up the role and further developing AFME’s contribution at this critical juncture. I look forward to working with AFME members and the team to advance AFME’s work on the different regulatory initiatives coming down the track, in particular ahead of the Basel 3 finalisation and as standard setters and regulators seek to address new risks in the framework.” – Ends –

Following its Board meeting today, the Global Financial Markets Association (GFMA) which represents the leading global financial and capital market participants, announced its new leadership team. Leonardo Arduini, Head of EMEA Markets at Citi, takes over as Chair of GFMA from Steve Ashley, Senior Managing Director, Head of Wholesale, Nomura. Adam Farkas, Chief Executive of the Association for Financial Markets in Europe (AFME), takes over as CEO of GFMA from Kenneth E. Bentsen, Jr., President and CEO of the Securities Industry and Financial Markets Association (SIFMA). Both Leonardo Arduini and Adam Farkas will serve for two-year terms. Leonardo Arduini, Head of EMEA Markets at Citi and incoming Chair, said: “I am delighted to take up the role of GFMA Chair, representing the global financial markets industry on the most important global markets issues. In 2022, there will continue to be challenges for markets in the post-pandemic economic recovery period. The GFMA therefore plays a vital role in helping to shape the evolution of international capital markets, as the industry navigates sustainable finance policy developments, new technologies and the ever-changing regulatory environment.” Steve Ashley, outgoing Chair, said: “It has been an honour to be Chairman of GFMA over the past two years. GFMA provides a tremendous platform for members to drive change and to engage with policymakers and regulators in the advent of significant global capital markets trends including Digital developments – crypto, CBDCs and digital technologies – and Sustainable Finance. In this period GFMA has published assessments and recommendations in a three part Climate Finance series, addressing the scaling of Climate Finance Markets, Global Taxonomy Principles, and Carbon Markets, developing ways to build sustainability into the core of global financial markets. I look forward to this work developing further and I congratulate Leo and Adam for the important roles they will play in advancing this vital work.” Adam Farkas, incoming CEO, said: “I am delighted and honoured to take up the baton from Ken, and to continue playing a leading role in helping GFMA members to identify key financial regulatory policy issues with a global impact on financial markets, support the development of industry positions based on strong evidence, and constructively engage with the global regulatory community in addressing these evolving global priorities.” Kenneth. E. Bentsen, Jr., outgoing CEO, commented: “I would like to congratulate Leo and Adam on their new roles leading the GFMA. Financial regulation on the global stage continues to be a top priority for the industry, and GFMA and its member organizations remain committed to working with regulators and policymakers to ensure they have the constructive industry insight needed to adopt responsible regulation that is consistent and coordinated across jurisdictions.” – Ends – Notes to Editors Leonardo Arduini has over 33 years of experience in Global Markets, spanning a variety of trading, coverage, sales and management roles in different jurisdictions. More recently, Global Head of Rates Sales in 2008–2010, then appointed Citi Country Officer and Head of Markets for Italy in January 2010 and in March 2012 he became Head of Investor Sales, EMEA Markets, with responsibility for the sales coverage and distribution of Citi’s global market product platform to Investor Clients across the EMEA region. He took on his current position as EMEA Head of Markets and Securities Services in March 2014, responsible for the overall strategy across the product platform of MSS jointly with the global products, and for the execution across the EMEA region, spanning over more than 40 countries. Leonardo is a board member of Citigroup Global Markets Limited UK & CGME Board as well as a board member of AFME. Prior to joining Citi, he has collaborated with Bocconi University and was Associate at Borsa Italiana (Italian Stock Exchange). He has also held positions in Fixed Income trading at San Paolo Finance (Now Banca Intesa Group), as a Board Member of MTS, as Head of Sales and Distribution at Caboto (Banca Intesa Group) and at Banca Monte Paschi Siena as General Manager of Finance and Global Markets. Leonardo took a degree cum laude in Business Administration, at Bocconi University Milan in 1987. Adam Farkas is the Chief Executive Officer of AFME since February 2020. Before joining AFME, Adam was the Executive Director of the European Banking Authority (EBA) from April 2011 until January 2020 where he managed the organisation’s daily operations and led the implementation of its regulatory work programme and led the implementation of its regulatory work programme. Between 2011 and 2019, he represented the EBA on the Basel Committee on Banking Supervision. Prior to joining the EBA, he acted as the Executive Chairman of the Hungarian Financial Supervisory Authority between 2009 to 2010 where he spearheaded the Authority’s response to the financial crisis and helped implement policy such as a new code of conduct for banks. His other previous positions include CEO for Allianz Bank from 2006 until 2009 and acting as the co-CEO of CIB Bank between 2002 and 2005. Between 1997 and 2001, he was Managing Director and Member of the Board at the National Bank of Hungary. Adam started his career as an Assistant Professor at the Budapest University of Economic Sciences (subsequently renamed Corvinus University of Budapest). He was also a Consultant to various financial institutions in Budapest and London, including the European Bank for Reconstruction and Development (EBRD) between 1991-1997. Adam holds a doctorate in Finance from the Budapest University of Economic Sciences, and a Master’s in computer-based simulation and modelling from Sunderland University in the UK. Steven Ashley has been Senior Managing Director and Head of Wholesale & Global Markets – London at Nomura Holdings, Inc. since 2018. He served as Head of Global Markets, Joint Head of Wholesale Division and Senior Managing Director at Nomura Holdings, Inc. until 2018. Steven Ashley joined Nomura from RBS in 2010. Prior to Nomura, he was Head of Delta Trading of The Royal Bank of Scotland Group Plc. Kenneth E. Bentsen, Jr. is President and CEO of SIFMA. He is also Chairman of Engage China, a coalition of 12 U.S. financial services trade associations united in support of high-level engagement with China. Previously, Mr. Bentsen served as President, and earlier as the Executive Vice President of Public Policy and Advocacy for SIFMA, responsible for SIFMA’s legal, regulatory, and legislative affairs and advocacy initiatives. Prior to joining SIFMA, he was president of the Equipment Leasing and Finance Association (ELFA), where he led the 700-member financial services trade association representing commercial and investment banks, financial services companies and manufacturers in the commercial finance sector. From 1995 to 2003, Mr. Bentsen served as a Member of the United States House of Representatives from Texas, where he sat on the House Financial Services Committee (and its predecessor House Banking and Financial Services Committee), and separately on the House Budget Committee. Prior to his service in Congress, Mr. Bentsen was an investment banker at George K. Baum & Co. and previously Drexel Burnham Lambert, Inc., where he specialized in municipal and mortgage finance.

The Association for Financial Markets in Europe (AFME) welcomes today’s report from the EBA, which provides an overview of the recent developments and challenges of introducing sustainability to the securitisation market and explores how the EU Green Bond Standard (EU GBS) could be implemented for securitisation, as well as whether a potential dedicated framework for sustainable securitisation should be introduced. Shaun Baddeley, Managing Director of Securitisation at AFME, said: “The EBA’s report today suggests amending the framework created by the EU GBS to make it more appropriate for securitisation. This would be done by ensuring that EU GBS requirements apply at originator level, rather than at issuer level, allowing a securitisation to qualify as green as long as the originator uses proceeds for green purposes. This is helpful because it allows issuers to use securitisation as an important tool to finance the energy transition alongside other financing instruments until such time there is relevant green collateral to securitise.” AFME welcomes the EBA’s recognition of the important role that green synthetic securitisations have to play in freeing up capital from banks active in green lending whilst recognising more time may be needed to assess whether and how the specificities of synthetic securitisation should be reflected in a green framework. AFME believes this is equally relevant to green private securitisations which also fall outside the GBS but are equally important in financing the green transition of the real economy. With regard to disclosures applicable to green securitisation, the EBA comments that additional proportionate disclosures may be effective to complement the overarching EU sustainable finance regulations.AFME supports this approach whilst noting that a substantive and somewhat fragmented disclosure framework exists around the product and would request proportionality and well-calibrated disclosures that are meaningful to investors. AFME notes that the US green securitisation market constituted around 50% of total US green bond issuance in Q1 2021, contrasting with Europe where sustainable securitisation accounted for only 2% of EU ESG bond issuance. Whilst this demonstrates the upside potential for EU green securitisation, it also reflects the challenges that the industry has faced since the implementation of EU Securitisation Regulation. – Ends –

In light of the humanitarian crisis unfolding in Ukraine, the Association for Financial Markets in Europe, representing the voice of the European investment banking industry, condemns Russia’s unlawful and unprovoked attack on Ukraine and its people. We are deeply saddened by the loss of innocent lives and support the strong international response. Our thoughts are with the people of Ukraine at this time. As an organisation, we are matching staff contributions to multiple charities supporting the crisis in Ukraine and are collecting supplies to donate to local businesses helping those on the ground. In line with the appropriate sanctions, we have also taken action to suspend the membership of our Russian member until further notice. AFME and its members stand with Ukraine.

At an event organised by the Association for Financial Markets in Europe (AFME) today on the Future of UK Wholesale Financial Markets, the UK Treasury outlined its proposals for the Wholesale Markets Review. In response, AFME Chief Executive, Adam Farkas, said: “The UK Treasury has today provided welcome clarity for the industry on the next steps for the UK Wholesale Markets Review. The proposals announced aim to ensure financial regulation remains fit for purpose and proportionate for UK capital markets, while promoting openness and competitiveness. “In particular, AFME supports proposals to allow systematic internalisers to execute at midpoint while also removing the share trading obligation (STO) and the double volume cap (DVC). These measures will help to boost the attractiveness of capital markets in the UK, making them more agile and promoting better outcomes for investors. AFME also agrees with the comments made by Secretary Glen to clarify that removing the STO and the DVC does not mean that trading will not be properly reported or scrutinised, but will in fact bring about greater transparency by ensuring the right information is made public. “AFME also welcomes the UK Treasury’s approach to transparency which will ensure non-equity instruments are subject to appropriate transparency that reflects the heterogeneous nature of the bond market “With some powers due to be devolved to the Financial Conduct Authority, AFME looks forward to engaging with the UK regulator on topics such as the consolidated tape, market outages, transparency requirements and the reporting framework for equity and fixed income markets. “In parallel, the EU is undertaking its own MiFIR Review. As this progresses, AFME urges EU authorities to ensure they put in place the right conditions for building-out the bloc’s wholesale markets capacity to ensure EU markets remain attractive and competitive globally. “AFME members are global wholesale banks that support European clients internationally, therefore, it is a priority to ensure the continuity of cross-border services and to avoid market fragmentation. In this respect, AFME advocates for the same policy approaches in both the UK and the EU.” More detail on some of the key areas AFME advocates for in both the UK and EU are outlined in our original response to the Wholesale Markets Review consultation here. – Ends –

Paper Encourages Collaboration between Public and Private Institutions and Outlines Opportunities, Challenges, and Questions Concerning the Design, Issuance, Legal Status, and Use Cases of wCBDCs BOSTON, February 22, 2022— Over 70% of central banks have begun exploring the possibility of introducing central bank digital currencies (CBDCs). A new paper, commissioned by the Global Financial Markets Association (GFMA) from Boston Consulting Group (BCG) and Clifford Chance LLP, identifies the GFMA’s critical considerations for the success of potential CBDCs in wholesale markets (wCBDCs). Entitled Central Bank Digital Currencies: A Global Capital Markets Perspective, the paper is based on research, as well as extensive interviews conducted with contributing member firms and market participants with particular expertise relevant to CBDCs, during the fourth quarter of 2021. The authors' recommendations stress that: Central banks in collaboration with the private sector should continue to explore the role that wCBDCs can play in driving innovation and efficiencies in wholesale markets. Central banks should take a measured approach in the introduction of wCBDCs and the timeline should be cautious to mitigate any potential transition risk impacting safety and soundness, and financial stability. wCBDCs are expected to operate alongside legacy instruments and systems, and not to replace them. It is therefore important for wCBDCs to be interoperable with the broader financial market ecosystem. The use of sandboxes, proof of concept, dialogue with market participants, and pilot programs based on specific use cases will test the application of wCBDCs and help identify the impact on capital markets. After sufficient analysis of lessons learned, financial institutions and regulators should define a transition period that is reflective of the risks and opportunities, and an effective implementation. The paper outlines the opportunities, challenges, and questions concerning the design, issuance, and legal status of wCBDCs, while introducing use cases to provide a framework for continuing a constructive conversation. GFMA, which represents the leading global financial and capital market participants, takes particular interest in this topic as its members will play a critical role in the potential distribution and intermediation of CBDCs. Allison Parent, executive director, GFMA, said, "Banks are recognizing that the adoption of wCBDCs could enhance the efficiency, resilience, and effectiveness of money flows and capital markets, but for a wCBDC to be a valuable instrument, it must be part of a collaborative partnership between public and private sectors. In this paper, we outline a series of critical design and legal factors that must be taken into account." "wCBDCs are designed to facilitate wholesale market transactions, with direct access to the wCBDCs limited to regulated financial institutions and PSPs. We and our partners recommend following the current two-tier structure which places central banks at the foundation of the payment system, while assigning end-user-facing activities to financial institutions and other PSPs," said Roy Choudhury, managing director & partner, BCG. Simon Gleeson, partner, Clifford Chance, said, "The first rule of medicine is 'do no harm', and we must follow that principle as we work to transplant wCBDCs into the real world economy. Failure to get the legal status of wCBDCs right could pose a threat to the safety and integrity of markets and to privacy rights. The legal status of wCBDCs would have to be firmly established, guaranteeing wCBDCs as fungible to fiat currencies, before they became widely used." A copy of the report can be downloaded here. For media inquiries: Anca Webber, +44 (0)73 4208 3718; [email protected] Rebecca Hansford, +44 (0)20 3828 2693; [email protected] Katrina Cavalli, +1 212 313 1181; [email protected] Michael Osborne, +44 (0)20 7006 5695; [email protected] Corliss Ruggles, + 852 93596996; [email protected]

Commenting on the proposals from the European Commission today, Pete Tomlinson, Director of Post Trade at AFME, said: “AFME welcomes the decision from the European Commission to extend the equivalence period for UK CCPs until 30 June 2025. This is an important step towards avoiding a significant financial stability risk and provides medium-term certainty for EU market participants. AFME continues to believe that voluntary, market-driven initiatives are important to help achieve the Commission's stated objective of growing clearing volumes in EU market infrastructures. We look forward to considering the accompanying Commission consultation in more detail.” – Ends –