AFME has today published a new paper outlining the key factors needed to boost the growth of a green securitisation market in Europe. While demand for green securitisation bonds is still relatively low, many institutional investors have increased their commitment to investing in green assets and AFME members are also seeing an increasing number of queries around green securitisations. AFME therefore expects this market to grow considerably in the near term. Anna Bak, Associate Director of Securitisation at AFME, said: “There is huge potential for green securitisation to help expand environmentally sustainable investments in the short term. Green securitisation could play an important role in helping to achieve the EU’s 2030 climate and energy targets by financing deals and investment in low-carbon assets, which would help to close the investment gap estimated at EUR 180 billion per year. However, there is still more work to do to help make this market more attractive and user-friendly for investors.” According to AFME’s paper, the following factors will be key to the future growth of the green securitisation market: • Clear definition A simple and clear definition of green securitisation will help to encourage the market to develop more quickly. More work is also needed on more systematic reporting and the tracking of underlying data to make green securitisation more tangible for investors. • More political support and regulatory and financial incentives The introduction of regulatory and other initiatives will be fundamental to support the growth of the green securitisation market. For example, the introduction of improved regulatory capital treatment for Green Securitised Bonds or tax incentives (at national level) for investing in green securitisations would help to promote green securitisation to all securitisation investors, not only those with a green mandate. • Establishing green eligibility criteria Green securitisation transactions will need to contain green eligibility criteria in order to police the green credentials of the underlying collateral upfront to ensure investments are genuinely sustainable and to avoid “greenwash”. • Considering the evolution of green technology over time As standards evolve over time a transaction originally considered to be green could lose its green status, which would impact pricing and liquidity in the secondary market. Ongoing reporting and transparency where standards have changed on legacy transactions will therefore be important.Therefore, any regulatory capital or similar incentives introduced for green securitisations should include grandfathering for legacy transactions that have ceased to be considered green over time as a result of the evolution of technology to mitigate any sudden detrimental impact on pricing and liquidity in the secondary market. You can read the paper here

AFME has today published a short briefing paper outlining remaining risks for the financial services sector in the event of a no-deal Brexit. While a substantial amount of work has already been undertaken by both banks and regulators to mitigate risks, a no-deal Brexit is likely to have a significant impact on the financial services sector. The paper therefore highlights the remaining no-deal risks and areas where further work is needed to minimise disruption to markets and clients. Oliver Moullin, Managing Director, Brexit at AFME, said: “In light of the ongoing political uncertainty, banks are continuing to implement their contingency plans for a no-deal Brexit scenario. However, there are remaining risks from a regulatory and operational perspective where further clarity is still needed to minimise disruption to markets and businesses across Europe. “These include issues such as the trading obligations for shares and derivatives, clarifying contingency measures and providing clarity on the renewal of equivalence for UK CCPs. We hope that regulators in the EU27 and UK continue to work together to address these.” The paper can be downloaded from the website here. -ENDS-

Following the start of the new European Parliament term and nominations for new leadership posts in the EU institutions, AFME has today published two new papers which highlight the Association’s strategic priorities for a strong EU financial sector agenda. Simon Lewis, Chief Executive of AFME, said: “In the next EU legislative cycle, it is important that policy makers pursue ambitious policies that promote sustainable growth and competitiveness, as well as addressing barriers to capital market integration in Europe. Key to this will be the completion of the Capital Markets Union project. Today we have set out the key priorities our members think should be included in the next EU legislative agenda.” The first publication, “Finance for Europe – Building competitive, resilient and integrated financial markets - A financial services strategy for sustainable growth and competitiveness in 2019-2024” recommends that the EU prioritise a growth strategy focusing on promoting competitiveness, innovation and deeper integration while transitioning to a greener economy. This paper lays out priorities and recommendations under eight key areas: Improving efficiency and connectivity in securities markets by undertaking a recalibration of MiFID2/R, addressing impediments to an integrated post-trade system and improving the functioning of corporate bond markets; Expanding the size and capacity of EU capital markets with a particular focus on improving retail investor participation, improving conditions for accessing equity capital and reviewing the regulatory treatment of securitisation.; Promoting integration in EU financial markets and removing harmful fragmentation by developing an ambitious Capital Markets Union and completing the Banking Union; Achieving a sound implementation of Basel III based on a robust and cumulative impact assessment; Fostering a culture of integrity and effective conduct regulation by improving the tools and frameworks to fight against money laundering and reviewing the Market Abuse Regulation; Taking sustainable finance to the next level through the completion of the EU taxonomy and enhancing corporate reporting and disclosures; Building a competitive digital single market by developing a pan-EU cyber-crisis governance model, harnessing the potential of emerging technologies and ensuring a level playing field between all market participants; Facilitating global regulatory convergence and supervisory cooperation by leading global efforts to tackle harmful fragmentation and expanding focus on a well-functioning equivalence regime. The full priorities paper can be downloaded here. AFME has also published a second paper on “The European banking system: tackling the challenges, realising the opportunities - Achievements and next steps in the reform programme”. The report specifically looks at priorities for bank prudential and resolution regulation. The paper gives an overview of the steps taken so far towards making Europe’s banking system safer and better able to contribute to sustainable growth. It also identifies priority areas where further work is needed during the new legislative cycle. These include the need to remove fragmentation in European Banking markets and to complete the Banking Union in order for cross-border banks to manage their capital and liquidity at a consolidated level and to help address the lack of profitability and excess capacity. The paper emphasises the urgent need to build effective shock absorption mechanisms in the form of private risk sharing. This is where an ambitious Capital Markets Union is necessary to complement the Banking Union. The paper also provides some initial views on the upcoming banking reforms (CRD6/CRR3 package) expected in 2020. The banking regulation priorities paper can be downloaded here. - ENDS -

The Association for Financial Markets in Europe (AFME) and the European Leveraged Finance Association, formerly the European Leveraged Finance Alliance (ELFA) today announce that the two organisations have agreed to end their formal affiliation with effect from 1 July 2019. The mutual decision was taken by the two groups following the conclusion of a 6-month trial period, so that both organisations can continue serving the interests of their respective members, while still working together for the benefit of the whole market. Sabrina Fox, Executive Advisor to ELFA, said: “ELFA is grateful to AFME for their support over the last six months. The platform they provided to us was essential to our success and momentum. As trade associations we represent different constituencies with unique perspectives. Working together as independent entities will enhance our ability to represent our respective members, and to collaborate with each other. Our intention is to continue to work closely with AFME as both parties act to support the growth and sustainability of the European leveraged finance market.” Gary Simmons, Managing Director of AFME’s High Yield Division, said: “This was a mutual decision taken by both organisations in order for us to best represent the interests of our respective members. The high yield investor community is an important part of the European high yield industry and we value its contribution to maintaining a healthy and viable market. AFME and ELFA will continue to work informally together across various policy issues, including joint initiatives and continued communication, to promote high yield market growth and efficiency.” -ENDS-

Following today’s Euro Summit on deepening the Economic and Monetary Union (EMU), Simon Lewis, Chief Executive of AFME, said: “Today’s EU summit has shown that progress on deepening EMU by completing the Banking Union is proving slow and difficult.” “Only by moving forward with this vital project and building up Europe’s capital markets will real economic progress be made. Without progress, Europe will fail to realise its true growth potential.” “The case for completing Banking Union and implementing Capital Markets Union is clear. By focusing on building more integrated banking and capital markets in the EU, this will create a financing market, which will, in turn, power EU investment, innovation and growth in the longer term.” -ENDS-

In response to the public statements by ESMA and the FCA on 29 May outlining their approach to the trading obligation for shares in a no-deal Brexit scenario, Simon Lewis, Chief Executive of AFME, said: “AFME welcomes the statements issued by ESMA and the FCA today in relation to the application of the Share Trading Obligation in the event of a no-deal Brexit.” “We are pleased that ESMA has responded to industry concerns and we note that the 14 major UK stocks, which were originally included within previous guidance, will no longer be in scope. This means that EU banks and investors will continue to be able to access these stocks in the UK and trading can continue uninterrupted in the event of a no-deal Brexit.” “However, we remain concerned that, in the absence of reciprocal equivalence, EU investors may still not be able to access the major pools of liquidity of a substantial number of EU27 shares and therefore may not be able to execute trades at the best available prices.” “AFME therefore urges EU27 and UK authorities to continue to work together to address this important issue”. -ENDS-

On the occasion of AFME’s inaugural Supervision & Integration conference which took place in Frankfurt on 23 May 2019, and in response to keynote speeches by Luis de Guindos, ECB Vice-President, and Dr Jörg Kukies, State Secretary of the German Ministry of Finance, Michael Cole-Fontayn, Chairman of AFME, said: “The European banking market continues to suffer from fragmentation across national lines. While the system is safer and more resolvable than 10 years ago, Banking Union is not yet delivering its expected integration benefits and it is negatively affecting cross-border banking services and cross-border M&A, which remain limited in the euro area.” “A continued lack of trust by Member States in each others’ facilitation of risk sharing also lies at the root of this. This is resulting in barriers to the free flow of capital and liquidity across the EU, preventing the diversification of risk and, perversely, running the risk of introducingsystemic fragilities.” “We need to unlock the full benefits of Banking Union. In order to do so, we must move forward with implementing the roadmap for a system-wide European Deposit Insurance Scheme (EDIS). This also requires the huge progress already achieved - through stronger prudential requirements and more effective supervision and resolution – to be acknowledged.” “More also needs to be done to deepen capital markets in the EU by continuing to implement the Capital Markets Union (CMU) project. Capital markets are an important source of private risk sharing across borders, which contribute to smoothing economic shocks and reduce the need for public risk sharing. By focusing on building more integrated banking and capital markets in the EU, this will create a financing market, which will, in turn, power EU investment, innovation and growth in the longer term.” In a new short paper, AFME makes further recommendations on how to achieve a truly integrated European financial market, or Financing Union. The paper is available online here. -ENDS-

Following the agreement by the European Parliament on the Risk Reduction Measures Package (RRM), Michael Lever, Head of Prudential Regulation, said: “We welcome the final agreement on the RRM package by the European Parliament, which marks an important milestone in lowering the risk of bank failures and avoiding tax payer funded bailouts.” “Despite these achievements, much remains to be done. The European banking market continues to be segmented across national lines and Banking Union is failing to deliver the degree of financial integration expected. Distrust amongst Member States lies at the root of this, resulting in barriers to the free flow of capital and liquidity across the EU, preventing the diversification of risk and introducing systemic fragilities.” “Unlocking the full benefits of Banking Union requires this lack of trust to be addressed. It also requires the huge progress already achieved - through stronger prudential requirements and more effective supervision and resolution – to be acknowledged. The establishment of a European Deposit Insurance Scheme would clearly help the move in that direction.” -ENDS-

The Board of the Association for Financial Markets in Europe (AFME) today announces that Simon Lewis OBE, its Chief Executive, will be stepping down from his role when his current contract expires at the end of October. Simon was the founding CEO of AFME when he joined in 2010. Since then AFME has more than doubled in size with over 80 people now based in London, Brussels and Frankfurt. Simon has led a team that has developed the Association into a powerful voice for banks operating in Europe’s wholesale financial markets and ensured that AFME plays a pivotal role as a bridge between its members and policy makers in the UK and the EU27. He has led the Association in its engagement with the European Commission on critical issues, such as Capital Markets Union, Banking Union and the implementation of MiFID II. He has also played a key role in the Association’s work on Brexit, which has sought to inform regulators and policy makers about the potential impact of Brexit on the functioning of Europe’s capital markets. During almost a decade with the organisation, he has overseen the opening of the AFME offices in Brussels and Frankfurt, which are instrumental in the Association’s fact-based advocacy. He also established the Association’s Frankfurt and Paris advisory boards, made up primarily of members who are on the ground and help to steer the organisation’s expanding footprint in Europe. Under Simon’s leadership, AFME was recently recognised as “Overall Best European Association” at the European Association Awards 2019 in Brussels. The AFME Board has commenced a process to identify a successor, to ensure there will be time for a smooth handover. Michael Cole-Fontayn, AFME Chairman, said: “Simon has been the driving force behind AFME for the past nine years and we are deeply grateful for his leadership. Simon will hand over a flourishing organisation that has achieved so much on his watch and will continue to be a leading advocate for Europe’s financial markets for years to come.” Simon Lewis said: “I am proud of all we have achieved at AFME as a team as we approach our tenth anniversary this year. Over these years we have navigated many significant market events and ensured that Europe’s wholesale financial markets participants have been able to inform policy and thinking at the highest level.” “It has been a privilege to work for three outstanding Chairs over the last nine years and to have had such a supportive, engaged Board committed to the aims and ambitions of AFME. I would like to thank Michael Cole-Fontayn for all his support and expert stewardship of the Board. I am looking forward to welcoming my successor into a great organisation that has so much to deliver.” -ENDS-

New York, NY, 8 April 2019 – To aid in the socialization of the development of overnight, nearly risk-free rates (RFRs), and the transition processes from Interbank Offered Rates (IBORs) impacting globally-active financial institutions, the Global Financial Markets Association (GFMA) today released the following documents outlining the various parts and players: Key Timelines and Milestones for the U.S. dollar, Japanese yen, Euro, UK pound sterling, and Swiss franc; A Snapshot of the IBOR and RFR variables associated with each currency; and An ‘At a Glance’ Tracker of each official sector working group’s activities and near-term expected actions. Sylvie Matherat, Chair of GFMA and Chief Regulatory Officer and Management Board Member at Deutsche Bank AG, said, “The transition to new IBOR rates will impact capital markets globally across market participants, products and clients. It will pose significant challenges for the industry and to manage it successfully it is essential that there is awareness and focus now. To support this, we have created a snapshot of the largest five IBORs to help firm identify the key developments in the transition.” Kenneth E. Bentsen, Jr., CEO of GFMA and President and CEO of SIFMA, said, “The Financial Stability Board (FSB) Official Sector Steering Group and its members have done a good job of raising awareness of the need to transition from LIBOR to alternative reference rates. The goal for our document is to assist the FSB, national regulators and the industry in focusing awareness on the importance of preparedness and coordination for the transition to new reference rates on a global scale.” Click here to access all the documents.