The FAQs are available inEnglish,French,German,ItalianandSpanish. AFME, together with Clifford Chance, has today published guidance to assist bank clients in understanding how their cross-border relationships may be impacted by banks’ plans to adapt to Brexit. The FAQs explain the potential significant impact on contractual relationships for financial services, providing answers to a number of “Frequently Asked Questions” which highlight potential operational and documentation impacts. As banks begin implementing their Brexit contingency plans, clients are likely to see impacts in respect of existing cross-border contracts and will be required to put in place arrangements for new business following Brexit. The FAQs address questions such as which clients may be in scope, which contracts may be affected, how they may be impacted and consequential operational impacts that need to be considered. Simon Lewis, Chief Executive of AFME said: “With the Brexit political process still ongoing, our FAQs document highlights the need for clients to take action now by reviewing documentation and operations to understand how they might be impacted, including whether operations may need to change. This is to ensure that clients have sufficient lead time to address documentation, technical and other issues for minimal business disruption. In this respect, AFME continues to call for clarity that clients will be able to rely on services under existing contracts post-Brexit.” Monica Sah, Partner at Clifford Chance, said: “Six months ago nobody was talking about repapering. Now people realise that moving contracts from one jurisdiction to another is likely to be a significant undertaking as banks adapt to Brexit. These FAQs attempt to simplify a hugely complex process and help clients understand how their day to day contractual activities will be impacted by their dealers' implementation of their own Brexit strategies. Clients need to work with their dealers to ensure a smooth transition and a continued seamless service.” The FAQs primarily focus on questions relevant to EU27 clients of UK-based banks in relation to sales and trading in wholesale markets and related credit given for settlement purposes. The FAQs also highlight questions for UK-based clients of EU27-based banks, and primary market and financial market infrastructure impacts. - ENDS -

Download the roadmap here. NEW YORK, February 1, 2018 – The International Swaps and Derivatives Association, Inc.(ISDA), the Association of Financial Markets in Europe (AFME), International Capital MarketAssociation (ICMA) and the Securities Industry and Financial Markets Association (SIFMA)and its asset management group (SIFMA AMG) have today launched a roadmap that highlightskey challenges involved in transitioning financial market contracts and practices from interbankoffered rates, or ‘IBORs’, to alternative risk-free rates (RFRs).The benchmark transition roadmap aggregates and summarizes existing information publishedby regulators and various public-/private-sector RFR working groups in order to provide a singlepoint of reference on the work conducted so far to select alternative RFRs and plan for transition. The analysis focuses on key IBORs in five currencies: euro, sterling, Swiss franc, US dollar andyen. Based on publicly available data, the roadmap estimates total outstanding notional exposureto the IBORs at over $370 trillion. Derivatives, syndicated loans, securitizations, business andretail loans, floating-rate notes (FRNs) and deposits are all significantly exposed to LIBOR andother IBORs.The roadmap is the first part of a comprehensive analysis of the issues and potential solutionsrelated to RFR transitioning for a wide spectrum of financial instruments. The Associations willshortly initiate a global survey of buy- and sell-side firms and infrastructure providers, whichwill feed into an in-depth report aimed at supporting industry interest rate benchmark transitionplanning efforts.“The task of transitioning from the IBORs to new RFRs is immense, so the industry needs tostart thinking about this now. Today’s roadmap is aimed at raising awareness of the workconducted to date, and creating a central resource for interest rate benchmark transitions acrossmarket sectors. The next step is to gather feedback from all parts of the market through ourglobal survey to identify all important issues and propose potential solutions for an orderly,efficient and harmonized transition,” said Scott O’Malia, ISDA’s Chief Executive.“The challenge of transitioning from IBORs to alternative RFRs is a truly global issue that impacts all areas of finance. For the transition to be successful, it is essential that there is coordination across jurisdictions and asset classes. AFME members and their clients are active users of wholesale cash markets products that use various types of reference rates, such as securitizations, FRNs, mortgages, corporate and certain government bonds, as well as derivatives and other products. This report provides an excellent foundation and stocktake for future crucial work on the transition to new risk-free rates,” said Simon Lewis, Chief Executive at AFME.“Benchmark reform is a global issue for financial markets. ICMA is very pleased to be part of this important international initiative to provide input into the process across market sectors. The launch of the roadmap, which defines the issues involved, is the first step towards coordinating the transition in such a way as to avoid market fragmentation or disruption,” said Martin Scheck, ICMA’s Chief Executive.“Our members are focused on the identification of challenges related to making any moves to new reference rates in a manner that protects the liquidity and resiliency of both cash and derivatives markets. This initiative will provide information and data that will help inform regulators and the market about both these challenges and begin the process of identifying potential paths forward,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO. “Global communication and coordination within our industry and with regulators is essential, and SIFMA and SIFMA AMG believe the roadmap and subsequent survey will be helpful in this way across the financial industry, to corporate end users, and to regulators. It is crucial to try to achieve some relative consistency across geographical regions, product segments and market participants to both avoid fragmentation of global markets and permit effective risk management.”The roadmap sets out a number of potential challenges that would need to be addressed when transitioning to RFRs, including market adoption of the new RFRs, valuation and risk management complexities, documentation issues, infrastructure requirements, and regulatory, tax and accounting implications. It also outlines the steps taken by the various public-/private-sector RFR working groups to resolve these challenges.Background Interbank rates such as LIBOR, EURIBOR and TIBOR (known collectively as the IBORs) are floating rates based on IBOR contributor banks’ average cost of unsecured funding in the interbank market for a given period in a given currency. Several reviews focusing on the IBORs have been published in recent years, starting with the Wheatley Review of LIBOR in the UK in September 2012. This was followed by a broader set of principles on benchmarks issued by the International Organization of Securities Commissions (IOSCO) in July 2013, and a further, more targeted report on interest rate benchmarks by the Financial Stability Board (FSB) in July 2014. The FSB’s report noted that liquidity in the transactions underpinning certain of the IBORs has decreased to the extent that these rates are no longer sustainable across all relevant tenors. The FSB therefore recommended transitioning to alternative RFRs. Working groups have been set up in several jurisdictions, including the UK (the Working Group on Sterling Risk Free Reference Rates), US (the Alternative Reference Rates Committee), Switzerland (the National Working Group on Swiss Franc Reference Rates) and Japan (the Japanese Study Group on Risk Free Reference Rates), to bring together representatives from both the public and private sectors to determine the most appropriate RFRs in the relevant currencies. European policy-makers have also announced the launch of a similar public-/private-sector working group to consider a euro risk-free rate. The selected rates are reformed SONIA for sterling, SARON for Swiss franc, SOFR for US dollar and TONA for yen. In July 2017, the chief executive of the UK’s Financial Conduct Authority (FCA), Andrew Bailey, announced that the FCA would no longer compel or persuade banks to provide submissions for LIBOR post-2021. The FCA’s announcement has prompted the industry to begin focusing on transition strategies for new and legacy contracts. In the US, the Alternative Reference Rates Committee has proposed a paced transition plan, and intends to augment and expand that plan through additional proposals this year.

Click hereto download the guidelines. AFME’s High Yield Division has today published its most comprehensive set of industry-wide Guidelines for the European High Yield Primary Bond Market. The Guidelines are intended to provide guidance for issuers and AFME members when leading or otherwise participating in offerings of non-investment grade notes, known as “high yield bonds”.The Guidelines were put together by AFME’s High Yield Division members in a wider effort to maintain and improve business practices in the European high yield market. The Guidelines provide a helpful overview of the high yield issuance process for first time or potential issuers (and other interested parties). Where appropriate, other elements of the Guidelines reflect suggested best practice for market participants and also provide forms of certain standardised documents for use in high yield offerings. Gary Simmons, Managing Director of AFME’s High Yield Division, said: “We believe that these comprehensive guidelines will be helpful to the European high yield industry, both as suggested procedures for conducting high yield transactions, and also as an explanatory guide for parties that are not necessarily familiar with the European high yield market and how it works. This is another example of AFME’s efforts to facilitate more efficient and effective capital markets across Europe."Youssef Khlat, Global Head of High-Yield Capital Markets, Crédit Agricole and Chair of the AFME High Yield Board, said: “The AFME European High Yield Guidelines are another important step in the industry’s efforts to come together and agree on proper practices and procedures. While it’s important that parties retain some flexibility to tailor high yield transactions to specific situations, I believe that the guidelines can provide a valuable basic framework for the industry.”Michael Dakin, Partner at Clifford Chance and Vice-Chairman of the AFME High Yield Board, said: “"On behalf of the AFME High Yield Division Board of Directors, I would like to thank those individuals from all across our industry who invested significant time in updating and preparing the European High Yield Market Practice Guidelines which were published today. Their efforts highlight the collaborative ethos that the Division has been so keenly focussed on fostering in our market and reflects the desire of the European High Yield market, from the sell-side to the buy-side and across other market participants, to work efficiently and effectively."Tanneguy de Carné, Global Head High Yield Capital Markets at Societe Generale CIB, and Vice-Chairman of the AFME High Yield Division Board, said: "Our European high yield bond market has grown tremendously over the past ten years, these guidelines are helpful recommendations to maintain the highest standards and to continue to welcome new participants and keep up with the evolving regulatory environment."

Commenting on the publication of the European Commission’s HLEG final report on sustainable finance today, Simon Lewis, Chief Executive at AFME said:“The HLEG’s final report on sustainable finance is a big step in the right direction. The recommendations in the report will help to encourage the financial sector’s contribution to sustainable and inclusive growth. It is crucial that capital markets are geared towards ensuring social and environmental sustainability and we look forward to working with the European institutions to take forward those areas of the HLEG report requiring further discussion and analysis.” On specific issues in the report: Taxonomy: AFME welcomes the proposed creation of the Sustainable Taxonomy Technical Working Committee and consultation process, but would strongly recommend the Committee to include a strong governance structure with key objectives and a timeline. Such work should also be consulted by a wide range of industry participants.Disclosure rules: AFME supports the recommendations taken by the HLEG on disclosure rules with voluntary disclosures but avoiding premature standardisation. Better voluntary disclosures should be focused on materiality, to improve investment decisions through the industry-led FSB TCFD work and the Non-Financial Reporting Directive. We are supportive of the HLEG approach to align any proposal at international level.Green supporting factor: AFME supports the development of sustainable finance in Europe and is reviewing the merits of a green supporting factor. A green supporting factor provides a clear incentive for institutions and may lead to quick change, but it should be recognised that capital requirements are there to mitigate risk and green investments could also contain risks that may then not be fully represented in capital requirements. Even where there is strong support for immediate implementation of a green supporting factor, there should be recognition that further work is needed in the EU to allow effective implementation, such as the need to develop a clear EU definition of green assets and a clear taxonomy.ESA review: AFME supports the HLEG’s view of building expertise at the level of the European Supervisory Authorities (ESAs). Our members support further research and cost-benefit analysis on how Environmental, Social and Governance (ESG) considerations - including climate change - can be integrated into various potential initiatives, such as data gathering. Banks are actively engaged in sustainability initiatives and would welcome further engagement with policymakers on sustainable finance. Such involvement from the industry would help wholesale financial participants inform supervisors about current market approaches to assessing risks associated with climate change, social and governance issues.Sell-side Research: AFME does not agree with the HLEG’s general commentary on the production of research by investment banks. Specifically, AFME disagrees with the view that sell-side analysts do not consider ESG criteria when preparing research. Many AFME members have ESG- or climate change-specific analyst teams with many years of experience required to assess the materiality of ESG-related risks to a sector or security. Although there is no industry-level best practice on the inclusion of ESG criteria, many firms use their in-houseframeworks to integrate such criteria in their research. With respect to the reference to potential conflicts of interest AFME members have robust procedures in place to protect the independence of their analysts. The general question of the use of ESG criteria and the horizon under review by analysts has no connection with the issue of independence.Sustainable Infrastructure Europe facility: We welcome the HLEG’s recommendation to expand the EIAH remit to include sustainability considerations and increase its footprint by including regional offices. The creation of a separate dedicated organisation would, however, overlap and potentially conflict with the EIAH.– Ends –

Commenting on the unanimous agreement by the EU General Affairs Council today to approve a new set of negotiating directives on Brexit transitional arrangements, Simon Lewis, Chief Executive at AFME said: “Today’s decision to adopt negotiating directives on transitional arrangements marks the next phase in the Brexit process, providing more clarity for firms and enabling them to proceed further with their Brexit planning. This is crucial in ensuring an orderly transition and financial stability.” – Ends –

Click here to download a copy of the paper. The Association for Financial Markets in Europe (AFME) has today published a new paper highlighting some of the potential cliff edge risks that Brexit could create for market efficiency and financial stability. The paper focuses on issues which may require intervention from policymakers and/or regulators in the UK and EU27. Simon Lewis, Chief Executive of AFME, said: “There are now less than 15 months before the UK leaves the EU and the financial services industry continues to face significant uncertainty. It is therefore imperative that agreement is reached as soon as possible on transitional arrangements. We have set out today a summary of some of the most significant cliff edge risks that need to be avoided through transitional arrangements and further action. In order to maintain financial stability, EU and UK policymakers should urgently clarify actions to mitigate these cliff edge risks.” The paper highlights the following 5 key risks: Cross-border personal data transfersRestrictions on sharing of personal data between the EU27 and the UK as a result of Brexit could severely disrupt the ability of businesses to continue to transfer personal data post Brexit. For businesses to continue to operate on a cross-border basis, an arrangement is required to ensure the ongoing free flow of personal data post Brexit. Continuity of contractsWhen the UK leaves the single market, existing passports enabling UK-based firms to engage in regulated activity in the EU27 (and vice versa) will cease. This creates important questions for businesses regarding the continuity of services under existing cross-border contracts. Choice of jurisdiction; recognition and enforcement of judgmentsThere is a very significant volume of financial services contracts where the parties have chosen the jurisdiction of the English courts. It is therefore important to provide clarity that continued recognition will be provided to the choice of jurisdiction throughout the UK and EU and that judgments of the courts of a Member State and of the UK will continue to be enforced throughout the UK and EU27. Access to market infrastructure: recognition of CCPsIn the absence of transitional arrangements, EU27 banks could find themselves in breach of regulation for maintaining positions in UK CPPs that would no longer be authorised or recognised under EU regulation. EU27 banks may also be required to hold a significantly increased amount of regulatory capital against positions in UK CCPs. While an equivalence framework for CCPs is in place in the EU, it is necessary to ensure that there is no gap while equivalence is formally assessed. Recognition of resolution actionsThe Bank Recovery and Resolution Directive (BRRD), put in place to prevent taxpayer bailouts, provides for the automatic recognition of resolution actions throughout the EU. Without an intergovernmental agreement, the automatic recognition would no longer apply as between the UK and EU27 following Brexit, which could create issues for financial institutions, including:- the potential requirement for EU27 banks to amend or reissue contracts governed by English law (and UK-based banks to amend or re-issue contracts governed by the law of a Member State) to include contractual recognition of bail-in and resolution stays, or having to re-issue them; and-uncertainty regarding the continued eligibility of English law governed capital and debt instruments issued by EU27 banks to meet loss-absorbing capacity requirements (and instruments issued by UK- based banks under EU27 law). AFME’s paper points to the Withdrawal Agreement as the best way to solve these cliff edge risks. It also suggests that where policymakers and regulators can take unilateral actions, this should also be done.– Ends –

Commenting on today’s report from the Commission outlining progress made so far on the issue of non-performing loans (NPLs), Simon Lewis, Chief Executive, at AFME said: “High levels of NPLs have acted as a drag on Europe’s economic recovery, so it is very encouraging to see that they are steadily declining. We would encourage the Commission to seize the opportunity to build on this progress by prioritizing the harmonisation of minimum insolvency standards across Europe and facilitating greater use of secondary markets for NPLs and distressed debt.“The picture for banks’ NPLs in individual countries continues to vary widely, which is all the more reason why all regulatory efforts should focus on bank-specific measures, rather than a blunt one-size-fits-all Pillar 1 approach.”– Ends –

Click hereto download the questionnare. The Association for Financial Markets in Europe (AFME) has today published a revised version of its Due Diligence Questionnaire (DDQ) which harmonises and simplifies the process of completing questionnaires for global custodians. The AFME Due Diligence Questionnaire Task Force, comprised of approximately twenty Network Managers, reviewed the earlier 2016 questionnaire and additional questions proposed by market participants. The revised DDQ now incorporates approximately 20 additional questions. The revised document should further standardise the process by allowing firms to use the AFME DDQ without sending a sizeable addendum of additional questions. An additional section has also been added for when the recipient is providing Global Custody services, following request from AFME members. Alan Cameron, Head of Market Strategy-Brokers, at BNP Paribas Securities Services and Chair of the AFME Due Diligence Questionnaire Task Force, commented: “We were glad to get this review completed in time for 2018. We reviewed many proposals, and while the changes to the previous version are minimal, the most significant change is the addition of a Global Custody section to allow those entities to outline their approach to due diligence for third parties. Our thanks are due to the many banks that participated in this process creating a harmonised document for the industry.” Stephen Burton, Managing Director, Post Trade at AFME, added: “It is encouraging to hear an ever-increasing awareness that the questionnaire can significantly reduce the time spent completing and reviewing due diligence questionnaires. Members devoted a significant amount of their time to make this document even more useful for the industry. We were able to rationalise some questions and added a Global Custodian Section.” AFME encourages the broadest use of this DDQ. It is available to all, free of charge, on AFME’s website. Click here to download. – Ends –

Commenting on the implementation of the Markets in Financial Instruments Directive (MiFID II), and the associated delegated regulation (MiFIR) today, Simon Lewis, Chief Executive at AFME, said: “Today sees MiFID II take effect. It is one of the most impactful and wide-reaching pieces of financial regulation to affect our industry to date. The review of the Markets in Financial Instruments Directive (MiFID II), and the associated delegated regulation (MiFIR) will fundamentally affect the way investment firms trade and interact with their clients, as well as how the European securities market ecosystem works.“In addition to strengthening the general investor protection regime and enhancing the current regime for equities markets, MiFID II extends this revised regime to an expanded range of product classes, including fixed income products and over-the-counter (OTC) derivatives. AFME supports the regulatory aims of the MiFID review of enhanced levels of investor protection, increased competition across the financial markets and calibrated transparency to facilitate fair, orderly and liquid markets.“Our members have been working closely and diligently with policymakers, regulators and the financial market industry to prepare for the go-live of this challenging project. AFME has been supporting its members through this implementation period and we will be continuing our constructive engagement, examining the impact of the MiFID package over the next few months.”– Ends –

Commenting on the European Commission proposal for a new prudential regime for investment firms, Michael Lever, Head of Prudential Regulation at AFME, said: “We welcome the Commission’s proposal for a new prudential regime for investment firms. While we look forward to reviewing the proposals in detail, prudential rules that are specifically tailored to the business models and risks assumed by investment firms should further the development of the Capital Markets Union. Of particular relevance for AFME’s membership is the proposed requirement that investment firms which are major broker/dealers and play key intermediation roles in the EU’s capital markets will remain subject to the prudential rules of the CRD/R. The introduction of direct ECB oversight of such firms for their Euro area activities is also welcome as it will foster a supervisory level playing field.” – Ends –