Commenting on the Bank of England’s announcement today, Simon Lewis, Chief Executive of AFME, said: “We welcome the Prudential Regulatory Authority’s confirmation that EU27 banks will be able to continue to operate their wholesale business through their existing branches in the UK post-Brexit. This provides welcome clarity for firms, enabling them to proceed with their Brexit planning and avoiding additional fragmentation of capital within Europe.” Ends

Commenting on the Council decision today that sufficient progress has been reached to move to the second phase of the Brexit negotiations related to transition and the framework for the future relationship, Simon Lewis, Chief Executive at AFME, said:“We very much welcome the Council’s decision that enough progress has been made to move to the second phase of the Brexit negotiations and to proceed with negotiations on a transition period. This is of crucial importance for businesses to ensure an orderly transition and financial stability.“Businesses continue to face significant uncertainty and we urge the UK and EU27 to reach agreement on transitional arrangements, including addressing issues relating to the continuity of services under existing cross-border contracts as soon as possible. We also call on the parties to clarify the framework for the future relationship as soon as possible to provide businesses with a clearer direction of travel.”– Ends –

HONG KONG, LONDON and WASHINGTON, X December 2017 – The Global Financial Markets Association (GFMA) today published a set of principles to guide the development of a commonly accepted framework for cybersecurity penetration testing. In furtherance of our collective goal to increase security and resiliency, and given increased regulatory interest in penetration testing requirements, GFMA’s goal is to encourage dialogue and share insights between the industry and regulators that would result in a globally coordinated approach to the regulatory use of penetration testing. Specifically, GFMA aims to facilitate a multi-regulator endorsed approach that enables regulators to drive consistent supervisory objectives and allows firms to maximize the utility and insight of approved penetration testing while minimizing risk. Penetration testing serves as one of the foremost tools in enabling a robust security program for financial institutions. Such testing allows firms to evaluate their systems and the controls that protect them in order to identify and remediate vulnerabilities, thereby strengthening their infrastructure against cyber threats. It is clear that the increased use of penetration tests provides a benefit to regulators and financial institutions as part of cyber preparedness. However, this also leads to risks that must be considered, including: Multiple regulatory frameworks can result in unnecessary duplication of sensitive information, putting financial firms, their clients, and other downstream third-parties at unknowable risk; Testing insights are reduced when regulators narrow options for test personnel and testing methods; Increasing regulatory demands requires testing teams spend more time complying with requests, reducing efficiency gains that could be better used increasing security of the sector, business partners, the supply chain and operational controls; Multiple regulatory frameworks can result in inconsistent reporting and the inability to develop a credible assessment of the sector due to lack of comparability; Penetration testing of critical systems in production creates the significant potential to disrupt firm operations; and Creation of multiple one-size-fits-all penetration testing frameworks disproportionately impacts midsize and smaller financial institutions. A number of jurisdictions around the world already leverage penetration testing in their regulatory regime. The goal of the GFMA proposal is not to compete with existing frameworks but rather to coordinate their development and use to ensure that financial institutions are able to safely, securely and efficiently comply with their supervisory requirements. The GFMA penetration testing framework is similarly aligned with the G-7’s broader recommendations on how institutions can conduct effective cybersecurity assessments, promoting safe and effective testing methods. The industry needs a flexible coordination framework established to perform realistic and rigorous penetration tests in a meaningful and efficient manner. GFMA’s principles for a commonly accepted penetration testing approach include: Provide regulators the ability to guide penetration testing programs, based on recent threat intelligence, to meet supervisory objectives through the use of common risk-based scenarios and agreed upon scheduling and scoping of testing activities; Provide regulators high confidence that penetration testing is conducted by trained, certified personnel with sophisticated tools and techniques to accurately emulate adversaries; Provide regulators transparency into financial firm governance processes to provide assurance that identified weaknesses are properly addressed; Ensure testing activities are conducted in a manner that minimizes operational risks; and Ensure data security by adhering to strict protocols for handling test results data due to the highly sensitive nature of this information. “The development of a global penetration testing coordination framework can address the respective needs of regulators and the financial industry, allowing for the continued confidence and growth of the world’s financial markets and economy,” said Mark Austen, chief executive officer of GFMA and chief executive officer of ASIFMA. “We hope these principles provide a foundation for continued dialogue and engagement between the public and private sector, and look forward to input from our regulators. The industry continues to believe that regulatory harmonization is critical to efficient and effective cybersecurity.” As first steps in the process, the industry suggests: Agreeing upon independent governance and assurance standards sponsored by an existing, identified voluntary international industry consensus standards body; Identifying qualification standards to rigorously certify individual assessors, teams of assessors and assessor organizations, all of which are equally accessible for in-house resources as well as third-party vendors; and Identifying quality standards for the technical delivery, evidence collection and reporting for all associated assessment methodologies to ensure they are performed to appropriate levels. The full Principles document is available here: -ENDS- ContactsCorliss Ruggles, +852 9359 6996, [email protected] Hansford, + 44 (0)20 3828 2693, [email protected] Pierce, +1 (212) 313-1173, [email protected]

Commenting on the progress made today on the negotiations for the UK’s withdrawal from the EU, Simon Lewis, Chief Executive at AFME, said: “We welcome the progress made today on the negotiations for the UK’s withdrawal from the EU. We urge the parties to reach agreement as soon as possible on transitional arrangements. Clarity is needed urgently to support an orderly transition and ensure financial stability. It is also essential to provide certainty on the status of cross-border contracts; an urgent issue that has been recognised by regulators as a priority for both the UK and EU27.” -Ends-

At the Association for Financial Markets in Europe (AFME)’s Board meeting and EGM held in Brussels on 6December, Michael Cole-Fontayn was appointed as Independent Chairman with effect from 1January 2018. Michael Cole-Fontayn is retiring from BNY Mellon this month after a 35-year career with the company, most recently as Executive Vice President, Executive Committee member and EMEA Chairman. He has served two years as AFME Chairman as the BNY Mellon Board member. Simon Lewis, AFME Chief Executive, said: “Michael is a passionate advocate for Europe’s capital markets and his dedication to AFME issues is unwavering. He has been a very engaged member of the Board since 2011, with an acute understanding of the relationship between flourishing capital markets and economic growth. I am delighted that the Board has asked him to continue to chair AFME as an independent director during this critical time for Europe’s capital markets.” Michael Cole-Fontayn said: “I am delighted to continue to help AFME’s important work shaping the policy debate around the future of Europe’s capital markets and working with our industry and regulators in support of the growth agenda. My tenure as AFME Chairman has seen challenging times for our industry in Europe. Given the current environment, AFME and its members are more dedicated than ever to promoting the “E” in AFME.” – Ends –

The Global Green Finance Council (GGFC) has today published the first version of its reference guide toglobal and regional policy initiatives on green finance. The “Global and European Green Finance Policy Directory” is authored by the GGFC, a group comprised ofglobal and regional financial industry organisations. The GGFC was founded by the Global Financial MarketAssociation (GFMA), the International Capital Market Association (ICMA), the European Banking Federation(EBF), the European Covered Bond Council (EMF-ECBC), the Institute of International Finance (IIF), the LoanMarket Association (LMA) and the World Federation of Exchanges. Other organisations are participating asobservers, including CERES, the European Financial Roundtable (EFR) and InsuranceEurope. The purpose of the Directory is to provide policymakers and global and regional market participants with asimple reference guide to the major initiatives on green finance, sustainability and climate change beingimplemented by international and regional bodies and industry organisations. The Directory shows that green finance is: A global policy matter:We welcome the increased interest in sustainable finance initiatives by global, regional andnational policymakers; Translated into public legislative and non-legislative initiatives:Many countries and regions have published both non-legislative (People’s Bank of China guidelineson green bond issuances) and legislative (Article 173 in France on sustainable reporting) measures; Actively led by the private sector:-In excess of 15 private initiatives on sustainable finance from issues, banks, investors and infrastructure providers, including standardisation of reporting and disclosures have been created by market participants who have been very active in leading private voluntary initiatives;- More than €100bn of green bond issuance this year as of November 2017 led by private initiatives and public guidelines, from €11bn in 2013; - In excess of 10 exchanges and index providers have created sustainability indices or sustainable listing requirements. A large majority of market infrastructure providers have sustainability programmes in place. Allison Parent, Executive Director of GFMA, said: “Sustainable finance is rising up the global agenda and weare seeing increasing numbers of international initiatives that are helping to advance sustainable financethrough market, policy and regulatory innovations. This inaugural Directory is a coordinated global industryeffort to collate and present in one place most of the major initiatives promoting sustainable finance. It is oneof the first initiatives from the GGFC, which aims to act as a global representative counterparty for the officialsector on sustainable finance policy matters. GGFC recommends that market stakeholders continue to pulltogether to further promote a favourable capital markets environment for sustainable finance to prosper.” Martin Scheck, Chief Executive of ICMA, said: “The Global and European Green Finance Policy Directory is aremarkable central resource outlining the many market-based and governmental initiatives arising in therapidly developing sustainable finance market. It provides the kind of practical information that will be muchappreciated by policy makers and market participants alike as they work to grow the sustainable financemarket - and especially to fund further progress on climate change mitigation. The Directory also illustratesthe important contributions that the recently created GGFC is making to facilitate the internationaldevelopment of sustainable finance.” The document includes: Recent policy developments at global (e.g. G20, FSB, United Nations, OECD), European (e.g.European Commission and Parliament) and Asian (e.g. China, HK, India) levels; A specific section on the sustainability risk analysis and disclosure, including a table, examples andlinks to the various initiatives; Examples of sustainability indices and exchange listing requirements; The document is a public online resource and is intended to be regularly updated to reflect legislative andnon-legislative developments in the area. The document is available here. – Ends –

Press release also available in: French, German, Italian, Spanish The Association for Financial Markets in Europe (AFME) has today published a new report highlighting the significant impact that key elements of the Commission’s Risk Reduction Measures (RRM) legislative package can have on Europe’s capital markets and the real economy. The report entitled The links between the Risk Reduction package and the development of Europe’s capital markets explains why the legislative proposals presented by the European Commission in November 2016 should not be considered in isolation, but rather in light of the significant links they have with capital markets and the broader economy. Stefano Mazzocchi, a Managing Director and Deputy Head of AFME’s Brussels office, said: “The Commission’s Risk Reduction Measures package represents an important further step towards the completion of the regulatory efforts aimed at strengthening the resilience of banks and consolidating the stability and soundness of the financial system. It is therefore broadly supported by AFME and its members. At the same time, if some of the key elements of the legislative package are not addressed, it could have significant negative implications for market liquidity and run counter to the Commission’s objective of further developing Europe’s capital markets. As such, our latest report sets out to illustrate what a more appropriately calibrated approach could look like.” Matti Leppala, Secretary General of PensionsEurope, welcomed the report and said “International and EU banking legislation (in particular NSFR and Leverage Ratio) should recognize the potential effects on end users. In this context, it is important for instance that high quality governments bonds are recognised as collateral in derivative transactions in order to improve financial stability and reduce liquidity risks for, amongst others, pension funds. More generally, a granular assessment of the implications of the banking reforms for market participants is important.” The report sets out 8 clear case studies which explore the potential impact of the RRM on capital markets, products and transactions – which are crucially important for market liquidity and for the end-users of capital markets – and presents proposals aimed at achieving a more proportionate treatment. The report also gives a concise overview of the elements of the RRM package which are particularly significant for capital markets, such as the Net Stable Funding Ratio (NSFR) and the Fundamental Review of the Trading Book (FRTB). All these components are necessary and supported by AFME, however, without reconsideration of some specific aspects - including their calibration, the timing of their introduction, as well as safeguards for globally consistent implementation - the negative impact on the end-users of capital markets, and on the objective of developing deeper and more liquid bond and equity markets, would be significant. The full report can be downloaded here.

Following the publication today of the report by the European Commission’s Expert Group on the functioning of European Corporate Bond Markets, Victoria Webster, Director of Fixed Income at AFME, said: “The uniqueness of this report lies in looking at the European corporate bond markets from the perspective of issuers, investors, intermediaries and infrastructure providers. We hope the full list of 22 recommendations will be taken on board by national and European authorities and look forward to hearing how they intend to follow up on them.”AFME, as a member of the expert group which was set up with a view to improving the efficiency and resilience of corporate bond markets, contributed to the report reviewing the functioning of the European corporate bond markets, in the context of building a Capital Markets Union.To put together the report, the expert group looked at recent changes in European corporate bond markets and the principal drivers of those changes.The headline report and supporting analytical report have resulted in 22 recommendations, across the following six objectives: Making issuance easier for companies; Increasing access and options for investors; Ensuring the efficiency of market making and intermediation; Fostering the development of new forms of trading; Ensuring an appropriate level of information and transparency; Improving the supervisory and policy framework. - ENDS -

The Association for Financial Markets in Europe (AFME) has today responded to the European Commission’s Consultation on Post-Trade in a Capital Markets Union (CMU). This important consultation will help the Commission determine the needs and priorities in European post-trade reform. Werner Frey, Managing Director, Post Trade at AFME, said: “The European Post-Trade Forum (EPTF) Report and this consultation are an important milestone in much-needed European post-trade reform. As a next step, we are very much in favour of dismantling the narrowly defined EPTF Barriers with a view to promoting the global competitiveness of European capital markets. At the same time, a strategic plan for a comprehensive European post-trade reform should be developed.” AFME’s consultation response finds that there are two interrelated parallel processes required to successfully promote European post-trade reform and a well-functioning CMU: the swift dismantling of the EPTF Barriers that have deliberately been narrowly defined to facilitate the implementation of the proposed solutions in the CMU context; and the development and implementation of a longer-term strategy for comprehensive European post-trade reform. With respect to dismantling the EPTF Barriers, AFME: strongly supports the EPTF Report, its analysis and proposed solutions; advocates the inclusion of all prioritised EPTF Barriers in the CMU Action Plan; proposes to continue the close and institutionalised cooperation between the public and the private sector to monitor the dismantling of all EPTF Barriers; believes that the dismantling of the EPTF Barriers should start without delay and therefore should not be made dependent e.g. on possible future benefits derived from technological developments such as DLT or the outcome of Brexit negotiations; suggests intensifying the dialogue with Member States in a bespoke and targeted manner as part of the aforementioned public-private partnership. With respect to the development and implementation of a longer-term strategy for comprehensive European post-trade reform, AFME: stresses the importance of progress on the EPTF barriers emphasizes that progress on the EPTF barriers will facilitate longer-term strategic steps refers to the AFME Post-Trade White Paper proposes the setup of a strategy group by the European Commission, the mandate of which should inter alia include:-the definition and the objectives of a comprehensive European post-trade reform;-an assessment of the likely impact of technological developments, based on an analysis to be performed of the conditions precedent, such as the legal and regulatory framework for such technological developments;-an assessment of the degree to which the successful dismantling of the EPTF Barriers achieves the defined objectives; -an analysis in regard of the timeliness of current post-trade processes including their rationale; -high level proposals for achieving the defined objectives. AFME finds that the following areas in particular require more in-depth work: systemic risk /risk transmissions in the settlement space harmonisation of tax processes collateral management AFME’s full consultation response can be found here. – Ends –

AFME and IA's Equities Electronic Trading Questionnaire - version twoClick here to download The Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have today published an updated version of the Equities Electronic Order Handling Questionnaire incorporating the obligations and requirements set out under MiFID II. The initiative, which was originally launched in March 2016, establishes a common framework for buy-side clients to request information from electronic trading providers in the European equity markets. The Questionnaire assists in facilitating the fair and accurate sharing of information on the operation of algorithms between investors and their broker-dealers. Through this process, it aims to enable safer and more efficient algorithmic trading. Since its launch, the initiative has gained increasing traction as market participants recognise the benefits of having a standard framework. April Day, Managing Director, Equities at AFME, said: “With MiFID II due to be implemented in January 2018, the Questionnaire covers electronic trading practices, including how an individual firm’s processes and decision-making frameworks facilitate best execution. Expanding on the requirements last set out in ESMA’s guidelines on systems and controls for automated trading, we have updated our Questionnaire to incorporate the obligations and requirements which are applicable under the new regime. The aim is to ensure that it remains a useful way to efficiently manage the exchange of important information on electronic order handling and dissemination of change notices.” Ross Barrett, Capital Markets Specialist at the IA, said: “This initiative is a best practice example of the Buy and Sell Sides successfully coming together to improve the practices involved in algorithmic trading. We have updated the Questionnaire to ensure that as soon as MiFID II comes into effect both sides can continue to benefit from the standard framework it offers. The publication of this Questionnaire is one example of how the industry is taking the initiative to improve the transparency and efficiency of markets to the benefit of the end investor.”Split into seven sections, the questionnaire covers best execution, trading venue selection, algorithmic trading, non-displayed liquidity, transaction cost analysis, client confidentiality and risks and controls.The scope of the Questionnaire is limited to equity/equity-like European Economic Area (‘EEA’) securities which are traded through a firm based in the EEA that is a regulated firm under MiFID and associated national laws, unless otherwise specified.The full Questionnaire can be found on both AFME and the IA’s websites. – Ends –