Commenting on the speech made by the Prime Minister on the Government’s negotiating objectives for exiting the EU, Simon Lewis, Chief Executive at AFME, said:"The Prime Minister has provided some welcome clarity on the UK Government’s objectives for Brexit and acknowledged the importance of an adjustment period to limit the disruption to Europe's financial services sector. We look forward to seeing more detailed proposals on interim agreements and on market access arrangements to support well-functioning capital markets across Europe."– Ends –

Following the vote on the Simple Transparent and Standardised (STS) Securitisation package, announced today in the European Parliament, Richard Hopkin, Head of Fixed Income at AFME, said: “As the trade association that represents all the leading industry participants in European securitisation markets - including originators, sponsors and issuers, underwriters, investors - we welcome the fact that the European Parliament and Council have now endorsed the establishment of an STS framework and that MEPs support in principle the introduction of a regime for both third country STS securitisations and for non-EU participants.” “However, we are concerned that many aspects of the proposals run counter to the objective of reviving securitisation in Europe and, if adopted as currently proposed, will discourage the use of securitisation as a funding and risk transfer technique. Unless these concerns are addressed in the trilogue discussions, this key component of the Capital Markets Union will not succeed.” European securitisation has performed very well through and since the financial crisis. Yet with issuance in Europe as low as EUR40.2bn at the end of Q3 2016, the market remains moribund – largely because of the lack of a level playing field with similar fixed income products created by punitive regulation which does not recognise this strong performance. If key provisions of the final text of the Parliament’s compromises are not significantly recalibrated then all securitisation – not just STS securitisation - will become prohibitively burdensome in Europe, the STS framework is likely to fail and securitisation as a whole – whether STS or not – will not be able to provide much-needed funding to the real economy. In particular, the following key areas should be addressed: Capital and “proxy data”: allowing European banks to use proxy data will help to reinforce a true Capital Markets Union by opening up a much wider range of potential investors across Europe and establishing a more level playing field globally; Proper recognition of private transactions: including appropriately adjusted, yet prudent standards for disclosure for private transactions, which play a key role for businesses and consumers, is key; Transparency: standards of disclosure in European securitisation are already very good and much better than for other fixed income products. The market is not failing to revive because of shortcomings in disclosure. Proposals for controversial new requirements like investor name-give up will further dissuade investors and increase costs for issuers, as well as risk conflict with already existing and well-functioning regimes and regulations; Restrictions on market participants: permitting only regulated entities to undertake securitisation will reduce rather than expand the use of this technique and exclude many real economy corporate issuers from the market. Allowing only institutional investors to participate will concentrate, not diversify, risk - and risk damage to financial stability; Risk retention: increasing risk retention for all securitisations, not just STS, will damage the efficiency of securitisation as a funding tool and make it more difficult for banks to transfer risk, thereby reducing their ability to lend to the real economy. Further, for some sectors of the market, such an increase poses an existential threat. These changes to prudential regulation are being proposed in the absence of any evidence supporting change, without any impact assessment and in the face of opposition from the ECB, the EBA and the European Commission - as well as the industry. They should be dropped – the existing regime has been reviewed many times over the years, and shown to work well. – Ends –

The Association for Financial Markets in Europe (AFME) has published a new due diligence questionnaire with a view to standardising and simplifying the process of completing such questionnaires for sub-custodians. Previously, sub-custodians faced the burdensome challenge of responding to clients’ individual questionnaires, which were inconsistent in the questions outlined and covered many of the same risk themes and due diligence topics. Consensus was built to simplify the process of evaluating sub-custodians at the Network Managers (NeMa) conference in 2015. The AFME Post Trade Board subsequently created an AFME Task Force, comprising about 20 Network Managers, with a view to producing the harmonised questionnaire. The work was coordinated by a group of leading European and international banks with operations in Europe that issue and receive proprietary questionnaires aimed at ensuring that securities and cash are held appropriately in safe custody. Using a Thomas Murray questionnaire as a baseline, AFME’s goal was to harmonise 80% of members’ questions. That percentage proved to be significantly higher when AFME recently piloted the document.The harmonised questionnaire provides for certainty in relation to an agreed set of questions and simplification of the process for all parties. Alan Cameron, Global Solutions Sponsor - Clearing and Custody Services at BNP Paribas Securities Services and Chair of the AFME Due Diligence Questionnaire Task Force, commented: “Our industry is delighted that AFME took the lead in addressing this long-running and increasingly burdensome issue. We are grateful to all the banks that contributed to this project and look forward to working with them to ensure the maximum usage in 2017 and the years ahead. Whilst getting the questions agreed amongst ourselves is important, the success of this project will be measured by usage across our industry.” Stephen Burton, Managing Director, AFME Post Trade, added: “AFME’s harmonised and standardised questionnaire will accelerate the completion process, highlight discrepancies and allow for a year-on-year comparison. The finalised document was only possible due to the commitment of the Task Force members. We are pleased that so many banks have decided to use the questionnaire in next year’s due diligence process.”AFME members encourage the use of this document by clients of global custodians, and sub-custodians as providers to global custodians who are involved in sending or responding to due diligence questionnaires.The document will be reviewed by AFME in the third quarter of 2017 to reflect any regulatory changes or major themes which develop over the coming year.The questionnaire is available to all in word format, free of charge, at: http://www.afme.eu/en/reports/industry-guidelines/ Firms participating the development of the questionnaire included: Bank of America Merrill Lynch, BNP Paribas, Barclays, BNY Mellon, Citi, Deutsche Bank, Goldman Sachs International, J.P. Morgan, Nomura, Nordea, Northern Trust, Standard Chartered, Société Générale, Standard Bank, Thomas Murray Data Services, UBS and UniCredit.

Commenting on the publication today by the European Council of its conclusions on tackling bottlenecks to investment identified under the Third Pillar of the Investment Plan, Simon Lewis, Chief Executive of AFME, said: “The Council conclusions on removing bottlenecks and providing greater regulatory predictability are an encouraging signal for the European investment environment. AFME is a long-time advocate of a strong and stable European Single Market enabling investment, jobs and growth.” “The Investment Plan for Europe is one of the European Commission’s key initiatives together with the successful implementation of the European Fund for Strategic Investments (EFSI). The EFSI’s potential extension is to be welcomed.” Despite an improvement in the European economy, private investments are still below 2008 levels. According to Eurostat, EU28 private investments as a percentage of GDP decreased from 22.5% in 2008 to 19.5% in 2015. AFME has consistently suggested that some key bottlenecks could be removed to help increase investment in Europe. These barriers include: Fragmented internal market. The fragmented internal market causes a shortage of risk capital in Europe’s small businesses. Different rules, taxes and standards are hampering young businesses seeking to scale-up across borders. Unfair treatment of infrastructure corporates. Infrastructure private capital benefits from the EFSI and the recent establishment of an infrastructure project asset class under which insurers would benefit from reduced capital requirements. Similar treatment for infrastructure corporates, which represent four times more volume than projects, would remove a clear barrier to infrastructure investments. Inconsistent EU insolvency frameworks. The creation of a consistent EU insolvency framework will benefit Europe’s economy by providing greater certainty to market participants, reducing costs for investors, increasing recovery rates and making it easier to turn around viable businesses.

Commenting on the publication today by the European Commission of the package of proposals including the fifth Capital Requirements Directive (CRD V)/second Capital Requirements Regulation (CRRII) and Total Loss Absorbing Capacity (TLAC)/ minimum requirement for own funds and eligible liabilities (MREL), Michael Lever, Head of Prudential Regulation at AFME, said:“AFME welcomes the publication of the Commission’s proposals today as another significant piece of the global financial reform programme in Europe.“The CRDIV/CRR has already greatly reduced the likelihood that banks will fail by increasing significantly the quantity and quality of capital they hold and by making them less leveraged and more liquid. The present CRDV/CRRII package builds on what has been achieved so far, introducing a binding stable funding and leverage ratio requirement. AFME supports the implementation of these requirements in the EU in a manner that will enable the sector to support economic growth and the development of the Capital Markets Union, as we communicated to the Commission in its call for evidence.“We also welcome the proposed implementation of TLAC in the EU, together with revisions to the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR) to increase alignment of European MREL requirements with global standards. Following substantial progress, these parts of the package represent the final steps in establishing an effective recovery and resolution framework. While the CRD/CRR significantly reduces the likelihood banks will fail, the TLAC/BRRD/SRMR package ensures that authorities have the tools to deal effectively with banks should they fail. In practice, this means that banks can be resolved in an orderly manner while continuing to carry out functions that are critical to the economy and financial stability, and importantly without taxpayers footing the bill. AFME continues to be very supportive of this objective.“We look forward to reviewing the proposals and engaging with the co-legislators over the coming months to ensure that the EU has a financial stability framework in place that achieves the most appropriate balance between a robust, resilient and resolvable financial sector and a vibrant, growing economy.” Visit AFME's CRDV/CRRII page – Ends –

Commenting on the publication today by the European Commission of the legislative proposal on insolvency, Simon Lewis, Chief Executive of AFME, said: “The Commission’s proposed directive on insolvency reform is a big step in the Capital Markets Union project as it addresses the problems caused by divergent national insolvency regulations across Europe. “Successful implementation of minimum standards will require consistent adoption at member state level. AFME has long advocated closer harmonisation of insolvency standards across Europe to embed key elements of effective insolvency laws and practices into national systems. We are therefore pleased to see this directive published. “Creating a consistent EU insolvency framework will benefit Europe’s capital markets and the economy in general by providing greater certainty for market participants, reducing costs for investors, increasing recovery rates and making it easier to turn around viable businesses.” Press release also available in: French

A new joint report published today by the Association for Financial Markets in Europe (AFME) and New Financial highlights the huge opportunity to develop capital markets in Central and Eastern Europe. The report focuses on 11 high potential economies in Central and Eastern Europe (CEE) which could harness the capital markets to accelerate GDP and productivity growth throughout the region. The report finds that deeper capital markets in these 11 countries could unlock more than €200 billion in long-term capital, as well as more than €40 billion a year in additional funding for companies. The figures come from a new joint report, The Benefits of Capital Markets to High Potential EU Economies, which measures the size, depth and growth potential of capital markets in the EU11 countries, examines their financial systems and reform programmes; and considers the outlook for long-term growth. Paul McGhee, Director of Strategy at AFME, said: “Our report highlights the economic prize from continuing to deepen capital markets across Europe and suggests that the CEE countries could be the biggest beneficiaries of Capital Markets Union. CMU is a vital long-term reform which can bring fresh impetus to the European economy." William Wright, Managing Director at New Financial, said: “This report confirms that there is a huge opportunity for countries in Central and Eastern Europe to develop deeper capital markets to diversify sources of funding and help build pools of long-term capital, which in turn could help kick-start the sort of growth that they enjoyed before the financial crisis. It also underlines that smaller economies with less developed capital markets stand to gain most of all from the Capital Markets Union initiative. The EU, national governments and market participants all have important roles to play in helping to develop capital markets in future.” Following a sustained period of catch-up growth in the previous decade, economic growth in the 11 economies has halved since the financial crisis, with the slowdown in GDP and productivity growth coinciding with a falling investment rate. The banking system in the EU11 has deleveraged since 2008, particularly in the Baltic and Balkan economies, which has contributed to lower investment rates in the EU11. Today companies in the EU11 rely heavily on retained profits to fund investment: capital markets could provide a vital source of additional funding. Between them, the EU11 countries account for 20% of the EU’s population, 8% of its GDP, but only 2.5% of capital markets activity. On average, capital markets in the EU11 states are one third as developed as in the EU as a whole when measured across 23 different sectors of activity relative to GDP. Furthermore, companies in the EU11 are more heavily reliant on bank lending than in the rest of the EU with bank lending representing 85% of corporate debt compared with the EU average of 75%. The report reviews the steps that national governments, local market participants and the EU institutions are already taking to encourage the development of capital markets, and suggests some policy proposals to support further growth. These include: Promoting the growth of national pension systems to provide a larger domestic investment pool; Easing investment regimes for institutional investors to allow investment in a wider range of assets; Encouraging diversification of financing sources for growth companies and promoting alternative financing for SMEs; Developing local financial market infrastructure - potentially through regional collaboration; Encouraging entrepreneurship and improving the framework for business restructuring; Supporting local issuers in accessing capital markets through financial literacy programmes; Encouraging state-owned enterprises to issue bonds or carry out IPOs; Providing institutional support for developing the necessary capital markets reforms tailored to the local business environment. The benefits of capital markets to high-potential EU economiesis available on the websites of AFME and New Financial. Please note this press release is also available in: French German Spanish Italian Polish Slovenian Romanian

Commenting on the publication today of the FCA’s corporate and investment banking study and a consultation paper on the proposed prohibition of certain contractual clauses in engagement letters, Simon Lewis, Chief Executive of the Association for Financial Markets in Europe (AFME), said: “We welcome the completion of the market study and note that the final report confirms the interim report’s general conclusion about the current provision of capital markets services. "We also note that in the final report the FCA is only proposing specific measures in relation to league table presentation and the prohibition of certain clauses in engagement letters.” With respect to those specific areas which the FCA considers need improvement, AFME will work with the FCA and its members to find solutions to the issues raised and notes with approval the FCA’s decision not to publish rules on league table presentations. In particular, AFME will: continue to contribute to the IPO reform process which is currently underway; play a coordinating role in creating industry guidance on the use of league tables in client presentations; participate in the consultation published today, whilst maintaining the view that any prohibition of the type proposed should be limited - Ends -

Eight leading European trade associations representing investors, originators, issuers and other market participants have today released a paper highlighting the importance of securitisation for jobs and growth in Europe, and underlining their commitment to supporting a safe and sustainable market that serves the real economy. Ahead of tomorrow’s meeting public exchange in the European Parliament where MEPs will discuss proposed amendments to the draft regulation for Simple, Transparent and Standardised (“STS”) securitisation, the associations have published a paper to make a positive case for the revival of securitisation for the benefit of Europe’s businesses, borrowers and consumers. The associations say that policymakers are right to raise questions around the risks and benefits of seeking a revival of securitisation in Europe. Their joint trade paper sets out to address these issues. The Association for Financial Markets in Europe (AFME), the Dutch Securitisation Association (DSA), the European Banking Federation (EBF), the European Fund and Asset Management Association (EFAMA), LeaseEurope and Eurofinas, the International Capital Market Association (ICMA) and Pensions Europe have all signed the paper and make the following key points: Securitisation can support SMEs and households in many different ways; A revival of sound securitisation can help diversify risks, thereby making the financial system more stable; A well-designed STS framework will deliver “simple”, “transparent” and “standardised” securitisations; Transparency and disclosure standards are already robust– further requirements should build on existing infrastructure and be carefully calibrated; The lessons of the crisis have been learned and reflected in EU regulations; Investor due diligence is important, but unnecessary duplication should be avoided as it disincentivises investment; Risk retention is important: the existing rules ensure alignment of interests and sufficient “skin in the game” for those who securitise; Tranching is common across all debt markets and is an essential feature of the securitisation technique to meet investors’ needs. As a key component of the Commission’s flagship Capital Markets Union initiative, the associations believe that a new STS securitisation framework could generate EUR 100-150 billion in additional funding for the real economy and act as a key driver in encouraging investor participation in European capital markets. The associations hope the paper will make a useful contribution to the ongoing European debate on this topic and urge EU legislators to bear these themes and arguments in mind as the debate progresses.

Commenting on the statement made today by Prime Minister, Theresa May announcing Article 50 will be triggered by the end of March 2017, Simon Lewis, Chief Executive of the Association for Financial Markets in Europe, said: "Now there is a clear timeline emerging for the formal exit of the UK from the EU, which will bring about more certainty for financial services. However, with Article 50 now due to be triggered in the coming months, it is important to consider the impact this will have on business and whether transitional arrangements may be helpful to mitigate any negative consequences. There is much practical work that needs to be done to understand the operational impact of Brexit on Europe's capital markets and to ensure that the outcome works for the UK and the EU27."