Commenting on the consultation published by the Fair and Effective Markets Review, Simon Lewis, Chief executive of the Association for Financial Markets in Europe (AFME), said: "We welcome the consultation document published today by the Fair and Effective Markets Review. The questions around structure and conduct raised in the paper are far-reaching and challenging for the global fixed income, currency and commodity markets, but highly relevant and we and our members look forward to engaging with the Review in the months ahead to help ensure that there are effective market solutions to the issues identified”. -ENDS-

Commenting on the results of the EU-wide stress test and asset quality review, Simon Lewis, Chief executive of the Association for Financial Markets in Europe (AFME), said: "AFME welcomes the release of the results of the EU-wide stress test and asset quality review. The results of these tests – the most stringent so far - clearly demonstrate the overall robustness of the European banking sector and provide welcome improvements in transparency on risk exposures. “AFME strongly supports the objectives of these exercises as key elements in ensuring the future resilience of the financial industry in Europe. They bring clarity and comparability to the strength of European banks, encouraging where necessary the repair of balance sheets and, ultimately, bolstering confidence in the European banking system. “Today’s announcement also marks a major milestone in the successful implementation of the Single Supervisory Mechanism and Banking Union more generally, which will play a significant role in promoting financial soundness, strengthening the internal market, fostering economic growth and securing the stability of the Eurozone.” -ENDS-

AFME and its members note the publication today of the EBA’s report on the use of allowances as part of banks’ compensation arrangements. We agree with the EBA that appropriate remuneration policies are an important tool for aligning employee incentives with the risk strategy and profile of institutions. However, given that CRDIV offers little guidance, we are unclear how the EBA has derived the detailed characteristics it suggests be applied for classifying allowances into the variable or fixed parts of remuneration. In our view this requires a great deal more discussion, analysis and consultation. We will therefore be actively engaging in the forthcoming consultation process that will take place before the EBA issues final Guidelines. Overall, we do not want a counterproductive outcome where the rules both prevent banks from competing for talent in global markets, and force them to increase base salary. This would be in nobody’s interest. It would undermine the ability of banks to use remuneration to guide staff behaviour and reduce banks’ ability to respond to any downturn in business, potentially threatening financial stability. ‐ENDS‐

Commenting on the adoption by the European Commission of a Delegated Act containing implementing rules for Solvency II today, Sidika Ulker, Director, Capital Markets at the Association for Financial Markets in Europe (AFME), said: “There is much to welcome in the proposed Solvency II Delegated Act. To start with, this is the first official recognition by both the European Commission and EIOPA that high quality securitisation should receive a more favourable regulatory treatment. In addition, the Delegated Act deliberately seeks consistency with related regulations such as the definition of High Quality Liquid Assets for bank investors. Consistency is key in this context. “While these are positive steps, unfortunately key provisions of the Delegated Act mean that insurance companies will remain disincentivised to invest in high quality securitisation, which helps fund the real economy, for the following reasons: The charges for type 1 securitisations (AAA-rated), despite having been substantially reduced, remain too high: securitisation spreads will not be sufficient to make investments attractive once the capital charges are applied. The classification of all non-senior tranches as Type 2 securitisations creates severe cliff effects between the capital charge treatment of senior and non-senior securitisations. For example, the senior tranche of a 5-year AAA-rated RMBS would receive a capital charge of 10.5% and the non-senior would receive a charge of 67%. This distortion is even more marked for securitisations which require greater credit enhancement, such as SME securitisations. The concept of look-through, which aims to cap the capital charges for Type 1 to be no greater than 3% (the charge of underlying loans), will not be effective for mortgages. Direct investment in pools of mortgage loans will continue to receive significantly lower capital charge treatment, creating adverse investment incentives. For example, a 5 year AAA-rated RMBS will receive a capital charge of 10.5%; however, direct investment in a whole loan pool comprised of the same mortgages will receive a capital charge of just 0-3%. “Further, we believe, as the ECB and Bank of England have recognised, that if a securitisation is high quality, the whole transaction (not just the senior tranche) should be treated as such. We very much hope that the European Commission will review the treatment of securitisation at the first possible opportunity in order that Solvency II may truly achieve the broader objective of reviving the high quality securitisation market to help support growth in Europe.” -ENDS-

Commenting on the unveiling of the details of the European Central Bank’s Asset-Backed Securities (ABS) purchase programme today, Richard Hopkin, Head of Fixed Income at the Association for Financial Markets in Europe (AFME), said: “AFME appreciates the continuing support of the ECB for the European securitisation market in the form of today's announcement of more details of the ABS Purchase Programme ("ABSPP"). However, while the programme is very welcome, as President Draghi himself has acknowledged, in isolation it will not be sufficient to restore the European securitisation market. “We believe that public sector investment, including in mezzanine tranches, will not be required if sufficient private sector demand can be generated. For that to happen, key regulations on capital charges, such as Solvency II and the Basel 269 RWA proposals, will need to be well-calibrated to encourage, not dissuade, private sector investors to participate - at both senior and mezzanine levels of risk - complementing and supporting the ABSPP. ” -ENDS-

Commenting on the unveiling of the new European Commission today, Simon Lewis, Chief Executive of the Association for Financial Markets in Europe (AFME), said: “AFME welcomes today's announcement by President-elect Jean-Claude Juncker on the composition of the new European Commission. We are confident the new Commission will be able to drive the measures necessary to return the EU to solid and sustainable economic growth and prosperity. “AFME also congratulates Jonathan Hill on his appointment as the new Commissioner responsible for Financial Stability, Financial Services and Capital Markets Union. This recognises the importance of Europe’s capital markets at a crucial moment, as an unprecedented array of new regulatory measures reach the implementation phase. We look forward to providing the industry assistance necessary to ensure the reforms deliver an efficient, well-integrated financial services market, supporting growth in the European economy.” -ENDS-

Commenting on the Prudential Regulation Authority’s (PRA) policy statement, in response to feedback received from the consultation on clawback, Simon Lewis, Chief Executive of the Association for Financial Markets in Europe (AFME), said: “AFME and its members support remuneration policies, such as appropriately calibrated clawback rules, that foster sound risk management and avoid incentives for excessive risk taking and short‐termism. In respect of the competitiveness of the UK financial services sector, while we note that some of the industry’s comments have been addressed in the PRA’s response, we remain concerned about the lack of coordination of clawback arrangements at the international level.” -ENDS-

Washington, D.C. and London, June 13, 2014 – SIFMA President and CEO Kenneth E. Bentsen, Jr. and AFME CEO Simon Lewis today issued the following statement in response to remarks by Michel Barnier, European Commissioner for Internal Market and Services, at the Peterson Institute for International Economics regarding developments in US-EU financial services and a Transatlantic Trade and Investment Partnership (TTIP): “SIFMA and AFME believe it is imperative that financial services regulatory coordination be included as a key component of TTIP, and we commend Commissioner Barnier for his focus on this issue. A financial services regulatory framework between the US and EU would enhance coordination, reduce conflict and confusion, and improve the efficiency of regulations across borders. We urge policymakers to capitalize on this opportunity provided by TTIP to promote consistent high-quality regulatory standards in global markets and economies that are closely intertwined.” -30- The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org. The Association for Financial Markets in Europe advocates stable, competitive and sustainable European financial markets, which support economic growth and benefit society. AFME (Association for Financial Markets in Europe) promotes fair, orderly, and efficient European wholesale capital markets and provides leadership in advancing the interests of all market participants. AFME represents a broad array of European and global participants in the wholesale financial markets. Its members comprise pan-EU and global banks as well as key regional banks, brokers, law firms, investors and other financial market participants. AFME participates in a global alliance with the Securities Industry and Financial Markets Association (SIFMA) in the US, and the Asia Securities Industry and Financial Markets Association through the GFMA (Global Financial Markets Association). For more information please visit the AFME website, www.afme.eu.

In response to the announcement by the UK Treasury of a “Fair and Effective Financial Markets Review,” Simon Lewis, Chief Executive of the Association for Financial Markets in Europe, commented: “AFME supports measures designed to preserve and increase confidence in the fixed income, currency and commodity markets. These markets underpin global trade and investing, serving the interests of end users such as institutional investors, companies and governments. It is critical that they remain fair, transparent and competitive, and to this end we welcome the Review’s areas of focus. Our members are international firms active in global markets, and it is important as the review progresses that it takes account of the broader regulatory agenda so that any further proposals dovetail with measures already in place at the European and international level. We look forward to engaging with the detailed work of the Review.” ‐ENDS‐

The Association for Financial Markets in Europe (AFME) has welcomed the discussion paper, ‘The case for a better functioning securitisation market in the European Union’, published today by the Bank of England (BoE) and the European Central Bank (ECB). “The paper summarises concisely what went wrong during the financial crisis, and helpfully acknowledges the steps already taken in Europe to address those shortcomings, as well as the strong performance of high‐quality securitisation in Europe,” commented Simon Lewis, Chief Executive, AFME. “Most importantly, the paper poses several interesting ideas for further discussion – most significantly, the concept of ‘qualifying securitisations’. This fits well with recent calls by the European Commission to revive a sustainable market for high‐quality securitisation in Europe, as well as the analysis currently being undertaken by the European Banking Authority. He added: “AFME and the industry are keen to continue our constructive engagement with the Bank, the ECB, the Commission and other policymakers to continue to develop this concept. Much work remains to be done, and there remain difficult challenges to resolve – for example, how to avoid cliff effects; how to address the different motives behind any single definition of ‘high quality’; and how to strike the right balance between meeting the needs of the real economy, while maintaining high quality. “We believe it is crucial for industry and policymaker discussions to converge in a single forum, where we can all work together in a co‐ordinated way. The prize will be an agreed standard that can be applied widely, usefully, easily and clearly to help revive European high‐quality securitisation.” ‐ENDS‐