The Association for Financial Markets in Europe (AFME) and the European Financial Services Round Table (EFR) today announced the launch of Prime Collateralised Securities (PCS) ‐ an industry‐led, nonprofit project to develop a label for high quality securitisations which meet best practice in terms of quality, transparency, simplicity, and standardisation. With the first label expected to be granted by the PCS Secretariat towards the end of this year, a number of key milestones have been reached: establishment of the PCS Association and the PCS Secretariat as bodies to respectively govern and operationally administer the PCS label; the appointment of the Head of the PCS Secretariat; identification of asset classes and structures which are eligible and not eligible for the label; compliance with required loan by loan reporting standards of the ECB and Bank of England; the fundraising target was fully achieved. Access to securitisation markets for issuers is becoming increasingly important to overcome a real economy funding shortfall1 in Europe. Asset Backed Securities can be an important component of the instruments that investors have available to them, especially as they do not use up the same credit line capacity as other investments, such as corporate bonds and covered bonds. Yet, despite the very strong underlying performance of European asset backed securities since 2007, a smaller investor base and the reduced level of issuance over this period could have knock on effects for companies reliant on capital markets funding, as well as Europe’s broader economic recovery. The PCS initiative ‐ developed by a broad group of market professionals comprising issuers, investors arrangers, and other market participants, in collaboration with other European industry associations, as well as observers such as the European Central Bank, European Investment Bank and Bank of England ‐ will comprise a two‐tier governance structure: a PCS Association, comprising independent non‐industry directors, as well as a mix of industry professionals; a PCS Secretariat, led by experienced industry professional Ian Bell, responsible for the day‐to‐day administrative and managerial operations. The PCS Secretariat will grant the PCS label to securities, certify a transaction and monitor the label after it is issued. Recent estimates show that €650 billion of senior unsecured and covered bond funding will mature in 2012 for European banks; for sovereigns, funding of over €900 billion will be needed and that an additional €1.5 – €1.9 trillion of funding will be needed to power any growth. Sources: Bloomberg and BAML Global Research Dec 2011, Standard & Poor's May 2012. PCS is more than just a positive label for eligible securitisations – it provides the basis for a definition of agreed market standards, as well as an enforcement mechanism of these agreed standards, based on a label which can be granted and withdrawn depending on compliance and as verified by the PCS Secretariat. Rick Watson, Head of Capital Markets at AFME, commented: “Investors and regulators need a clear reference point, setting out best practices around which to build investment guidelines and regulations, which, in turn, will encourage issuance as well as investment and support the real economy. Combining the expertise and market coverage of both AFME and EFR members has resulted in the ability to move forward on this very important initiative. “PCS will bring added quality, transparency and standardisation to the market, which will deepen the securitisation investor base in Europe and, in turn, improve overall liquidity. Europe needs a healthy securitisation market and we are confident that this initiative, alongside regulatory changes, will provide a significant boost to the market.” Sebastian Fairhurst, the EFR’s Secretary‐General, commented: “The PCS label will be awarded on a deal‐by‐deal basis and subjected to a verification process by the newly established PCS Secretariat. It will be granted to transactions backed by asset classes that have performed extremely well through the financial crisis and are of direct relevance to the real economy, including European auto, residential mortgage, SME, consumer and credit loans. “Issuers will need to provide high quality reporting on an ongoing basis, in accordance with the relevant ECB and Bank of England reporting standards.” Ian Bell, PCS’s newly appointed Head of Secretariat, commented: “It’s exciting to be part of such an important industry initiative, which has seen so much support from investors, issuers and policymakers alike. With commitments to fully fund PCS’ first two years of operations from over 30 institutions in the industry, PCS demonstrates the seriousness of the industry’s intent to establish a vibrant, yet robust European securitisation market capable of funding the growth Europe so badly needs." ‐ENDS‐

I am writing on behalf of AFME (the Association for Financial Markets in Europe) to respond to the Accounting Standards Board’s (“the ASB’s”) January 2012 Financial Reporting Exposure Drafts on the future of financial reporting in the UK and Republic of Ireland (“the FREDs”). AFME is, as you know, the leading European trade association for firms active in investment banking and securities trading and thus represents the shared interests of a broad range of participants in the wholesale financial markets. We welcome the opportunity to respond to these latest FREDs, and we commend the ASB for its continued consultation on this important topic. As noted in our letter of 21 April 2011, in which we commented on the ASB’s previous UK GAAP proposals, the great majority of AFME members are large financial institutions with trading operations in a significant number of countries, both inside and outside the EU, and securities listed on one or more exchanges. Their interests therefore focus on only certain limited sections of the proposals, and this is reflected in our comments below. As explained in our responses to Questions 1 and 2, a key concern with the current proposals is the exclusion of financial institutions from the exemption for financial instrument disclosures. Given, amongst other factors, the focus of users on consolidated financial statements (which is acknowledged in the FREDs) we believe the disclosure exemptions should be applied consistently to all wholly owned subsidiaries, provided that the relevant information is presented in publicly available consolidated financial statements that include the entity concerned. Moreover, as financial institutions that are wholly owned subsidiaries are currently eligible for exemption from the financial instrument disclosures in FRS 29 (IFRS 7): Financial Instrument Disclosures, we believe the present proposal provides an unnecessary element of “gold plating” in this respect, which contravenes the principle set out in sub-paragraph 3.11(c) of Part One of the FREDs. Association for Financial Markets in Europe St. Michael’s House, 1 George Yard, London EC3V 9DH, United Kingdom T: +44 (0)20 7743 9300 F: +44 (0)20 7743 9301 www.afme.eu Company Registration No: 6996678 European Union Register of Interest Representatives No: 65110063986‐76 Our responses to the questions set out on pages 9‐10 of Part One of the FREDs are set out below. Q1 The ASB is setting out the proposals in this revised FRED following a prolonged period of consultation. The ASB considers that the proposals in FREDs 46 to FRED 48 achieve its project objective: To enable users of accounts to receive high­quality, understandable financial reporting proportionate to the size and complexity of the entity and users’ information needs. Do you agree? A1 We support the stated project objective, which we believe is generally achieved by the proposals. We note in particular that the proposal acknowledges that users generally focus on the consolidated financial statements rather than those of wholly owned subsidiaries, and that the proposals therefore provide reduced disclosure requirements for wholly owned subsidiaries, an approach which we support. As already stated, however, we believe this principle should be consistently applied, and that wholly owned subsidiaries that happen to be financial institutions should also be permitted to use the exemption from financial instrument disclosures since this information will be available for users in the consolidated group financial statements. We note also that financial institutions that are wholly owned subsidiaries are currently eligible for exemption from the financial instrument disclosures contained within FRS 29, and we are not aware of any user demand for these disclosures to be provided at the individual legal entity level. On this basis, we believe the existing exemption should be retained in the ASB’s revised reporting requirements. Q2 The ASB has decided to seek views on whether: As proposed in FRED 47 A qualifying entity that is a financial institution should not be exempt from any of the disclosure requirements in either IFRS 7 or IFRS 13; or Alternatively A qualifying entity that is a financial institution should be exempt in its individual accounts from all of IFRS 7 except for paragraphs 6, 7, 9(b), 16, 27A, 31, 33, 36, 37, 38, 39, 40 and 41 and from paragraphs 92­99 of IFRS 13 (all disclosure requirements except the disclosure objectives). Which alternative do you prefer and why? A2 As already noted, we believe the reduced disclosure framework should be applied consistently to all entities, including financial institutions, given the focus of users on consolidated financial statements and the existing availability of this exemption to financial institutions under FRS 29. Notwithstanding the above, we believe the first of the stated alternatives ‐ the FRED 47 proposal ‐ will be clearer and easier to apply. Q3 Do you agree with the proposed scope for the areas cross­referenced to EU­adopted IFRS as set out in section 1 of FRED 48? If not, please state what changes you prefer and why. A3 We do not believe our members will be significantly affected by this aspect of the proposals and therefore have no comment on this question. Q4 Do you agree with the definition of a financial institution? If not, please provide your reasons and suggest how the definition might be improved. A4 While in general supporting the definition of a financial institution, we note that it appears, as currently drafted, to exclude broker‐dealer entities. As the nature of broker‐dealer activities is consistent with that of institutions included in the scope of the proposed definition, we believe it would be appropriate for broker‐dealers also to be included. We understand from your colleagues that it is the ASB’s intention to clarify/amend the FREDs so as to ensure that broker‐dealer entities fall within the definition of a financial institution, and we would therefore support such a change. Q5 In relation to the proposals for specialist activities, the ASB would welcome views on: (a) Whether and, if so, why the proposals for agriculture activities are considered unduly arduous? What alternatives should be proposed? (b) Whether the proposals for service concession arrangements are sufficient to meet the needs of preparers? A5 Our members will not be affected by these aspects of the proposals and we therefore have no comment on this question. Q6 The ASB is requesting comment on the proposals for the financial statements of retirement benefit plans, including: (a) Do you consider that the proposals provide sufficient guidance? (b) Do you agree with the proposed disclosures about the liability to pay pension benefits? A6 Our members will not be affected by the proposals for the financial statements of retirement benefit plans (at least in relation to their role as AFME members), and we therefore have no comment on this question. Q7 Do you consider that the related party disclosure requirements in section 33 of FRED 48 are sufficient to meet the needs of preparers and users? A7 We believe the disclosure requirements in section 33 of FRED 48 should be sufficient to meet the needs of both preparers and users. In particular, we support the ASB’s decision to retain the existing exemption from the related party disclosure requirements for transactions between wholly‐owned members of a group. In our view, disclosure of such transactions adds little if any useful information at the subsidiary level. The volume of such transactions can however be significant, making it onerous for preparers to collect the relevant information, and we therefore believe any benefit to users from providing such disclosures will be far outweighed by the cost to preparers of producing the information. Retaining this exemption is also consistent with the focus of users on the consolidated group financial statements as transactions between members of a wholly owned group will be eliminated on consolidation. Q8 Do you agree with the effective date? If not, what alternative date would you prefer and why? A8 While sympathetic to the conflicting demands on the ASB in regard to introducing the proposed changes, we remain concerned that the proposed effective date may not be realistic given the major changes currently being developed in IFRS, particularly in relation to those standards that may have significant operational impacts, such as impairment of financial assets and leases. As noted in our letter of 21 April 2011 on the ASB’s previous proposals, it is difficult to determine operationally how the ASB’s proposed effective date will impact the implementation efforts of preparers when the IASB has still not finalised the effective dates for all of its new standards. We therefore recommend that the ASB should reconsider the effective date for its current proposals once the IASB has determined the implementation timetable for its own new standards. Q9 Do you support the alternative view, or any individual aspect of it? A9 We do not support the alternative view. Although we believe its stated objective to be broadly consistent with the ASB’s stated objective, we think many of the points made in respect of complexity would be more appropriately addressed specifically to entities which report under the FRSSE, rather than to the broad range of companies at which the FREDs are directed. We also believe that introducing alternative accounting methodologies, formats and treatments adds complexity, and would undermine the key objective of introducing a consistent accounting framework for all companies reporting under UK GAAP.

Q: Can you outline what proposals have been issued earlier this week by the Federal Deposit Insurance Corporation (FDIC) and Bank of England paper? The US Federal Deposit Insurance Corporation and the Bank of England issued a joint paper entitled ‘Resolving Globally Active, Systemically Important Financial Institutions’ which discusses how UK and US regulators plan to deal with global systemically important financial institutions – or G‐Sifis ‐ that fail across the two jurisdictions. The paper focuses on ‘top down’ resolution strategies that involve a single resolution authority applying its powers to the top of a financial group – that is, at the parent holding company level – while keeping bank, securities and other operating subsidiaries out of resolution, insolvency or administration. These strategies are designed to solve the ‘too big to fail’ problem by providing an alternative to the toxic choice between taxpayer‐funded bailouts and liquidations that can destabilize the financial system. The broader goal is to produce resolution strategies that can impose losses on a firm’s shareholders and debtholders, rather than taxpayers, while maximizing the group’s franchise value and maintaining its systemically important operations. This will provide a credible alternative to the toxic choice between taxpayer bailouts and destabilization of the financial system. Q: What’s the significance of these proposals? Ever since the collapse of Lehman Brothers and the bailout of AIG and other firms four years ago, policymakers have been debating how best to develop a resolution framework that will effectively deal with a failing institution without a destabilizing liquidation like Lehman or a bailout like AIG. In light of the fact that 12 of the world’s 28 G‐Sifis are based in the UK or US, this paper is a major contribution to that debate. Q:o you agree with the approach taken in the paper? Yes, we strongly agree with top‐down resolution strategies, when they are appropriate. They can be effective in resolving most G‐SiFis by imposing the losses of the G‐SiFi on its shareholders and debtholders, instead of taxpayers, while maximizing its franchise value and preserving the systemic operations of its operating subsidiaries. There has been some press comment suggesting that GFMA is not supportive of the top down approach to resolving G‐SiFis. However, this is categorically not the case. GFMA strongly supports the joint paper – our members believe that no financial firm should be ‘too big to fail’ or have to rely on taxpayer support for its survival. The paper provides a helpful explanation of the approaches that each of the US and UK authorities would take to resolution of G‐Sifis via a single point of entry route. Although the main focus of the paper is on a ‘single point of entry’ resolution approach, the joint paper itself acknowledges that the US and UK would apply different versions of this approach because of the differing legal structures and funding approaches of their G‐SiFis. It also points out that the top‐down approach may “not necessarily be appropriate for all UK G‐SiFis in all circumstances. Other strategies may be more appropriate depending on the structure of the group, the nature of its business, and the size and location of the group’s losses.” We agree with this qualification as much as we agree with top down strategies, when they are appropriate. In other words, as we pointed out in our recent comment letter on the Financial Stability Board’s Consultative Document on Recovery and Resolution Planning, we do not believe that one size fits all financial firms. Different resolution models or ‘presumptive paths’ may be necessary, depending on a firm’s corporate structure, size, complexity, funding structure, or other characteristics or circumstances. Q: So you think resolution authorities should have some flexibility in their approach? Yes, although as we pointed out in our recent comment letter to the FSB, we think that pre‐vetted resolution strategies are necessary to provide host‐country regulators, depositors, creditors, equity holders, counterparties and financial market infrastructures, among others, with a reasonable degree of confidence of how a particular G‐SiFi will be resolved in a failure scenario. As the joint FDIC / Bank of England paper acknowledges, resolution authorities need some flexibility to deviate from the ‘presumptive path’ in order to adapt to particular circumstances at the time of a particular firm’s failure. The development of firm‐specific cross‐border cooperation agreements will be a key component to achieve the right balance between predictability and flexibility. Any bilateral agreement between the UK and US could act as a framework for and supplement to individual firm specific cross‐border cooperation agreements. Q: How does the joint paper fit in with the other resolution programmes in development at G20 and European level? Importantly this joint paper is set against the framework established by the Financial Stability Board (FSB) and is consistent with the FSB’s Key Attributes of Effective Resolution Regimes for Financial Stability. GFMA views the proposals as being in line with FSB, European Union and US resolution laws. Q: What are next steps? The proposals in the joint FDIC / Bank of England paper are likely to be discussed further with a view to developing cross‐border cooperation agreements. In addition, we believe policymakers in other jurisdictions will be examining the proposals contained in the paper with great interest.

Proposed Solvency II rules around securitisation will dramatically reduce the willingness of insurers to invest in securitisation assets, according to the Securitisation Investor Survey, a new survey of leading asset managers and insurance companies carried out by the Association for Financial Markets in Europe (AFME). AFME canvassed the views of 27 Europe-based insurance companies and asset managers who collectively hold or manage more than €5 trillion in global assets. A third (33%) of insurers polled said the new rules would stop investment altogether, with the remaining two-thirds (67%) saying they would dramatically reduce allocation of funds to the securitisation sector. In late 2011, the European Commission proposed Solvency II capital charges of 7% of market value per year of duration on AAA-rated securitisations held by insurance companies, compared with 0.9% for corporates and 0.7% for covered bonds. Significantly, more than one in five insurers (22%) who stated that they would withdraw from the securitisation market now if the proposed rules were enacted, said they would never return - even if the capital charges were in future reduced to levels more comparable to those of corporates and covered bonds. Of those who would return, 63% said that any return would take more than one year, with almost a fifth saying it would take three years or more. Moreover, the proposed capital charges have been calibrated using a flawed methodology by including historic and largely US-sourced bonds that are no longer issued and would be prohibited anyway for investment by European insurers. The charges, therefore, not only fail to reflect the economic risks of permitted investments, they also fail to distinguish between different types of risk. Furthermore, they have not been consistently applied across all asset classes. AFME’s Securitisation Investor Survey also found that: • 85% of investors, who noted that the proposed Solvency II rules would result in a reallocation of funds, indicated that at least half of these funds would be reallocated away from securitisation. • Over half (56%) indicated that the proposed capital charges would incentivise them to develop their own internal models to calculate their own capital charges. However, over half of respondents also believed that their regulator would not approve their internal model if the results were materially different from those generated by the standardised approach. Commenting on the ‘Securitisation Investor Survey’ findings, Rick Watson, a managing director at the Association for Financial Markets in Europe said: “Many European policymakers acknowledge that Europe very much needs a healthy securitisation market to help support its economic recovery, particularly in light of European Central Bank estimates that European banks will need €1 trillion of funding over the next two years. Given insurers are a key investor group, these findings raise serious concerns. “The survey shows that Solvency II capital charges will have a direct negative impact on securitisation investment. Once this investment disappears, it could take a long time for it to return. “Much of this calibration has been based on a misperception of the sector as being high risk and badly performing. This reputation is undeserved since the performance of European securitisation has been very good. For example, since 2007, only 0.07% of European residential mortgage-backed securities have defaulted, and price performance has been better than many senior bank debt, covered bond and European sovereign debt issues. “We urge policymakers to conduct further analysis using more appropriate calibrations for assessing securitisation capital charges that properly reflect the economic risks of the investments.” -ENDS-

Commenting on the European Commission’s Green Paper on shadow banking, issued today, Simon Lewis, AFME’s chief executive said: “Shadow banking poses particular challenges for regulators who must address the potential systemic risks posed by entities that undertake bank‐like activities in an integrated and proportionate way without undermining the benefits they bring in diversifying risk and supporting economic growth. “Given changes to global banking regulations, it is particularly important that capital markets‐based financing be encouraged to help businesses access the widest possible sources of funding in order that they can fully contribute to the growth of the economy. AFME welcomes the opportunity to engage with policymakers to develop the most appropriate market infrastructure to allow for this much-needed growth, whilst also mitigating any potential systemic risk.”

Commenting on today’s announcement by the European Securities and Markets Authority (ESMA) that credit rating agency regulation in US, Canada, Hong Kong and Singapore is in line with European rules, Mark Bearman, a director at the Association for Financial Markets in Europe (AFME) said: “ESMA’s announcement should allow firms to continue to use ratings from these major jurisdictions, thereby avoiding the potential for multiple increases in regulatory capital requirements. The inability of banks to use ratings from these third-country jurisdictions could also have led to increased concentration risks, unintended consequences for the management of liquidity and the non-viability of some business models, so this is good news for the industry and alleviates much of the impending market disruption. “Similar announcements in relation to the ability to use ratings from Mexico, Brazil and Argentina would be welcome ahead of the end-April deadline.” - ENDS -

Commenting on the publication today of the UK’s Financial Services Authority’s finalised guidance on ‘FG12/06: Collateral upgrade transactions (includes liquid) said: “In its Guidance, the FSA has recognised that ‘collateral upgrade transactions’ bring real benefits to the economy. We believe that they not only provide an alternative means to utilise excess liquidity, they also provide an important source of liquidity to enable banks to lower their liquidity risks, an increasing priority in light of existing and forthcoming liquidity regulation ­ for example, CRD IV. “The Guidance also identifies the potential risks associated with collateral upgrade transactions, such as asset encumbrance, and recognises that these should be dealt with in a broader risk management framework applicable to all forms of collateralised borrowing transactions. We hope that European policymakers and regulators approach these collateral upgrade transactions in a similar way.” The FSA finalised guidance can be found at http://www.fsa.gov.uk/library/policy/final_guides/2012/fg1206

Dear Secretary Geithner and Commissioner Barnier: On behalf of the Global Financial Markets Association (GFMA)[1], whose members represent the common interests of the world’s leading financial and capital market participants, we write to express strong concern that regulation in different G20 jurisdictions may be creating conditions which could result in a fragmented transatlantic capital market. Given your forthcoming meeting we wanted to take the opportunity to draw your attention to the numerous extraterritorial issues, both new and previously raised, that risk impeding or disrupting the efficient functioning of our global financial markets. In particular, we are concerned about duplicative, incompatible, or conflicting requirements, regulatory uncertainty, and the impact that these will have on competition and consumer choice. Fragmented or conflicting regulation – even when the policy objectives are the same – would negatively impact the ability of market users and participants to raise capital, manage risk and contribute to economic growth. In April 2010, two of our member associations, AFME and SIFMA wrote to you – in the context of the US-EU Financial Markets Regulatory Dialogue (the “FMRD”) and the financial regulatory reform programme being developed in light of G20 priorities. We emphasized that such a programme should seek to achieve consistent results which do not adversely affect our Members’ ability to provide the products and services that their customers demand. Since we last wrote the regulatory community has driven forward with the FSB reform programme, and we have been exploring the extent to which extraterritorial regulatory provisions are giving rise to difficulties in both interpretation and practice. Our present work follows on from the joint paper on issues affecting derivatives, and we remain concerned that extraterritorial regulation may disrupt and fragment the operation of the global derivatives market, and distort competition in that market. However, the scope of our work is now broader and accordingly still very much underway. Moreover, we are concerned about the use of equivalence and other similar forms of determinations – they must be outcomes based, and not used as a tool to export regulations from one jurisdiction to another. Similarly, we believe that policies that promote the concept of reciprocity are equally dangerous and could cause a serious rift. Instead, we encourage use of three “gateways” for modernising the regulation of global business – regulatory recognition, exemptive relief and targeted rules convergence – in solving the difficulties to which extraterritorial measures give rise. Given our concerns, we are of course participating in the parallel follow-up work being taken forward by the EU-US Coalition 3 on these issues. Through the FMRD, and other forums, we respectfully urge you to continue to explore the extent to which the issues that we have identified can be resolved and, to this end, we will be providing our findings to you in the near term. The key issues can be summarised as follows: Duplicative requirements; Incompatible or conflicting requirements; 1 The Global Financial Markets Association (GFMA) brings together three of the world’s leading financial trade associations to address the increasingly important global regulatory agenda and to promote coordinated advocacy efforts. The Association for Financial Markets in Europe (AFME) in London and Brussels, the Asia Securities Industry & Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in New York and Washington are, respectively, the European, Asian and North American members of GFMA 2GFMA with Other Associations Comments to EU Commissioner and US Treasury Secretary Regarding EUExtraterritorial Effects and US Derivatives Regulation(July 2011) 3 In early 2005, a group of leading EU and US financial service industry associations agreed to work together to address the urgent need to simplify the regulation of wholesale Transatlantic financial services business; and subsequently agreed to form themselves into the EU/US Coalition on Financial Regulation. They comprise, currently: American Bankers Association Securities Association (ABASA), Association for Financial Markets in Europe (AFME), Bankers' Association for Finance and Trade (BAFT), British Bankers' Association (BBA), Futures Industry Association (FIA), Futures and Options Association (FOA), International Capital Market Association (ICMA), Investment Industry Association of Canada (IIAC), International Swaps and Derivatives Association (ISDA), Securities Industry and Financial Markets Association (SIFMA), Swiss Bankers Association (SBA) and Observer: European Banking Federation (EBF). The group submitted the following letter: http://www.sifma.org/uploadedfiles/newsroom/2008/us-eucoalition-fin-regualtion-reportmar08.pdf(March 2008) Reduction of consumer choice Distortion of competition; Market fragmentation Impact on clients/counterparties who are not directly subject to regulation; Aspects of mutual recognition in practice; and Regulatory uncertainty. Our shared goal and interest is to implement reforms in a coordinated and consistent manner. We emphasize the urgency of addressing these issues and note that the most recent developments on Legal Entity Identifiers (LEIs) and the Foreign Account Tax Compliance Act (FATCA) demonstrate the extent to which the FMRD, and cooperative dialogue between the industry and regulators, can lead to solutions that meet policy objectives within a framework that allows global firms to respond to their clients’ needs. We appreciate your attention to these issues and look forward to continued dialogue on this ongoing endeavour.

Dear Secretariat, The Global Financial Markets Association (GFMA)1 welcomes the opportunity to comment on the consultative document; Definition of capital disclosure requirements, 19 December 2011. GFMA would like to express its support for the work that the Basel Committee has undertaken to implement clear and comparable disclosure of regulatory capital following the implementation of Basel III, which entails a substantial redefinition of capital. As pointed out in the consultative document, at present, there is no consistent format across all jurisdictions for disclosure of the composition of capital. Moreover, as Basel III introduces significantly more precision in the definition of eligible capital it is appropriate to revisit the existing Pillar 3 disclosure requirements.

The public reporting of certain large equity trades must allow for appropriate delays, but the method proposed for calculating time limits proposed by the European Securities and Markets Authority (ESMA) will only increase costs for investors and issuers, according to a new report, published today by the Association for Financial Markets in Europe (AFME). The ‘Equity Deferred Reporting Blueprint’reportalso concludes that reporting delays permitted under the current MiFID regime, are flawed, since they are based on the value of a trade relative to a historic measure of liquidity – Average Daily Turnover - rather than prevailing market conditions. In addition, changes to the current regime – proposed by ESMA and the European Commission – including raising the minimum qualifying trade sizes and reducing the maximum permitted delays – will increase costs for investors as they are likely to force the premature publication of large trades, allowing short term investors to anticipate and materially affect the price of subsequent related trades. This will be most apparent in less liquid stocks such as SMEs whose cost of capital will, as a direct and predictable consequence, be increased. The AFME study recommends that: Large equity trades are reported as early as possible within permitted delay periods which, importantly, are based on prevailing market conditions; An official European Consolidated Tape – as per the Blueprint published by the European Fund and Asset Management Association in September 2011 – should be implemented and form the measure of liquidity used in calculating the allowable delay period; ESMA assesses alternative approaches to the deferred publication regime and has the power to implement a new regime without undue delay. Commenting on the ‘Equity Deferred Reporting Blueprint’ report, Christian Krohn, a managing director at the Association for Financial Markets in Europe said: “Whilst recognising the need for timely information on trading activity, it is important that reporting rules allow for delays to avoid damaging the returns of investors who act collectively to trade in large sizes. The issue with the current MiFID regime is that permitted delays are based on Average Daily Turnover – which means that a given trade will have the same allowable delay whether it is executed on Christmas Eve or on the day a company announces its results. “To protect the efficiency of this mode of execution there must be an appropriate period of confidentiality when transferring the execution risk of a large trade from one party to another, whilst at the same time, maintaining an appropriate level of transparency. ESMA should reassess deferred reporting requirements, with a view to having reporting delays more closely aligned to prevailing market conditions. A future European Consolidated Tape should form the measure of liquidity used in calculating the allowable delay period.” -ENDS-