AFME principles on asset segregation, due diligence and collateral management
12 Sep 2016
Segregation of client assets and related account structures is a topic deemed of high relevance by policymakers at international level (e.g. by IOSCO’s Principles regarding the Custody of Collective Investment Schemes’ Assets), at EU level (e.g. AIFMD, EMIR, CSDR, UCITS V, MiFID/MiFIR) and at national levels.
Yet such regulatory focus in Europe lacks a comprehensive and holistic approach in terms of the nature of obligations, scope of financial instruments and entities and requirements for collateral treatment.
It is against this background that AFME has engaged in a two-stage project:
to comprehensively analyse existing and proposed regulation that impacts client asset protection, focusing primarily on Europe but with consideration of the broader global context given the nature of the markets in question, and
to develop, based on the conclusions of this analysis and focusing primarily on securities accounts, principles on segregation of client assets and client account holding structures from a holistic and integrated operational, legal and compliance perspective that simultaneously ensure adequate safety of client assets while minimising operational complexity and cost.
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AFME has commissioned a report from PwC, outlining the operational impacts and transformation challenges that Brexit poses to the provision of banking services in the EU.
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\nThe study aims to provide policymakers and other industry stakeholders with a granular, fact-based exposition of the steps that firms are planning to take in order to maintain uninterrupted service to the users of wholesale banking and capital markets services in Europe during and following Brexit.
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Key findings of the report include:
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\n - the Brexit process will be highly complex for wholesale banks and covers many interdependent activities. Firms providing a significant proportion of current industry capacity will need to execute transformation programmes which will extend beyond Article 50 timescales and in many cases up to five years; or even longer if the post-Brexit trading relationship between the EU and UK remains unresolved for a protracted period.
\n - in executing their transformation programmes, banks will be heavily dependent upon timely approval of licenses by new EU regulators. This represents a critical step in the implementation of new business models and is likely to occur at a time when regulators will see a peak in requests following Article 50 activation.
\n - banks are currently proceeding with two-year tactical plans to maintain continuity of service. However, these plans are likely to be sub-optimal for clients and market effectiveness, and will be dependent on reaching agreement about an interim business model that is acceptable to their new EU27 regulators and can be put in place before the UK leaves the EU.
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In order to assist the wholesale banking and capital markets industry support European corporates and continue to help growth across all of Europe the report recommends that policymakers:
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\n - clarify with industry participants as soon as possible the structure of any interim business models that may be deemed acceptable immediately post-Brexit.
\n - set out as soon as possible any future permanent terms for the provision of wholesale banking and capital markets services between the UK and EU post-Brexit.
\n - following Brexit and agreement of any new market access arrangements provide an implementation period of at least three years to allow banks to complete their adaptation, and 'grandfather' transactions that are in force at the time that the UK leaves the EU.
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Click here to read the press release
\n","PublishDate":"2017-02-03T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/planning-for-brexit-tn.jpg?ver=2019-09-11-143713-070","ThumbnailImage":"/Portals/0/DispatchFeaturedImages/afme-pwc-planning-for-brexit.pdf","FriendlyUrl":"planning-for-brexit","Gated":false,"TeaserContent":"
The study aims to provide policymakers and other industry stakeholders with a granular, fact-based exposition of the steps that firms are planning to take in order to maintain uninterrupted service to the users of wholesale banking and capital markets services in Europe during and following Brexit.
\n","Metadata":"{\"Description\":\"The study aims to provide policymakers and other industry stakeholders with a granular, fact-based exposition of the steps that firms are planning to take in order to maintain uninterrupted service to the users of wholesale banking and capital markets services in Europe during and following Brexit.\",\"Keywords\":\"brexit, banking, capital markets, europe, afme, pwc\"}","Featured":false,"DateCreated":"2020-02-28T10:22:25.577","CategoryIds":[1980,1983,1984,1998,2005,2010],"Categories":["Securitisation","Divisions","Capital Markets","Keyissues","Brexit","Technology And Operations"],"Author":"Anonymous","AuthorImage":null,"Tags":"AFME, capital markets, Europe, Banking, Brexit","Background":{},"Views":5903,"Comments":0,"CustomFields":{},"SortOrder":"2017-02-03T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5819,"Active":true,"Published":true,"Draft":false,"Title":"The benefits of capital markets to high-potential EU economies","Content":"
This report, published 15 November 2016, is a collaboration between New Financial and AFME, which analyses the potential role and benefits of deeper capital markets in the high-potential economies in central and eastern Europe.
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The report discusses the extensive efforts of national governments and local market participants to encourage the development of capital markets, and the challenges they are addressing. It also makes some policy proposals for further growth.
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Press releases available in:
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","PublishDate":"2016-11-15T09:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/afme-new-financial-benefits-of-capital-markets-report-thumb.jpg?ver=2019-09-11-143701-370","ThumbnailImage":"/Portals/0/globalassets/downloads/press-releases/2016/Deeper-capital-markets-in-EU11-could-unlock-EUR200-billion-capital.pdf?ver=2019-09-11-143557-633","FriendlyUrl":"the-benefits-of-capital-markets-to-high-potential-eu-economies","Gated":false,"TeaserContent":null,"Metadata":"{\"Description\":\"This report, published 15 November 2016, is a collaboration between New Financial and AFME, which analyses the potential role and benefits of deeper capital markets in the high-potential economies in central and eastern Europe.\\n\\nThe report discusses the extensive efforts of national governments and local market participants to encourage the development of capital markets, and the challenges they are addressing. It also makes some policy proposals for further growth.\",\"Keywords\":\"AFME, Association for Financial Markets in Europe, capital markets, AFME New Financial Benefits of capital markets report\"}","Featured":false,"DateCreated":"2016-11-15T09:00:00","CategoryIds":[1968,1973,1984,1998],"Categories":["Capital Markets Union","Funding For Growth","Capital Markets","Keyissues"],"Author":"Anonymous","AuthorImage":null,"Tags":"AFME, capital markets, Association for Financial Markets in Europe, AFME New Financial Benefits of capital markets report","Background":{},"Views":1549,"Comments":0,"CustomFields":{},"SortOrder":"2016-11-15T09:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5817,"Active":true,"Published":true,"Draft":false,"Title":"European Primary dealers handbook: Q4 2015","Content":"
The AFME European Primary dealers handbook is an invaluable reference work for European government bond market participants, as well as policymakers and journalists. The handbook offers a detailed description of the infrastructure of the primary and secondary markets of European countries and the organisation of each of their Primary Dealer systems.
","PublishDate":"2016-10-27T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/afme-primary-dealers-handbook-q4-2015-thumb.jpg?ver=2019-09-11-143659-637","ThumbnailImage":"/Portals/0/globalassets/downloads/publications/AFME-Primary-Dealers-Handbook-Q4-2015.pdf?ver=2019-09-11-143659-543","FriendlyUrl":"european-primary-dealers-handbook","Gated":false,"TeaserContent":null,"Metadata":"{\"Description\":\"The AFME European Primary Dealers Handbook is an invaluable reference work for European government bond market participants, as well as policymakers and journalists. The handbook offers a detailed description of the infrastructure of the primary and secondary markets of European countries and the organisation of each of their Primary Dealer systems.\",\"Keywords\":\"AFME, Association for Financial Markets in Europe, AFME European Primary Dealers Handbook, AFME European Primary Dealers Handbook Q4 2015, European Primary Dealers Handbook, Primary Dealers Handbook, Primary dealers, bond dealers, AFME Primary Dealers Board\"}","Featured":false,"DateCreated":"2016-10-27T00:00:00","CategoryIds":[1983,1984,1992],"Categories":["Divisions","Capital Markets","Primary Deals/Rates"],"Author":"Anonymous","AuthorImage":null,"Tags":"AFME, Association for Financial Markets in Europe, AFME European Primary Dealers Handbook, AFME European Primary Dealers Handbook Q4 2015, European Primary Dealers Handbook, Primary Dealers Handbook, Primary dealers, bond dealers, AFME Primary Dealers Board","Background":{},"Views":163,"Comments":0,"CustomFields":{},"SortOrder":"2016-10-27T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5816,"Active":true,"Published":true,"Draft":false,"Title":"AFME Outline on securities law reform and close-out netting","Content":"
As the Commission's Action Plan on Building a Capital Markets Union of 30 September 2015 correctly points out despite progress made under EU legislation such as EMIR, CSDR and MiFID II in fostering efficient and safe post-trade infrastructures, barriers in the form of legal uncertainty remain in the field of cross-border clearing and settlement based on divergent national property and insolvency laws in the field of securities laws, but also close-out netting. AFME has put forward a step-by-step approach on the future evolution of the legal framework for securities transactions and close-out netting.
","PublishDate":"2016-10-01T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/afme-outline-on-securities-saw-reform.jpg?ver=2019-09-11-143658-540","ThumbnailImage":null,"FriendlyUrl":"afme-outline-on-securities-law-reform-and-close-out-netting","Gated":false,"TeaserContent":"
As the Commission's Action Plan on Building a Capital Markets Union of 30 September 2015 correctly points out despite progress made under EU legislation such as EMIR, CSDR and MiFID II in fostering efficient and safe post-trade infrastructures, barriers in the form of legal uncertainty remain in the field of cross-border clearing and settlement based on divergent national property and insolvency laws in the field of securities laws, but also close-out netting. AFME has put forward a step-by-step approach on the future evolution of the legal framework for securities transactions and close-out netting.
","Metadata":"{\"Description\":\"As the Commission's Action Plan on Building a Capital Markets Union of 30 September 2015 correctly points out despite progress made under EU legislation such as EMIR, CSDR and MiFID II in fostering efficient and safe post-trade infrastructures, barriers in the form of legal uncertainty remain in the field of cross-border clearing and settlement based on divergent national property and insolvency laws in the field of securities laws, but also close-out netting. AFME has put forward a step-by-step approach on the future evolution of the legal framework for securities transactions and close-out netting.\",\"Keywords\":\"Capital Markets, Capital Markets Union, EMIR, CSDR and MiFID II, \"}","Featured":false,"DateCreated":"2016-10-01T00:00:00","CategoryIds":[1967,1974,1975,1983,1997,1998,1999,1968,1980],"Categories":["Banking Union","Insolvency Reform","Post-Trade","Divisions","Post Trades","Keyissues","Bank Structural Reform","Capital Markets Union","Securitisation"],"Author":"Anonymous","AuthorImage":null,"Tags":"Capital Markets, Capital Markets Union, , EMIR, CSDR and MiFID II","Background":{},"Views":3623,"Comments":0,"CustomFields":{},"SortOrder":"2016-10-01T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5844,"Active":true,"Published":true,"Draft":false,"Title":"Annual Review 2016","Content":"
My first year as AFME Chairman coincided with a historic moment for Europe when the UK voted to leave the European Union. No Member State has voted to leave the EU before, and the UK electorate’s decision will profoundly affect Europe’s interconnected capital markets. We now need constructive solutions.
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AFME’s aim in the post-referendum period is to minimise Brexit’s potentially harmful impact both on European capital markets and the 500 million European citizens who save and invest. We are in close contact with our members and other trade associations to ensure the industry’s voice is heard on the practical implications for Europe’s financial centres and wider economic growth.
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One significant challenge will be UK-based institutions’ ability to passport services to the rest of the EU. Following our fact-based approach, we commissioned the AFME-Clifford Chance report, The UK Referendum – Challenges for Europe’s Capital Markets: A legal and regulatory assessment. The document has already become required reading for policymakers and industry experts in all Member States seeking to understand the different options for UK access to the single market.
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Brexit aside, the broader regulatory agenda remains. We remain committed to supporting Europe’s wholesale markets in adapting to the current regulatory reform programme.
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This year we have continued our work helping to implement the Basel programme at European level and have made significant contributions to major conduct reform measures. The work demonstrates the technical expertise and insight of AFME’s staff in helping to shape the legislation that will underpin Europe’s interconnected markets.
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AFME looks forward to constructively engaging on CMU with Vice-President Valdis Dombrovskis and his colleagues as this vital project becomes a reality.
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AFME has always been guided by the need to promote stable, competitive and sustainable financial markets that support economic growth and benefit society. These principles were reaffirmed at our first Board meeting after the referendum and will continue to inform us going forward.
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Our role as a pan-European trade group gives us not just a unique insight inside the EU Member States, but an opportunity also to be a genuine voice for the capital markets industry in Europe in a time of uncertainty.
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Finally, I would like to thank AFME Board members and staff members for their dedication and hard work over the past year. Special thanks go to Christophe Mianné from Société Générale and Jose-Luis Guerrero from HSBC, both of whom stepped down from the Board this year. Their insights have been invaluable in helping AFME tackle the issues at the heart of Europe’s capital markets. We welcome their successors to the Board, Frank Drouet and Patrick George.
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Michael Cole-Fontayn
Chairman
\n
\n
Association for Financial Markets in Europe
September 2016
","PublishDate":"2016-09-16T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/annual-review-2016.jpg?ver=2019-09-11-143731-727","ThumbnailImage":null,"FriendlyUrl":"annual-review-2016","Gated":false,"TeaserContent":null,"Metadata":"{\"Description\":null,\"Keywords\":null}","Featured":false,"DateCreated":"2016-09-16T00:00:00","CategoryIds":[1983,1998],"Categories":["Divisions","Keyissues"],"Author":"Anonymous","AuthorImage":null,"Tags":"","Background":{},"Views":669,"Comments":0,"CustomFields":{},"SortOrder":"2016-09-16T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5818,"Active":true,"Published":true,"Draft":false,"Title":"AFME principles on asset segregation, due diligence and collateral management","Content":"
Segregation of client assets and related account structures is a topic deemed of high relevance by policymakers at international level (e.g. by IOSCO’s Principles regarding the Custody of Collective Investment Schemes’ Assets), at EU level (e.g. AIFMD, EMIR, CSDR, UCITS V, MiFID/MiFIR) and at national levels.
\n\n
Yet such regulatory focus in Europe lacks a comprehensive and holistic approach in terms of the nature of obligations, scope of financial instruments and entities and requirements for collateral treatment.
\n\n
It is against this background that AFME has engaged in a two-stage project:
\n\n
\n - to comprehensively analyse existing and proposed regulation that impacts client asset protection, focusing primarily on Europe but with consideration of the broader global context given the nature of the markets in question, and
\n - to develop, based on the conclusions of this analysis and focusing primarily on securities accounts, principles on segregation of client assets and client account holding structures from a holistic and integrated operational, legal and compliance perspective that simultaneously ensure adequate safety of client assets while minimising operational complexity and cost.
\n
\n","PublishDate":"2016-09-12T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/afme-principles-of-asset-segregation-thumb.jpg?ver=2019-09-11-143700-387","ThumbnailImage":"/Portals/0/DispatchFeaturedImages/AFME-position-and-proposed-principles-on-asset-segregation-07.09.16-1.pdf","FriendlyUrl":"afme-principles-on-asset-segregation-due-diligence-and-collateral-management","Gated":false,"TeaserContent":"
Segregation of client assets and related account structures is a topic deemed of high relevance by policymakers at international level (e.g. by IOSCO’s Principles regarding the Custody of Collective Investment Schemes’ Assets), at EU level (e.g. AIFMD, EMIR, CSDR, UCITS V, MiFID/MiFIR) and at national levels.
\n","Metadata":"{\"Description\":\"Segregation of client assets and related account structures is a topic deemed of high relevance by policymakers at international level (e.g. by IOSCO’s Principles regarding the Custody of Collective Investment Schemes’ Assets), at EU level (e.g. AIFMD, EMIR, CSDR, UCITS V, MiFID/MiFIR) and at national levels.\\n\\nYet such regulatory focus in Europe lacks a comprehensive and holistic approach in terms of the nature of obligations, scope of financial instruments and entities and requirements for collateral treatment.\\n\\nIt is against this background that AFME has engaged in a two-stage project:\\n\\n- to comprehensively analyse existing and proposed regulation that impacts client asset protection, focusing primarily on Europe but with consideration of the broader global context given the nature of the markets in question, and\\n\\n- to develop, based on the conclusions of this analysis and focusing primarily on securities accounts, principles on segregation of client assets and client account holding structures from a holistic and integrated operational, legal and compliance perspective that simultaneously ensure adequate safety of client assets while minimising operational complexity and cost.\",\"Keywords\":\"AFME, Association for Financial Markets in Europe, asset segregation, AFME Post Trade, AFME Post-Trade, Post Trade, Post-Trade, AFME Client Asset Protection Task Force\"}","Featured":false,"DateCreated":"2020-02-21T11:04:26.553","CategoryIds":[1975,1997],"Categories":["Post-Trade","Post Trades"],"Author":"Anonymous","AuthorImage":null,"Tags":"AFME, Post Trade, Association for Financial Markets in Europe, post-trade, asset segregation","Background":{},"Views":2739,"Comments":0,"CustomFields":{},"SortOrder":"2016-09-12T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5810,"Active":true,"Published":true,"Draft":false,"Title":"European securitisation: an essential tool to fund economic growth","Content":"
Securitisation is a mechanism for financing real-economy assets by ring-fencing them and protecting the cashflows they generate for the benefit of institutional investors who receive what the ring-fenced assets generate. This report explains the benefits of securitisation for the real economy and the current proposals to revitalise this market in Europe.
\n","PublishDate":"2016-06-14T22:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/securitisation-an-essential-tool-2016.jpg?ver=2019-09-11-143653-010","ThumbnailImage":"/Portals/0/DispatchFeaturedImages/european-securitisation-essential-tool-for-economic-growth.pdf","FriendlyUrl":"european-securitisation-an-essential-tool-to-fund-economic-growth","Gated":false,"TeaserContent":"
AFME has produced a report showing how securitisation can help economic growth in Europe.
\n","Metadata":"{\"Description\":\"AFME has produced a report showing how securitisation can help economic growth in Europe.\",\"Keywords\":\"AFME, Securitisation, STS\"}","Featured":false,"DateCreated":"2020-05-18T13:43:18.517","CategoryIds":[1980,1998,1973],"Categories":["Securitisation","Keyissues","Funding For Growth"],"Author":"Anonymous","AuthorImage":null,"Tags":"STS, Securitisation, AFME","Background":{},"Views":5967,"Comments":0,"CustomFields":{},"SortOrder":"2016-06-14T22:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5796,"Active":true,"Published":true,"Draft":false,"Title":"The UK Referendum – Challenges for Europe’s Capital Markets: A legal and regulatory assessment","Content":"
To help inform the debate surrounding the UK’s EU Referendum, AFME asked the leading law firm Clifford Chance to produce a report ‘The UK Referendum: Challenges for Europe’s Capital Markets: A legal and regulatory assessment’. This document provides a detailed, fact-based analysis of the issues European capital markets will face in the event of the UK leaving the EU.
\n\n
In particular, the report focuses on ‘passporting’, which enable banks in one EU country to provide cross-border services to clients elsewhere in the single market. As the report highlights, in the event of a UK exit, global banks based in the UK would lose their rights as EU firms to ‘passport’ their services to the rest of the EU under existing legislation, such as MiFID and CRD. Any replacement trade agreement or ‘third country’ arrangement would have the potential to restrict cross-border trading.
\n","PublishDate":"2016-03-22T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/eu-referendum-report-2016.jpg?ver=2019-09-11-143634-433","ThumbnailImage":"/Portals/0/DispatchFeaturedImages/the-uk-referendum-challenges-for-europes-capital-markets-a-legal-and-regulatory-assessment.pdf","FriendlyUrl":"UK-Referendum-Challenges-for-Europe-Capital-Markets","Gated":false,"TeaserContent":"","Metadata":"{\"Description\":\"The UK Referendum – Challenges for Europe’s Capital Markets provides a detailed, fact-based analysis of the issues European capital markets will face in the event of the UK leaving the EU.\",\"Keywords\":\"EU, Referendum, UK\"}","Featured":false,"DateCreated":"2020-02-28T10:23:18.393","CategoryIds":[1968,1984,1998,2001,2005],"Categories":["Capital Markets Union","Capital Markets","Keyissues","Mifid","Brexit"],"Author":"Anonymous","AuthorImage":null,"Tags":"EU, referendum","Background":{},"Views":4633,"Comments":0,"CustomFields":{},"SortOrder":"2016-03-22T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"},{"ArticleId":5798,"Active":true,"Published":true,"Draft":false,"Title":"How Europe's capital markets interconnect","Content":"
The UK is an integral part of Europe’s capital markets, delivering much-needed investment
\nto the real economy. This AFME produced infographic shows how capital markets stimulate growth in infrastructure, SMEs and the real economy.
\n","PublishDate":"2016-03-22T00:00:00","ExpiryDate":null,"FeaturedImage":"/Portals/0/globalassets/images/publications/how-europes-markets-interconnect-2016.jpg?ver=2019-09-11-143636-217","ThumbnailImage":null,"FriendlyUrl":"how-europes-capital-markets-interconnect","Gated":false,"TeaserContent":"","Metadata":"{\"Description\":\"AFME have produced an infographic explaining how Europe's capital markets interconnect.\",\"Keywords\":\"Brexit, Referendum, CMU, Capital Markets, Europe\"}","Featured":false,"DateCreated":"2020-11-07T10:06:58.723","CategoryIds":[1968,1984,1998,1973,2005],"Categories":["Capital Markets Union","Capital Markets","Keyissues","Funding For Growth","Brexit"],"Author":"Anonymous","AuthorImage":null,"Tags":"capital markets, Europe, CMU, Brexit, referendum","Background":{},"Views":685,"Comments":0,"CustomFields":{},"SortOrder":"2016-03-22T00:00:00","DefaultImage":"","DetailsPage":"/Publications/Reports/Details/"}],"Featured":[],"ShareBtnClass":"st_sharethis_custom","ShareBtnAttr":"st_url","PaginationMode":"normal","InfintePaginationPageSize":9,"PageNumber":15,"PageCount":19,"DefaultImage":"","FullResultsUrl":"","DisableRouting":false,"IncludeFeaturedArticles":false,"GridTemplate":"\\DesktopModules\\Cantarus\\DispatchListing\\Components\\templates\\Listing_No_Image.html","ListTemplate":"\\DesktopModules\\Cantarus\\DispatchListing\\Components\\templates\\Listing_No_Image.html"}, {"allowedCategories5":"-1","infinitePageSize":"9","pageSize":"10","instanceIds":"5","PaginationMode":"normal","pageNumber":"14","orderDirection":"0","orderFieldId":"0","IncludeFeaturedArticles":"False","moduleId":"498","PageCount":"19"});
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