ICMA-国际资本市场协会季报（英）-2021.7_62页_1mb

ICMA Quarterly Report Summary

Core Content

The International Capital Market Association (ICMA) is a global membership association based in Switzerland, dedicated to promoting resilient and well-functioning international debt securities markets. It serves a wide range of members, including issuers, investors, regulators, and market infrastructure providers, and focuses on four core areas: primary markets, secondary markets, repo and collateral markets, and sustainable finance.

This quarterly report highlights several key initiatives and developments, including:

• The orderly wind-down of LIBOR in the bond market
• The establishment of a new ICMA representative office in Brussels
• Progress in sustainable finance
• Innovations in FinTech
• Developments in Asian international bond markets

Main Points

1. The Orderly Wind-Down of LIBOR

• LIBOR is being phased out due to insufficient market activity and the need for more robust reference rates.
• The transition to risk-free rates (RFRs) is a global initiative coordinated by the FSB Official Sector Steering Group.
• In the UK, SONIA is the successor to sterling LIBOR, while SOFR, €STR, SARON, and TONA are the RFRs for other currencies.
• The FCA has announced the cessation of all 35 LIBOR panel bank settings, with 26 settings permanently ceasing on specific dates.
• The remaining 9 LIBOR settings may continue on a synthetic basis for an additional period.

2. LIBOR Transition in the Sterling Bond Market

• Three types of fallback mechanisms are in place for legacy LIBOR bonds:
  • Type 1: Bonds fall back to the previous LIBOR fix, turning into fixed-rate bonds.
  • Type 2: Independent advisers select a successor rate and apply a fixed credit adjustment.
  • Type 3: Similar to Type 2, but includes a pre-cessation trigger if LIBOR is deemed unrepresentative.
• Type 2 and Type 3 fallbacks account for about 30% of legacy bonds.
• Active transition is encouraged by the UK PRA and FCA to reduce the number of LIBOR-referenced contracts to an irreducible minimum.
• The sterling bond market has successfully transitioned around one third by value and 10% by number of legacy LIBOR bonds, leaving a significant "tough legacy" problem.

3. Legal and Regulatory Developments

• The UK has introduced legislation under the Financial Services Act to manage the transition of tough legacy contracts.
• The FCA can designate a benchmark as unrepresentative and prohibit its use, except for legacy contracts.
• In the US, NY State Senate Bill S297 was passed to address the discontinuation of LIBOR, providing legal clarity for contracts referencing US dollar LIBOR.
• The EU has also amended its Benchmarks Regulation to empower the European Commission to designate a replacement for LIBOR in case of market disruption.

4. ICMA’s Role and Activities

• ICMA is actively involved in the transition to RFRs, especially in the sterling bond market, and is working with regulators and market participants to ensure a smooth process.
• The new Brussels office supports ICMA’s engagement with the EU and UK authorities.
• ICMA is also working on sustainability initiatives, including the Green and Social Bond Principles, Sustainability Bond Guidelines, and Sustainability-Linked Bond Principles.
• FinTech is a growing focus, with the Common Domain Model (CDM) being expanded to include repo and collateral trades and cash bonds.

Key Initiatives and Developments

Sustainable Finance

• ICMA continues to promote sustainable finance through various guidelines and principles.
• The 2021 update of the Green and Social Bond Principles is highlighted.
• ICMA is involved in comparing global taxonomies and promoting convergence.
• Japan has developed Basic Guidelines on Climate Transition Finance, referencing ICMA’s Climate Transition Finance Handbook.

FinTech

• The Common Domain Model is being expanded to include repo and collateral trades.
• The FinTech Advisory Committee is working on regulatory developments and innovation in capital markets.
• The FinTech Newsletter provides updates on the latest FinTech trends and technologies.

Asian Markets

• The Hong Kong office has been instrumental in regulatory consultations and guidance on primary market processes.
• Bloomberg and ICMA have published a guide to tough legacy bonds in the Asia-Pacific region.
• China has seen regulatory developments in its capital markets, with ICMA monitoring these changes.

Challenges and Outlook

• The tough legacy problem remains a key challenge in the sterling bond market, with a significant number of legacy bonds not yet transitioned.
• Synthetic LIBOR is being considered for the remaining LIBOR settings, with a forward-looking term rate and credit spread adjustment methodology.
• ICMA is preparing for the next phase of development, with Martin Scheck stepping down as CEO and Bryan Pascoe taking over on 6 September 2021.
• The transition to RFRs is expected to continue intensifying as LIBOR discontinuation approaches.
• The digitisation of capital markets is seen as a critical step, with smart contracts and technology-driven solutions being explored.

Conclusion

The ICMA Quarterly Report outlines a comprehensive overview of the ongoing transition from LIBOR to RFRs, the growing importance of sustainable finance, and the advancements in FinTech and Asian markets. The association continues to play a vital role in regulatory engagement, market development, and member support, ensuring that international capital markets remain resilient and well-functioning.