25 September 2024 This handbook outlines core principles and recommendations for reporting to provide issuers with a reference as they develop their own reporting. In 2024, the Impact Reporting Working Group started work on adding core and other impact reporting metrics and sector specific guidance for each of the project categories referenced in the Social Bond Principles (SBP), starting with Affordable Housing. While this document does not, at this stage, cover detailed impact reporting on all other SBP categories, the authors of this document acknowledge the importance of alignment and harmonisation also for such projects, for which additional suitable indicators will be developed in the future.Social Bonds are bond instruments aligned with the four core principles of the SBP where the proceeds are exclusively applied to finance or re-finance eligible social projects. These are projects with the objective to address or mitigate specific social issues and/or seek to achieve positive social outcomes especially, but not exclusively for a target population(s). Transparency and reporting are critical to developing a robust Social Bond market and to maintaining the integrity of the market.Compared to the past versions, the 2024 edition of the Harmonised Framework for Impact Reporting for Social Bonds fully duplicates the Core Principles and Recommendations for Reporting that are described in the Handbook Harmonised Framework for Impact Reporting for Green Bonds, enabling issuers to provide the market with standardised practices.The handbook also includes an illustrative list of quantitative social indicators that may be considered.Download Handbook - Harmonised Framework for Impact Reporting for Social BondsA template in the form of an excel file can also be downloaded here.

13 September 2024 ICMA welcomes the opportunity to provide feedback on the European Commission’s targeted consultation on artificial intelligence (AI) in the financial sector.ICMA promotes well-functioning cross-border capital markets, which are essential to fund sustainable economic growth. It is a not-for-profit membership association with offices in Zurich, London, Paris, Brussels, and Hong Kong, serving around 620 members in nearly 70 jurisdictions globally. Its members include private and public sector issuers, banks and securities dealers, asset and fund managers, insurance companies, law firms, capital market infrastructure providers and central banks. ICMA provides industry-driven standards and recommendations, prioritising three core fixed income market areas: primary, secondary and repo and collateral, with cross-cutting themes of sustainable finance and fintech and digitalisation. ICMA works with regulatory and governmental authorities, helping to ensure that financial regulation supports stable and efficient capital markets. ICMA’s response is based on the feedback from a subset of its Artificial Intelligence in Capital Markets (AICM) working group, including investors, banks, market infrastructures, law firms and issuers across the international debt capital markets. Due to the composition of the Artificial Intelligence in Capital Markets working group, our response to the consultation excludes part 2 on “Questions related to specific use cases in financial services”. However, for insight into specific use-cases of AI in the debt capital markets industry across the different market sectors, ICMA has been tracking new FinTech applications in bond markets on our website.A key objective of the Artificial Intelligence in Capital Markets working group is to provide a forum for discussion and education on AI in the industry, including the promotion of best practices that foster effective bond markets globally. The feedback in this consultation is based on the initial findings of participants, who are at various stages of their AI trajectory.We have, in addition, encouraged all our members across all market sectors, who are part of this extensive group of individuals to complete the survey bilaterally on behalf of their own organisation. We hope this will extend the depth of response from the capital market industry.Executive Summary(I) ICMA members encourage innovation across the debt capital markets industry and support fair and transparent applications of AI.(II) ICMA members emphasise the importance of human validation and an internal framework to manage the responsible use of AI in an organisation. Internal risk frameworks covering AI-related risk have been longstanding in financial organisations, as AI models, including machine learning algorithms, are not a nascent technology in this industry.(III) They highlight the interconnectedness of AI technology with ESG and DLT related developments, and the potential risk of an unintended impact on innovation if supplementary regulation to the EU AI Act is introduced too early.(IV) In addition, existing pieces of legislation such as UCITS, AIFMD, and MiFID II/MiFIR already capture safeguards for the responsible use of technology, including AI and related service providers. It is recommended that in the implementation of the EU AI Act, this is taken into account to ensure that it is appropriately interlinked into current regulation.(V) In general, ICMA members see increased efficiency and automation, freeing capacity for more high value tasks, as a key positive of AI use.Feedback on selected questions that pertain to a ‘whole industry sector’ can be found in our response, the other questions have been left blank.Contact Emma Thomas, Associate, FinTech and Digitalisation (emma.thomas@icmagroup.org)

10 September 2024 This ICMA note summarises, on four pages, the recommendations in the Draghi report, published on 9 September 2024, on Capital Markets Union (CMU) and financial services.Download the note here.

9 September 2024 ICMA has today submitted a response to ESMA’s consultation paper on Technical Advice on the Scope of CSDR Settlement Discipline. The consultation sought stakeholder views on two specific exemptions from settlement discipline measures that are set out in the CSDR Refit article 7(9) and which ESMA has been asked to further specify, namely i) settlement fails that are considered as not attributable to the participants in the transaction, and ii) operations that are not considered as trading.ICMA’s response covers both the secondary market angle as well as relevant aspects from a primary market perspective, incorporating feedback from ICMA’s CSDR-SD working group, as well as input from ICMA’s Primary Market Practices Committee (PMPC). In general, ICMA is supportive of ESMA’s proposals in terms of the two exemptions and the applicable scenarios set out in the consultation paper. The response welcomes ESMA’s stated objective to keep exemptions from penalties relatively limited in line with the “immunisation principle”, ensuring that intermediaries in a fail chain are flat in terms of penalties due and received. In this respect, ICMA also highlights the important differences between penalties and mandatory buy-ins, which would require a distinct approach if they were ever to be implemented. From a primary market perspective, the response reiterates ICMA’s concerns with cash penalties in the primary market context suggesting a one-day grace period for all fails of transactions in a new bond due to settle on the issue date of that new bond.

30 August 2024 ICMA’s Repo & Sustainability Taskforce has published a summary report to reflect the feedback received in response to its 2024 Repo & Sustainability Market Survey, launched in February 2024. Building on the observations and categorisations from ICMA’s 2022 paper on sustainability in the repo market, the survey aimed to deepen the understanding of existing market practices and identify issues for further reflection and future guidance.Some key points from the survey: A clear call for further dedicated guidance to cover all types of sustainability-related repo A confirmation that the majority of respondents active in this market primarily focus on repo transactions involving sustainable collateral and this category of sustainability-related repo remains their top priority A general agreement that Use of Proceeds (UoP) and Sustainability-Linked (SL) repo should be transacted under firms’ overarching sustainability frameworks or strategies A strong view that SL repos are more appropriate for maturities exceeding 12 months A consensus that to avoid double-counting from an accounting perspective, any green claims should remain with the repo seller, who retains the economic exposure to the assets Guided by members of the Taskforce, ICMA will continue to closely monitor the market evolution and is looking to work on expanded guidance as a next step, which is a clear request emerging from the survey outcomes.    

29 August ICMA welcomes ESMA’s proposals to further define the EU consolidated tape framework with a view to improving transparency in the EU bond markets, following the latest amendment of the Markets in Financial Instruments Regulation (MiFIR) which entered into force on 28 March 2024.Key points:As highlighted throughout our response to this consultation, ICMA is of the view that in the development of the framework for a Consolidated Tape for bonds, it is important that a distinction is being drawn between different asset classes. In particular, the bond market with its mechanics is very different from the equity market and this important distinction has to be reflected in the upcoming transparency regimes When defining the framework for a consolidated tape, there is a trade-off to be balanced between a) the cost of the consolidated tape and technical requirements and b) latency and data quality/accuracy. Such trade-offs have to be viewed differently with respect to the different asset classes. Whereas requirements for latency and real-time transmission may play a pivotal role in equity markets, the underlying nature of bond markets is very different, and the focus here should be on high data quality and accuracy. A strong governance model of the CTP is key and ICMA welcomes ESMA’s proposal to set up an administrative committee consisting of data providers and data users. Ultimately, the successful CTP “project” will depend on the right calibration of the framework, and a good collaboration of all involved stakeholders, with the aim to make high quality data accessible in a consolidated form, at an affordable cost, thereby allowing for a wide market participation across EU bond markets. To read the full ICMA response, click here

29 August ICMA welcomes the opportunity to respond to ESMA’s Consultations on the Review of RTS 2 and draft RTS on reasonable commercial basis, as part of ESMA’s MiFIR Review Consultation Package : Review of RTS 2 on transparency for bonds, structured finance products and emission allowances, draft RTS on reasonable commercial basis and review of RTS 23 on supply of reference data, published in May 2024.ICMA has been a longstanding advocate of increased transparency in the European bond markets and the introduction of an EU consolidated tape for bonds. This has been with the broad support of ICMA members. ICMA therefore welcomes the objective of the MiFIR Review to support the establishment of a consolidated tape. Underpinning the success of the tape will be the design and calibration of the related deferral framework, aimed at optimizing the scope of real-time post-trade transparency while also providing protection to the most sensitive transactions and reflecting the nature, structure, and liquidity of Europe’s bond markets.ICMA has undertaken extensive statistical analysis to ensure that its recommendations to ESMA are as data-driven and scientifically based as possible.In constructing its recommendations, ICMA has also recognized the challenge of finding the right balance between achieving the optimal calibration for as many bond classes and sub-classes as possible and a desire to avoid excessive complexity.Based on its analysis, ICMA proposes the following refinements to the deferral framework proposed by ESMA and based on the Revised MiFIR provisions:(i) More granular groupings of bonds. ICMA proposes a distinction between the fixed coupon issuance of the very largest sovereign issuers and other sovereign bonds, as well as between investment grade and high yield credit.(ii) A more scientific approach to establishing the appropriate Liquidity determinant. While ICMA has focused on outstanding issuance size as the key determination variable, it does not rule out the relevance of other key features (such as time to maturity or currency denomination).(iii) A refinement to the proposed matrix, which allows for a more appropriate distinction between liquid and illiquid trade size thresholds.(iv) A more data-driven approach to establishing the appropriate trade size thresholds for the relevant deferral categories, based on historical traded average daily trading volumes.ICMA acknowledges the complexity of achieving optimal calibration across diverse bond classes but believes a data-driven approach is crucial. ICMA urges ESMA to consider these recommendations and collaborate with the industry to create a revised, well-calibrated framework that enhances market outcomes while mitigating risks.To read the ICMA response on the Review of RTS 2 on transparency for bonds in full, click here. To read the ICMA response on the draft RTS on reasonable commercial basis in full, click here.

29 August ICMA welcomes the opportunity to respond to ESMA’s Consultations on the Review of RTS 2 and draft RTS on reasonable commercial basis, as part of ESMA’s MiFIR Review Consultation Package : Review of RTS 2 on transparency for bonds, structured finance products and emission allowances, draft RTS on reasonable commercial basis and review of RTS 23 on supply of reference data, published in May 2024.ICMA has been a longstanding advocate of increased transparency in the European bond markets and the introduction of an EU consolidated tape for bonds. This has been with the broad support of ICMA members. ICMA therefore welcomes the objective of the MiFIR Review to support the establishment of a consolidated tape. Underpinning the success of the tape will be the design and calibration of the related deferral framework, aimed at optimizing the scope of real-time post-trade transparency while also providing protection to the most sensitive transactions and reflecting the nature, structure, and liquidity of Europe’s bond markets.ICMA has undertaken extensive statistical analysis to ensure that its recommendations to ESMA are as data-driven and scientifically based as possible.In constructing its recommendations, ICMA has also recognized the challenge of finding the right balance between achieving the optimal calibration for as many bond classes and sub-classes as possible and a desire to avoid excessive complexity.Based on its analysis, ICMA proposes the following refinements to the deferral framework proposed by ESMA and based on the Revised MiFIR provisions:(i) More granular groupings of bonds. ICMA proposes a distinction between the fixed coupon issuance of the very largest sovereign issuers and other sovereign bonds, as well as between investment grade and high yield credit.(ii) A more scientific approach to establishing the appropriate Liquidity determinant. While ICMA has focused on outstanding issuance size as the key determination variable, it does not rule out the relevance of other key features (such as time to maturity or currency denomination).(iii) A refinement to the proposed matrix, which allows for a more appropriate distinction between liquid and illiquid trade size thresholds.(iv) A more data-driven approach to establishing the appropriate trade size thresholds for the relevant deferral categories, based on historical traded average daily trading volumes.ICMA acknowledges the complexity of achieving optimal calibration across diverse bond classes but believes a data-driven approach is crucial. ICMA urges ESMA to consider these recommendations and collaborate with the industry to create a revised, well-calibrated framework that enhances market outcomes while mitigating risks.To read the ICMA response on the Review of RTS 2 on transparency for bonds in full, click here. To read the ICMA response on the draft RTS on reasonable commercial basis in full, click here.

ICMA welcomes the following new members in August 2024: Emirates NBD Capital Limited, United Arab Emirates Freedom Finance Global plc, Kazakhstan Macquarie Group Limited, Australia Morgan, Lewis & Bockius UK LLP, United Kingdom Click here to view the full list of ICMA members.

19 August 2024 ICMA is pleased to announce the publication of the Digital Assets Annex, a significant new addition to the Global Master Repurchase Agreement (GMRA). The Digital Assets Annex has been prepared as part of a joint project between ICMA and ISLA aiming to bring consistency to the legal terms used by market participants when trading certain digital assets under the GMRA 2011 and GMSLA 2010. The Annex was developed by the Digital Assets Legal Working Group run by ICMA & ISLA, with Clifford Chance appointed as counsel. The Digital Assets Annex provides a standardised framework and set of terms which can be used to document repo transactions involving digital cash, digital securities (including tokenised traditional securities), or asset-backed digital assets. The Annex clarifies that in the GMRA 2011, references to Securities includes Platform Transferred Securities, and references to cash or currency encompasses Digital Cash. The Annex also seeks to address some of the commercial considerations that arise as a result of the operational feasibility of intra-day repo transactions, which have been made possible by the shorter settlement times offered by digital assets and technological platforms. Michael Brown, partner at Clifford Chance commented "We're delighted to have worked with ICMA, ISLA and the combined Digital Assets Legal Working Group to produce the Digital Assets Annex, which leverages the experience of the working group in respect of the opportunities in the SFT market presented by technological developments over the last few years. We hope the Digital Assets Annex will assist the further growth of the market by presenting a common approach that firms can leverage for transactions referencing the relevant categories of digital asset." Deena Seoudy, Senior Director and Associate Counsel at ICMA commented “We are thrilled with the launch of the Digital Assets Annex, created in partnership with ISLA, Clifford Chance, and the Digital Assets Legal Working Group. This Annex represents a significant milestone in the evolution of the GMRA, and we are confident it will support the continued growth and innovation of digital assets within the repo market.” To promote ICMA members’ familiarity with the Digital Asset Annex, ICMA will partner with Clifford Chance to run a webinar in September that will provide an overview of how the Annex works and its various features, as well as an opportunity for members to ask any questions. Further details on the webinar and how to register will follow. To download the Digital Assets Annex and accompanying guidance note, click here.

8 August 2024 ICMA is pleased to announce the publication of a new Global Master Repurchase Agreement (GMRA) legal opinion for Ghana. Following member requests, ICMA commissioned a legal opinion for Ghana that covers the enforceability of the netting provisions of the GMRA, as well as the validity of the GMRA as a whole, under the laws of Ghana. Exclusively available to ICMA members, the legal opinion for Ghana can be accessed on the aosphere platform, along with the other 70 legal opinions in ICMA’s GMRA legal opinion library.About the GMRA legal opinionsThe opinions provide ICMA members a business-critical service with exclusive access to a substantive body of legal know-how regarding the enforceability of the GMRA and, in particular, the GMRA netting provisions in 71 jurisdictions globally.  Regulators require repo transactions to be subject to agreements like the GMRA, supported by regularly updated legal opinions, in order to reduce regulatory capital requirements through close-out netting. ICMA legal opinions enable members to realise these significant regulatory capital benefits. Full list of jurisdictions covered by the legal opinions