The Association for Financial Markets in Europe (AFME) welcomes today’s report from the EBA, which provides an overview of the recent developments and challenges of introducing sustainability to the securitisation market and explores how the EU Green Bond Standard (EU GBS) could be implemented for securitisation, as well as whether a potential dedicated framework for sustainable securitisation should be introduced. Shaun Baddeley, Managing Director of Securitisation at AFME, said: “The EBA’s report today suggests amending the framework created by the EU GBS to make it more appropriate for securitisation. This would be done by ensuring that EU GBS requirements apply at originator level, rather than at issuer level, allowing a securitisation to qualify as green as long as the originator uses proceeds for green purposes. This is helpful because it allows issuers to use securitisation as an important tool to finance the energy transition alongside other financing instruments until such time there is relevant green collateral to securitise.” AFME welcomes the EBA’s recognition of the important role that green synthetic securitisations have to play in freeing up capital from banks active in green lending whilst recognising more time may be needed to assess whether and how the specificities of synthetic securitisation should be reflected in a green framework. AFME believes this is equally relevant to green private securitisations which also fall outside the GBS but are equally important in financing the green transition of the real economy. With regard to disclosures applicable to green securitisation, the EBA comments that additional proportionate disclosures may be effective to complement the overarching EU sustainable finance regulations.AFME supports this approach whilst noting that a substantive and somewhat fragmented disclosure framework exists around the product and would request proportionality and well-calibrated disclosures that are meaningful to investors. AFME notes that the US green securitisation market constituted around 50% of total US green bond issuance in Q1 2021, contrasting with Europe where sustainable securitisation accounted for only 2% of EU ESG bond issuance. Whilst this demonstrates the upside potential for EU green securitisation, it also reflects the challenges that the industry has faced since the implementation of EU Securitisation Regulation. – Ends –

In light of the humanitarian crisis unfolding in Ukraine, the Association for Financial Markets in Europe, representing the voice of the European investment banking industry, condemns Russia’s unlawful and unprovoked attack on Ukraine and its people. We are deeply saddened by the loss of innocent lives and support the strong international response. Our thoughts are with the people of Ukraine at this time. As an organisation, we are matching staff contributions to multiple charities supporting the crisis in Ukraine and are collecting supplies to donate to local businesses helping those on the ground. In line with the appropriate sanctions, we have also taken action to suspend the membership of our Russian member until further notice. AFME and its members stand with Ukraine.

At an event organised by the Association for Financial Markets in Europe (AFME) today on the Future of UK Wholesale Financial Markets, the UK Treasury outlined its proposals for the Wholesale Markets Review. In response, AFME Chief Executive, Adam Farkas, said: “The UK Treasury has today provided welcome clarity for the industry on the next steps for the UK Wholesale Markets Review. The proposals announced aim to ensure financial regulation remains fit for purpose and proportionate for UK capital markets, while promoting openness and competitiveness. “In particular, AFME supports proposals to allow systematic internalisers to execute at midpoint while also removing the share trading obligation (STO) and the double volume cap (DVC). These measures will help to boost the attractiveness of capital markets in the UK, making them more agile and promoting better outcomes for investors. AFME also agrees with the comments made by Secretary Glen to clarify that removing the STO and the DVC does not mean that trading will not be properly reported or scrutinised, but will in fact bring about greater transparency by ensuring the right information is made public. “AFME also welcomes the UK Treasury’s approach to transparency which will ensure non-equity instruments are subject to appropriate transparency that reflects the heterogeneous nature of the bond market “With some powers due to be devolved to the Financial Conduct Authority, AFME looks forward to engaging with the UK regulator on topics such as the consolidated tape, market outages, transparency requirements and the reporting framework for equity and fixed income markets. “In parallel, the EU is undertaking its own MiFIR Review. As this progresses, AFME urges EU authorities to ensure they put in place the right conditions for building-out the bloc’s wholesale markets capacity to ensure EU markets remain attractive and competitive globally. “AFME members are global wholesale banks that support European clients internationally, therefore, it is a priority to ensure the continuity of cross-border services and to avoid market fragmentation. In this respect, AFME advocates for the same policy approaches in both the UK and the EU.” More detail on some of the key areas AFME advocates for in both the UK and EU are outlined in our original response to the Wholesale Markets Review consultation here. – Ends –

Paper Encourages Collaboration between Public and Private Institutions and Outlines Opportunities, Challenges, and Questions Concerning the Design, Issuance, Legal Status, and Use Cases of wCBDCs BOSTON, February 22, 2022— Over 70% of central banks have begun exploring the possibility of introducing central bank digital currencies (CBDCs). A new paper, commissioned by the Global Financial Markets Association (GFMA) from Boston Consulting Group (BCG) and Clifford Chance LLP, identifies the GFMA’s critical considerations for the success of potential CBDCs in wholesale markets (wCBDCs). Entitled Central Bank Digital Currencies: A Global Capital Markets Perspective, the paper is based on research, as well as extensive interviews conducted with contributing member firms and market participants with particular expertise relevant to CBDCs, during the fourth quarter of 2021. The authors' recommendations stress that: Central banks in collaboration with the private sector should continue to explore the role that wCBDCs can play in driving innovation and efficiencies in wholesale markets. Central banks should take a measured approach in the introduction of wCBDCs and the timeline should be cautious to mitigate any potential transition risk impacting safety and soundness, and financial stability. wCBDCs are expected to operate alongside legacy instruments and systems, and not to replace them. It is therefore important for wCBDCs to be interoperable with the broader financial market ecosystem. The use of sandboxes, proof of concept, dialogue with market participants, and pilot programs based on specific use cases will test the application of wCBDCs and help identify the impact on capital markets. After sufficient analysis of lessons learned, financial institutions and regulators should define a transition period that is reflective of the risks and opportunities, and an effective implementation. The paper outlines the opportunities, challenges, and questions concerning the design, issuance, and legal status of wCBDCs, while introducing use cases to provide a framework for continuing a constructive conversation. GFMA, which represents the leading global financial and capital market participants, takes particular interest in this topic as its members will play a critical role in the potential distribution and intermediation of CBDCs. Allison Parent, executive director, GFMA, said, "Banks are recognizing that the adoption of wCBDCs could enhance the efficiency, resilience, and effectiveness of money flows and capital markets, but for a wCBDC to be a valuable instrument, it must be part of a collaborative partnership between public and private sectors. In this paper, we outline a series of critical design and legal factors that must be taken into account." "wCBDCs are designed to facilitate wholesale market transactions, with direct access to the wCBDCs limited to regulated financial institutions and PSPs. We and our partners recommend following the current two-tier structure which places central banks at the foundation of the payment system, while assigning end-user-facing activities to financial institutions and other PSPs," said Roy Choudhury, managing director & partner, BCG. Simon Gleeson, partner, Clifford Chance, said, "The first rule of medicine is 'do no harm', and we must follow that principle as we work to transplant wCBDCs into the real world economy. Failure to get the legal status of wCBDCs right could pose a threat to the safety and integrity of markets and to privacy rights. The legal status of wCBDCs would have to be firmly established, guaranteeing wCBDCs as fungible to fiat currencies, before they became widely used." A copy of the report can be downloaded here. For media inquiries: Anca Webber, +44 (0)73 4208 3718; [email protected] Rebecca Hansford, +44 (0)20 3828 2693; [email protected] Katrina Cavalli, +1 212 313 1181; [email protected] Michael Osborne, +44 (0)20 7006 5695; [email protected] Corliss Ruggles, + 852 93596996; [email protected]

Commenting on the proposals from the European Commission today, Pete Tomlinson, Director of Post Trade at AFME, said: “AFME welcomes the decision from the European Commission to extend the equivalence period for UK CCPs until 30 June 2025. This is an important step towards avoiding a significant financial stability risk and provides medium-term certainty for EU market participants. AFME continues to believe that voluntary, market-driven initiatives are important to help achieve the Commission's stated objective of growing clearing volumes in EU market infrastructures. We look forward to considering the accompanying Commission consultation in more detail.” – Ends –

The Association for Financial Markets in Europe (AFME) has today published a new report, commissioned from Expand Research LLP, which finds that the cost associated with fixed income market data has soared between 2017-2021, increasing by 50%. This has been driven by price increases of 35% on the existing cost base and new, incremental usage which accounts for an additional 15% of spend. This is compared to a 25% price increase for sell-side market data more generally. Fixed income data costs are therefore rising much faster than the average cost of overall market data. The report, “The Rising Cost of European Fixed Income Market Data”, identifies the sources of rising market data costs within fixed income markets and proposes solutions to encourage greater liquidity, efficiencies and growth in European markets, which play a critical role in providing funding for governments and corporates. Adam Farkas, Chief Executive of AFME, said: “Our latest report finds that fixed income market data costs have increased far beyond those for equity markets, which are already considered to be too high. Unnecessarily high market data fees act as a barrier to entry to financial markets and ultimately lead to detrimental outcomes for end investors through less choice and higher costs. “This report chimes with recent concerns raised by the Financial Conduct Authority in the UK in its January feedback statement on accessing and using wholesale data, and with the EU Commission MiFIR review objective of enhancing users’ understanding of how the price for market data is set across asset classes. Rising market data costs is a market-wide problem which must be tackled as a standalone issue. While a consolidated tape has been suggested as a solution, it will not fix the fundamental issue of rising market data costs. For a tape to be effective and to contribute to open and competitive markets which serve end investors, it must be built on cost-effective data. “If market data costs go unaddressed, market participants may be forced to scale back their data purchases which could lead to other strategic decisions, such as withdrawing from certain markets.” This report is based on data voluntarily submitted by 10 major European fixed income market makers, all of whom are AFME members, as well as publicly available sources. Expand collected European fixed income market data spend data from participant organisations for the years 2016-2021. Key findings: Costs in all categories have increased, with the composition of data spend significantly different than for equities. Buyside costs have also increased significantly. Figure 3 of the report demonstrates that costs have increased regardless of the number of market data users and is driven by price increases and changes to charging structures. Figure 3 also demonstrates that the cost of sourcing the data is rising yearly and the trend is likely to continue, steepening the trajectory further. As a result, increasing market data costs are likely to have forced some consumers to scale back their data purchase to a minimum and often to economically suboptimal levels. In some cases, it could lead to strategic decisions to withdraw from specific markets. The report identifies a first step to achieving more reasonable fixed income data costs is to establish and apply a set of industry developed standards to fixed income market data across the industry. These should cover: Standardised pricing models for purchasing data from all vendors. Uniform formats in which the data is stored and provided to firms. A consistent procedure for accessing the data. The full report can be downloaded from the AFME website. – Ends –

In light of the continuing negotiations on the Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD), the Association for Financial Markets in Europe (AFME) has today published a paper welcoming the progress made so far and highlighting priorities for the Directive to be effective and proportionate. Finalising EU sustainability reporting standards has become especially urgent to enhance the availability and comparability of sustainability information, provide banks with the sustainability information needed to scale sustainable finance and to address the problematic sequencing of ESG disclosure rules. Oliver Moullin, Managing Director for Sustainable Finance at AFME, said: “Putting in place an effective corporate sustainability reporting framework is an urgent priority to enhance the availability and comparability of sustainability information. “Maximising the compatibility and consistency of EU and international standards and ensuring a proportionate approach to reporting on activities outside the EU is essential for the effectiveness of the EU corporate disclosures framework. The CSRD risks having a disproportionate impact on internationally active companies, which will have to report on their worldwide activities, including in jurisdictions where the necessary data is not yet available. “AFME believes that it is important to ensure a proportionate application to internationally active companies through limiting the scope of reporting to EU activities, at least for an initial period, and introducing greater proportionality in the scope of application to companies based outside the EU.” AFME’s paper “The importance of the international context for the CSRD” raises these concerns, particularly in light of recent momentum towards the development of international sustainability reporting standards. AFME also highlights the importance of maximising the compatibility and consistency of EU standards with the forthcoming international standards. It provides recommendations to introduce more proportionate requirements in the proposal, including by: limiting the scope of reporting to EU activities and EU exposures to companies that are subject to the same CSRD and Taxonomy transparency rules, at least for an initial period; and introducing greater proportionality in the scope of application to companies based outside the EU. AFME has also published additional feedback addressing other key issues being discussed by the co-legislators, including: Supporting the Commission’s proposal for a proportionate inclusion of SMEs in the scope of the requirements. The proposal takes a proportionate approach by minimising the reporting burden through a dedicated, simplified standard and by allowing three additional years for SMEs to start reporting. Raising concerns with any further extension of the scope of the CSRD to non-EU companies. Instead, AFME calls for greater proportionality and close cooperation among international standard-setters to reduce fragmentation and facilitate the flow of sustainability information across jurisdictions. Highlighting the importance of maintaining the Commission’s proposed exemption for subsidiaries to report separately where covered by a parent entity’s consolidated report. Supporting concerns that have been raised with reporting on intangible assets (such as information on intellectual and human capital) and suggesting that companies could choose to provide additional disclosures on intangible assets when they deem them material to their sustainability profile. Ensuring that the legislation provides for appropriate sequencing of disclosures by the non-financial and financial sectors, providing for financial institutions to report under the CSRD one year after non-financial companies, in line with disclosures under the Taxonomy Regulation. The full international context for CSDR paper can be downloaded from the AFME websitehere. AFME has also published a short position paper on its priorities for the negotiationshere – Ends –

The Association for Financial Markets in Europe (AFME) has today published a position paper in the context of the negotiations on the establishment of an EU Green Bond Standard (GBS). Oliver Moullin, Managing Director for Sustainable Finance, said “AFME strongly supports the establishment of a voluntary EU Green Bond Standard which facilitates the further growth of the market and is an important source of financing for the transition to Net Zero.” “AFME supports the proposals to provide investors with transparency, comparability and confidence in the credibility of the bond’s environmental credentials. In order to meet these objectives, it is important that the new EU GBS label is seen as a credible standard and also attractive to issuers and investors. Our recommendations to further this goal include maintaining the voluntary nature of the standard, providing for GBS designation to apply to maturity, maintaining the scope of environmental sustainability, and avoiding creating different standards for different types of issuer.” AFME makes the following recommendations to support the establishment of an effective and successful label for EU Green Bonds: It is important to maintain the voluntary nature of the EU GBS standard to avoid constraining the growth of the market while more investable projects become available. The EU GBS was envisaged and designed as a voluntary standard to support the growth in issuance and to develop deep and liquid green bond markets in the EU. Making the GBS mandatory would be likely to overly constrain issuance in the EU, given the limited availability of taxonomy-aligned investments, in particular in the short term. Green Bonds should maintain their designation until maturity following a change to the Taxonomy criteria. For investors, the certainty that bonds keep their label for the entire term is a necessary condition to build investment portfolios. EU GBS should remain focused on environmental sustainability. Its distinguishing feature is the link with the EU Taxonomy Regulation, a dynamic and science-based classification system for environmentally sustainable economic activities. It is therefore important that the scope of the standard remains environmental sustainability. The GBS is also not the appropriate regulation to establish requirements for companies to develop transition plans, which is best dealt with through regulation on sustainability disclosures. Creating different requirements across issuers and issuances should be avoided. Whether or not any flexibility regarding Taxonomy-alignment is provided, the criteria should be the same for all issuers, without distinctions being made between sovereign and private issuers. A differential treatment would threaten the proposal’s harmonisation objectives, adding complexity for issuers and confusion for investors. – Ends –

The Joint Associationswelcome clarification from ESMA that national competent authorities are expected not to prioritise supervisory actions in relation to the application of the CSDR buy-in regime. We support the political agreement by the EU legislators on changes to Regulation (EU) No 909/2014 (“CSDR”) that allow for a delay to the implementation of mandatory buy-ins. The Joint Associations advocated for a reassessment of this aspect of the settlement discipline regime as part of the broader CSDR Review. The Joint Associations support a result that achieves the regulatory objectives in an effective and proportionate way, and that avoids significant negative consequences for market liquidity and stability. While further formal steps need to be taken for the changes in the political agreement to be put into effect and formally adopted and published as EU law, the political agreement reflects the intent of EU legislators that mandatory buy-in requirements in the current CSDR should not go live on 1 February 2022. The Joint Associations therefore believe that EU legislators do not expect market participants to take further action towards implementation of the mandatory buy-in requirements, due to come into effect on 1 February 2022, including but not limited to the contractual obligations of Article 25 of RTS (EU) 2018/1229 on Settlement Discipline (“CSDR RTS”). On this basis, those associations that were intending to publish industry standard documentation to facilitate compliance with the mandatory buy-in requirements, will no longer be proceeding with publication. With respect to all other CSDR settlement discipline measures (i.e., Articles 1 – 20 and 39 – 42 of the CSDR RTS) it is expected that market participants will proceed with implementation in accordance with the relevant regulatory deadline of 1 February 2022. These requirements include rules relating to cash penalties for settlement fails, and requirements relating to the allocation and confirmation process. The Joint Associations encourage all national competent authorities in the EU to follow the guidance provided by ESMA on 17 December 2021. We stress the importance of ensuring full consistency with ESMA’s guidance to avoid a risk of uncertainty for market participants in any EU jurisdiction. The Joint Associations welcome the opportunity for further engagement with the regulatory authorities on the important topic of increasing settlement efficiency in European capital markets.

Following the publication of ESMA’s AnnualStatistics Report(ASR) on 17 December, the Association for Financial Markets in Europe (AFME), issued the following statement: AFMEsupportsESMA’s continued efforts to provide a detailed overview of trading activity in securities markets through the publication of its AnnualStatistics Report(ASR).However,AFMEnotesthere remain challenges relating to the granularity of data which is available to ESMA. The result is thatthe annual report does notyetprovide a clearand accurate understandingof where tofind liquidityin EU equity markets. AFME also notes that ESMA has taken the decision topresent data relating to trading in EUsharesbothincludingand excludingUK trading venuesas well as Systematic Internalisers(SIs) and Over The Counter (OTC).Nevertheless,the main issue remains that none of this data accurately represents the reality of the trading landscapesince it doesnot capturethe liquidity truly available to market participants.At this stage, itthereforedoes not provide a basis upon which future policy decisions can be built. Rick Watson, Head of Capital Markets at AFME, Rick Watson,commented, “ESMAhasacknowledgedthatdatacurrently at its disposaldoes notallow for a clear pictureofexisting market structureto be drawnandisseeking toaddressthisviaareview theofregulatory reporting frameworkfor equitytrading.Webelieve that this review will prove beneficial not only in the context ofdata published in futureASRs,but also as a vital step to ensuring the successful delivery of a pre- and post-trade consolidated tapefor equities.” “In the absence of accurate consolidated dataon the EU trading landscape for equities, AFME publishesits ownquarterly analysisof sharetrading according to executionmechanism.This analysis usesdataflags and identifiers to providea more refined and, in ourview,accurate representation of addressable marketliquidityacrossEurope, including the EU27, the UK andSwitzerland.Our datashows that on-venue trading for Q3 2021 represented 82% of overall trading activity, whiletrading onSIand OTCrepresented 10% and 8%respectively.” – Ends –