Commenting on the publication today by the European Commission of the legislative proposal on insolvency, Simon Lewis, Chief Executive of AFME, said: “The Commission’s proposed directive on insolvency reform is a big step in the Capital Markets Union project as it addresses the problems caused by divergent national insolvency regulations across Europe. “Successful implementation of minimum standards will require consistent adoption at member state level. AFME has long advocated closer harmonisation of insolvency standards across Europe to embed key elements of effective insolvency laws and practices into national systems. We are therefore pleased to see this directive published. “Creating a consistent EU insolvency framework will benefit Europe’s capital markets and the economy in general by providing greater certainty for market participants, reducing costs for investors, increasing recovery rates and making it easier to turn around viable businesses.” Press release also available in: French

A new joint report published today by the Association for Financial Markets in Europe (AFME) and New Financial highlights the huge opportunity to develop capital markets in Central and Eastern Europe. The report focuses on 11 high potential economies in Central and Eastern Europe (CEE) which could harness the capital markets to accelerate GDP and productivity growth throughout the region. The report finds that deeper capital markets in these 11 countries could unlock more than €200 billion in long-term capital, as well as more than €40 billion a year in additional funding for companies. The figures come from a new joint report, The Benefits of Capital Markets to High Potential EU Economies, which measures the size, depth and growth potential of capital markets in the EU11 countries, examines their financial systems and reform programmes; and considers the outlook for long-term growth. Paul McGhee, Director of Strategy at AFME, said: “Our report highlights the economic prize from continuing to deepen capital markets across Europe and suggests that the CEE countries could be the biggest beneficiaries of Capital Markets Union. CMU is a vital long-term reform which can bring fresh impetus to the European economy." William Wright, Managing Director at New Financial, said: “This report confirms that there is a huge opportunity for countries in Central and Eastern Europe to develop deeper capital markets to diversify sources of funding and help build pools of long-term capital, which in turn could help kick-start the sort of growth that they enjoyed before the financial crisis. It also underlines that smaller economies with less developed capital markets stand to gain most of all from the Capital Markets Union initiative. The EU, national governments and market participants all have important roles to play in helping to develop capital markets in future.” Following a sustained period of catch-up growth in the previous decade, economic growth in the 11 economies has halved since the financial crisis, with the slowdown in GDP and productivity growth coinciding with a falling investment rate. The banking system in the EU11 has deleveraged since 2008, particularly in the Baltic and Balkan economies, which has contributed to lower investment rates in the EU11. Today companies in the EU11 rely heavily on retained profits to fund investment: capital markets could provide a vital source of additional funding. Between them, the EU11 countries account for 20% of the EU’s population, 8% of its GDP, but only 2.5% of capital markets activity. On average, capital markets in the EU11 states are one third as developed as in the EU as a whole when measured across 23 different sectors of activity relative to GDP. Furthermore, companies in the EU11 are more heavily reliant on bank lending than in the rest of the EU with bank lending representing 85% of corporate debt compared with the EU average of 75%. The report reviews the steps that national governments, local market participants and the EU institutions are already taking to encourage the development of capital markets, and suggests some policy proposals to support further growth. These include: Promoting the growth of national pension systems to provide a larger domestic investment pool; Easing investment regimes for institutional investors to allow investment in a wider range of assets; Encouraging diversification of financing sources for growth companies and promoting alternative financing for SMEs; Developing local financial market infrastructure - potentially through regional collaboration; Encouraging entrepreneurship and improving the framework for business restructuring; Supporting local issuers in accessing capital markets through financial literacy programmes; Encouraging state-owned enterprises to issue bonds or carry out IPOs; Providing institutional support for developing the necessary capital markets reforms tailored to the local business environment. The benefits of capital markets to high-potential EU economiesis available on the websites of AFME and New Financial. Please note this press release is also available in: French German Spanish Italian Polish Slovenian Romanian

Commenting on the publication today of the FCA’s corporate and investment banking study and a consultation paper on the proposed prohibition of certain contractual clauses in engagement letters, Simon Lewis, Chief Executive of the Association for Financial Markets in Europe (AFME), said: “We welcome the completion of the market study and note that the final report confirms the interim report’s general conclusion about the current provision of capital markets services. "We also note that in the final report the FCA is only proposing specific measures in relation to league table presentation and the prohibition of certain clauses in engagement letters.” With respect to those specific areas which the FCA considers need improvement, AFME will work with the FCA and its members to find solutions to the issues raised and notes with approval the FCA’s decision not to publish rules on league table presentations. In particular, AFME will: continue to contribute to the IPO reform process which is currently underway; play a coordinating role in creating industry guidance on the use of league tables in client presentations; participate in the consultation published today, whilst maintaining the view that any prohibition of the type proposed should be limited - Ends -

Eight leading European trade associations representing investors, originators, issuers and other market participants have today released a paper highlighting the importance of securitisation for jobs and growth in Europe, and underlining their commitment to supporting a safe and sustainable market that serves the real economy. Ahead of tomorrow’s meeting public exchange in the European Parliament where MEPs will discuss proposed amendments to the draft regulation for Simple, Transparent and Standardised (“STS”) securitisation, the associations have published a paper to make a positive case for the revival of securitisation for the benefit of Europe’s businesses, borrowers and consumers. The associations say that policymakers are right to raise questions around the risks and benefits of seeking a revival of securitisation in Europe. Their joint trade paper sets out to address these issues. The Association for Financial Markets in Europe (AFME), the Dutch Securitisation Association (DSA), the European Banking Federation (EBF), the European Fund and Asset Management Association (EFAMA), LeaseEurope and Eurofinas, the International Capital Market Association (ICMA) and Pensions Europe have all signed the paper and make the following key points: Securitisation can support SMEs and households in many different ways; A revival of sound securitisation can help diversify risks, thereby making the financial system more stable; A well-designed STS framework will deliver “simple”, “transparent” and “standardised” securitisations; Transparency and disclosure standards are already robust– further requirements should build on existing infrastructure and be carefully calibrated; The lessons of the crisis have been learned and reflected in EU regulations; Investor due diligence is important, but unnecessary duplication should be avoided as it disincentivises investment; Risk retention is important: the existing rules ensure alignment of interests and sufficient “skin in the game” for those who securitise; Tranching is common across all debt markets and is an essential feature of the securitisation technique to meet investors’ needs. As a key component of the Commission’s flagship Capital Markets Union initiative, the associations believe that a new STS securitisation framework could generate EUR 100-150 billion in additional funding for the real economy and act as a key driver in encouraging investor participation in European capital markets. The associations hope the paper will make a useful contribution to the ongoing European debate on this topic and urge EU legislators to bear these themes and arguments in mind as the debate progresses.

Commenting on the statement made today by Prime Minister, Theresa May announcing Article 50 will be triggered by the end of March 2017, Simon Lewis, Chief Executive of the Association for Financial Markets in Europe, said: "Now there is a clear timeline emerging for the formal exit of the UK from the EU, which will bring about more certainty for financial services. However, with Article 50 now due to be triggered in the coming months, it is important to consider the impact this will have on business and whether transitional arrangements may be helpful to mitigate any negative consequences. There is much practical work that needs to be done to understand the operational impact of Brexit on Europe's capital markets and to ensure that the outcome works for the UK and the EU27."

AFME and Citi are today co-hosting a special event in Canary Wharf, as part of this year’s City Giving Day, to celebrate individuals from AFME Board member firms who have made an exceptional contribution to a charity or community group. While City Giving Day has historically focused efforts around the Square Mile, this year AFME wanted to spotlight the hard work of people working in Canary Wharf. Simon Lewis, Chief Executive of AFME, said: “So many firms, not just those in the City, do a great job supporting charitable and community projects, but we don’t always hear about them. AFME wanted to extend City Giving Day to celebrate some of the remarkable individuals in Canary Wharf who have made a significant contribution to the community.” “We hope that by highlighting the efforts of some of our member firms, the public sees that giving back to society is important for this sector. Whether inspiring colleagues to participate in fundraising activities, or supporting deserving organisations, there is a range of community activity represented today.” Among the member firms with individuals receiving certificates for their contributions are: Bank of America Merrill Lynch, Barclays, BNY Mellon, Citi, Crédit Agricole, Credit Suisse, Lloyds Bank, Nomura and UBS. At the celebratory event hosted at Citi’s offices in Canary Wharf, award nominees will hear from guest speaker, Alderman Peter Estlin, Sheriff-elect of the City of London, as well as AFME Board member, Leo Arduini, Head of Markets in EMEA at Citigroup.

Following President Juncker’s 2016 State of the Union address and the communication from the European Commission setting out next steps to accelerate the completion of Capital Markets Union (CMU), Simon Lewis, Chief Executive of the Association for Financial Markets in Europe (AFME), commented: “President Juncker’s commitment to completing the Capital Markets Union is a strong signal of the Commission’s focus on creating economic growth and jobs across Europe.“We strongly support the focus on insolvency reform and boosting infrastructure funding in the next phase of CMU, and we are hoping for quick completion of the measures on securitisation and the prospectus regime. “It is vital that the CMU project works for every EU Member State by channelling much-needed capital market finance to high-growth firms and infrastructure projects across Europe.“As the trade group representing Europe’s wholesale markets we are committed supporters of the Commission’s initiative on CMU and will continue to do all we can to help make it a reality.” - Ends -

AFME has today published a new report entitled Principles of Asset Segregation, Due Diligence and Collateral Management, which calls for greater harmonisation of asset segregation across European regulation. Segregation of client assets currently falls under various pieces of EU regulation (including AIFMD, EMIR, CSDR, UCITS V and MiFID/MiFIR), however, the report finds there is currently no consistency in the meaning of “account segregation” across the regulations nor in the level of segregation required. The report, therefore, calls for a harmonised approach to ensure a high standard of securities account holder protection whilst also acknowledging the consequences of differing insolvency regimes. Werner Frey, Managing Director of the AFME Post Trade division, said: “EU regulations currently create a fragmented approach to account segregation. Given this patchwork of legislation, asset segregation lacks coherence and creates a level of uncertainty and confusion among industry participants. This is why we have developed a list of principles to provide a holistic view of asset segregation for European policymakers and financial institutions.” The AFME report contains a comprehensive analysis of existing and proposed regulations that impact client asset protection, focusing primarily on Europe, but with consideration of the broader global context, given the nature of the markets in question. This is followed by a set of principles for segregation of client assets and client account holding structures, which are based on the conclusion of this analysis. These principles focus primarily on securities accounts, from a holistic operational, legal and compliance perspective, which simultaneously ensure adequate safety of client assets while minimising operational complexity and cost. Among some of AFME’s key Asset Segregation Principles are: Internal accounts should be fully segregated and identify the immediate client for whom the assets are being held; External accounts should be segregated between proprietary assets and securities account holder assets; In the event of the insolvency of a securities account provider, client asset protection is of utmost importance. Download Principles of Asset Segregation, Due Diligence and Collateral Management

The Association for Financial Markets in Europe (AFME) has today published model clauses for the contractual recognition of bail-in for the purposes of satisfying the requirements of Article 55 of the EU Bank Recovery and Resolution Directive (BRRD). The model clauses seek to support cross-border effectiveness of resolution and assist banks with complying with the requirements of Article 55 BRRD by providing model wording for inclusion in debt instruments and other contracts. Commenting on the publication of the model clauses, Oliver Moullin, Head of Recovery & Resolution and General Counsel at AFME, said: “AFME’s model clauses for the contractual recognition of bail-in should support cross-border effectiveness of resolution and assist banks in meeting the requirements of Article 55 BRRD. However, very significant challenges remain and the scope of Article 55 should be amended to align it with the international standard, increasing consistency and clarity for the market.” Continued concerns with the scope of Article 55 BRRD The scope of Article 55 is very broad and requires banks to include contractual recognition clauses in contracts giving rise to all liabilities governed by non-EEA law, save where these are expressly excluded from bail-in under the BRRD. The requirement gives rise to significant challenges, for example where banks are unable to unilaterally amend contracts, such as in relation to trade finance and membership of financial markets infrastructure.A number of authorities have acknowledged that in many cases inserting such a clause is impracticable. While several authorities have sought to adopt a pragmatic approach to implementation, there remains uncertainty and potential inconsistency in application. A clear and consistent approach across the European Union is required to provide banks and counterparties with a clear and workable solution. AFME believes that the scope of Article 55 should be amended to align it with that agreed at the international level through the Financial Stability Board (FSB). These principles propose that the scope should cover instruments eligible for loss absorbing capacity requirements and any other “debt instruments”. This would provide a much clearer scope of liabilities and significantly reduce the impact on firms while meeting the objective of ensuring resolvability. Alignment with the FSB principles is particularly important where inconsistencies in approach could severely impact the competitiveness of European banks operating in global markets. – Ends –

Commenting on the launch of the first Joint EU-US Financial Regulatory Forum, Simon Lewis, Chief Executive at AFME, said: "AFME welcomes the launch of the EU-US Joint Financial Regulatory Forum which has the potential to build upon the transatlantic cooperation that the Financial Markets Regulatory Dialogue has already established. Beyond this welcome initiative, AFME recognises that more needs to be done to enhance international coordination and facilitate cross-border investment with a view to supporting the growth agenda in Europe. "We therefore believe this should be a first step towards including a framework for discussing financial regulation in the Transatlantic Trade and Investment Partnership (TTIP). TTIP offers the best opportunity for a forward-looking EU-US dialogue that can address issues early while also bringing the needed transparency and accountability that other mechanisms may lack”.