Trade Bodies Warn On CSDR Mandatory Buy-In02.03.2020
ICMA’s AMIC and the IA have written to Executive Vice-President Dombrovskis of the European Commission, on behalf of their members, expressing concerns about the potential bond market impacts of the CSDR mandatory buy-in provisions (due to come into force in early 2021).
The @ICMAgroup Asset Management and Investors Council and the @InvAssoc wrote to @EU_Finance @VDombrovskis expressing concerns about the potential bond market impacts of the CSDR mandatory buy-in provisions.
You can read the letter here ⤵️https://t.co/PDfQpFqNv1
— ICMA (@ICMAgroup) February 3, 2020
The regulatory initiative is widely expected to have negative implications for European bond market efficiency, liquidity, and stability, creating additional, and largely unwarranted risks for investors.
Representing European and global buy-side institutions, the Asset Management and Investors Council and the Investment Association encourage the European Commission to undertake a robust market impact assessment of the mandatory buy-in provisions before attempting implementation.
In the absence of such an analysis, as a minimum, the associations request a cautious, phased-in approach to minimize potential disruption to the European markets.
Same-day execution reduces clients’ risk and resources as optimization can take up to 5 days.
Initial margin for centrally cleared markets increased by $300bn over March 2020.
More buy-side firms will be caught by the new rules.
Exposures and margin calls can be monitored in real-time.
Reducing costs associated with funding and liquidity is becoming increasingly important.