Today the European Securities and Markets Authorities (ESMA) hosted the T+1 Governance Launch Meeting to present the arrangements for driving the move to the reduction of default settlement cycles to T+1 for EU securities markets. The reduction of the settlement cycle for securities transactions can help reduce counterparty credit risks, improve market efficiency, and address issues arising from the current lack of alignment between the settlement cycles of Europe and other major global markets, which creates costs and inefficiencies for investors, issuers, intermediaries, and market infrastructures. Aware of the benefits and costs that this transition entails, members of the Industry Committee have welcomed the ESMA report, which identified a pathway and also suggested a date for the transition to the T+1 settlement cycle. In line with the recommendations of that report, and in coordination with the public authorities, the industry has established an appropriate governance framework to guide the transition process with the aim of moving to T+1 in a manner and timing also coordinated with the UK and Swiss markets. At the meeting on January 22 organised by ESMA, the independent chair of the T+1 Industry Committee, Giovanni Sabatini, presented the Terms of Reference for the T+1 Industry Committee, the committee's composition, and the organisation of work across the various identified Technical Workstreams, along with an initial draft of the work plan. The principles underpinning the composition of the committee and its activities are representativeness, inclusivity, transparency, consensus-seeking, and efficiency. In this regard, the committee's work may build upon the work already completed by the European industry in the October 2024 report, as well as the ESMA report and the UK recommendations, US Playbook, and upcoming Swiss report, when relevant. The Chair of the Industry Committee, Giovanni Sabatini, commented: “The T+1 project is a collective effort of the financial industry based on good faith and credibility. Establishing a robust, balanced, and inclusive governance framework is key to ensuring broad acceptance and support while avoiding overcomplexity. A coordinated move to T+1 will support the efficiency, liquidity, and competitiveness of EU financial markets. Constructive, transparent, and continuous cooperation with European Authorities will be key to ensuring the success of the project.”

The Association for Financial Markets in Europe (AFME) is pleased to announce the appointment of April Day as Head of Capital Markets. Ms. Day brings a wealth of experience in investment banking and capital markets to her new role. During her 12 years at AFME, she previously served as AFME's Head of Equities, overseeing Equity Capital Markets (ECM), trading, and post-trade activities. Her career includes senior roles at Dresdner Kleinwort and Panmure Gordon as Director of Equity Sales. Ms. Day holds an LLB (Hons) in Business Law and a Legal Practice Certificate from the Oxford Institute of Legal Practice. Ms. Day succeeds Rick Watson, who announced his retirement in July, after 18 years of service with AFME. AFME’s CEO, Adam Farkas, said, “We are delighted to appoint April as our new Head of Capital Markets. Her market insights and deep understanding of the industry make her the ideal candidate for this role. At AFME, we are committed to nurturing and supporting talent, and April’s appointment underscores this focus. April’s leadership and vision will undoubtedly strengthen our efforts to advance Europe’s capital markets and support our members in navigating the challenges and opportunities ahead.” – Ends –

The Association for Financial Markets in Europe (AFME) has today announced that Juan Blasco, Global Head of Institutional Business at BBVA, has been appointed as Chair of the Board. He assumes the role from Thalia Chryssikou who was previously a member of the AFME Board and served as Chair between June 2021 and July 2024. Adam Farkas, AFME Chief Executive, said: “We are delighted to welcome Juan as AFME’s new Chair. Since joining the Board in 2020, Juan has brought invaluable insight and perspective to AFME and its members. His wealth of knowledge and experience from his over 20-year career in financial services equips him to lead the AFME Board as we work to ensure Europe’s capital markets can play its role in allowing Europe to regain its competitive edge and secure long-term economic prosperity.” “I would also like to take this opportunity to thank Thalia for her service and dedication to AFME. Under Thalia’s Chairmanship, AFME continued to advance its reach and reputation as an expert and credible voice for Europe's wholesale financial markets across a broad range of regulatory and capital markets issues. She has been a very energetic and committed Chair; she remains a friend of AFME’s and we wish her well in her future endeavours.” Juan Blasco, said: "I am deeply honoured to assume the role of Chair at AFME and excited to build on its impactful work. As we navigate an evolving global landscape, Europe’s ability to foster efficient and integrated capital markets is key to enhancing global competitiveness. This requires continued collaboration and coordination between the EU and the UK to ensure that companies and investors are empowered to drive sustainable economic growth. I look forward to working closely with our members to advance capital markets that effectively serve businesses, investors, and communities." – Ends –

A consortium of leading trade associations (the “Trade Associations”) welcomes the opportunity to respond to the consultation of the European Commission (“EC”) on the functioning of the EU Securitisation Framework (the “Framework”). The Trade Associations support the efforts of the EC to review and address holistically the different elements of the Framework which hinder market growth. This initiative is a very important and welcome step at a pivotal moment given the important role securitisation can play in contributing to the realisation of the Savings and Investments Union and vibrant European capital markets supporting the growth and competitiveness of the EU economy. The regulatory and prudential challenges lie both on the demand and the supply side and, therefore, no single reform can ever provide an effective solution to the revival of the EU securitisation market. On the contrary, multiple, synchronised and targeted reforms are urgently needed to address the current regulatory impediments. These reforms include: Reform to Solvency II capital calibrations Reform to Article 5 due diligence requirements Adjustments to bank capital calculations for Internal Model and Standard Model banks Adjustments to LCR eligibility criteria and haircuts for securitisation for HQLA purposes Reform to Article 7 disclosure requirements Simplification of STS criteria – Ends –

The Association for Financial Markets in Europe (“AFME”) welcomes the opportunity to respond to the consultation by the European Commission (“EC”) on the functioning of the EU Securitisation Framework (the “Framework”). AFME is supportive of the efforts by the European Commission to consider holistically and review the different factors which are preventing the revival of the securitisation market and, as a result, hindering broader economic growth in the EU. AFME believes that every single segment of the securitisation market can offer valuable contributions to the Savings and Investment Union and the broader CMU objectives. Traditional and synthetic securitisations of mortgages, SME loans, corporate exposures and other asset classes have the potential to finance the real economy on a greater scale. The SRT market has also experienced significant growth in recent years and can further contribute to the deepening of EU capital markets, while private cash securitisations (both ABCP and non-ABCP) can provide important additional lines of credit to businesses across Europe. Given the potential of securitisation to improve the competitiveness of the European economy, AFME believes that the regulatory framework for securitisation needs to evolve to become more proportionate and risk-sensitive. Adam Farkas, CEO of AFME, said: “We are grateful for the opportunity to share our views and recommendations on what is needed to revive the securitisation market in the EU. We welcome the European Commission’s efforts to review the current Securitisation Framework and ensure it is fit for purpose and able to support the broader growth and competitiveness objectives laid out by the new EU Commission.” Shaun Baddeley, Head of Securitisation at AFME, said: “EU leaders have rightly acknowledged the value of securitisation and called for relaunching the European securitisation market, including through regulatory and prudential changes. The lacklustre securitisation market of the past decade can indeed, at least in part, be attributed to regulatory overcorrection, due to which, the EU is currently lacking the ability to deploy this financing technique at scale. More specifically, the combined effect of certain provisions within the EU Securitisation Regulation as well as in the EU Bank and Insurance Prudential Capital Frameworks have disincentivised EU investors and limited the utility of the product as a funding and risk transfer tool.” Following the submission of the AFME response to the EC consultation yesterday and the publication of AFME’s position paper ‘EU Securitisation back on track’ in June, AFME looks forward to continuing its engagement with the European Commission and other stakeholders as discussions evolve and progress. – Ends –

Overview This statement is supported by the following financial markets Trades Associations (“the Associations”) on behalf of their members active in the EU bond markets, including sell side, buy side, and financial market infrastructures: the Association for Financial Markets in Europe (AFME), BVI (German Investment Funds Association), Bundesverband der Wertpapierfirmen (bwf), the European Fund and Asset Management Association (EFAMA) and the International Capital Markets Association (ICMA). As ESMA’s review of EU’s post-trade transparency for bonds enters its final stages the undersigned Associations strongly reiterate the importance of the incorporation of credit ratings in underpinning the success of the EU post-trade transparency framework for corporate bonds. Distinguishing between investment grade (IG) and high-yield (HY) corporate bonds is an essential element that provides for greater transparency in more liquid bonds whilst balancing the need to provide protection for those bonds where overly prompt dissemination of trade information has the ability to negatively impact market liquidity. Other sophisticated bond markets also calibrate transparency for corporate bonds according to the credit rating of the issuer. Not adopting a similar methodology would put EU corporate bond markets at a disadvantage globally. The associations therefore urge policy makers to ensure that the European Union will remain competitive in the global fixed income markets, preserving and potentially expanding existing liquidity in EU bond markets, which in turn will continue to ensure issuers can finance their investment needs in the most effective way. It is clear that there are precedents for using credit ratings, not just across jurisdictions but also under other EU regulations. Use of credit ratings for the calibration of transparency for corporate bonds Why the need for credit ratings? The susceptibility of corporate bonds to price volatility varies based on their credit rating. High Yield bonds (i.e. bonds that meet lower credit quality standards) are innately more volatile in price than Investment Grade bonds (i.e., bonds of higher credit quality). This, consequently, creates greater sensitivity to undue risk potentially caused by overly early publication of trade details which, in turn, creates greater sensitivity and volatility in risk price provision caused by the same. This necessitates different levels of protection for those instruments that have greater price volatility. Having a distinction between IG/HY corporate bonds allows for more tailored transparency levels for instruments with different price volatility profiles. Credit rating is a criterion used by TRACE in the US for several years without difficulty; in the UK the FCA has just adopted credit rating as an important element for the calibration of the FCA’s proposed transparency models. AFME are confident that this approach in other jurisdictions can provide sufficient reassurance for regulators in the EU as well, regarding the feasibility of using credit ratings and can better help achieve the goal of competitiveness of EU capital markets with other leading global financial centres Wide support for use in transparency framework and evidence of their current use in EU regulation The European Commission expert stakeholder group on equity and non-equity market data quality and transmission protocols have also recommended in their Report on bonds (available here) that ESMA should consider the distinction of IG vs HY corporate bonds. Similarly, ESMA’s own Securities & Markets Stakeholder Group (SMSG) in its advice to ESMA also recommend the distinction between IG and HY to result in a more refined calibration approach (further details here). It should be noted that the ECB rely on credit rating as part of its assessments in the context of their prudential regulation and monetary policy powers. Specifically, the Eurosystem credit assessment framework relies on credit ratings from external credit assessment institutions (ECAIs). The different credit rating grades are mapped to a harmonised rating scale in order to make the ratings comparable across systems and sources, with 1-3 representing investment-grade status while steps 4-5 are for non-investment grade status. In addition, at the EU level there is already a credit assessment framework based on External Credit Assessment Institutions (ECAIs) that applies in the context of various EU regulations, including the CRR and EMIR, market participants are mandated to conform with that. We further note that ESMA already operate a potential source of the relevant data in the form of the European Rating Platform (ERP) which incorporates ratings data from all authorised credit rating agencies, including the 3 most globally recognised ones. Given ESAs already apply the mapping table of ECAIs’ credit assessments pursuant to implementing CRR regulation, this could effectively address any operational issues that might arise when using credit ratings as part of the MiFIR post-trade transparency deferral calibrations, if ESMA were willing to host a golden source (flag IG/HY per ISIN) available to the industry. Another option would be to leave the implementation to the industry (as the FCA and FINRA have done) with the determination defined at the level of investment firms, APAs and trading venues. Victoria Webster, Managing Director, Fixed Income, AFME Dr Thorsten Freihube, Director, Market Practice & Regulatory Policy, bwf Rudolf Siebel, Managing Director, BVI German Investment Funds Association Susan Yavari, Deputy Director, EFAMA Andy Hill, Managing Director, Co-head of Market Practice and Regulatory Policy, ICMA

The Association for Financial Markets in Europe (AFME) would like to extend its congratulations to the new College of Commissioners as they enter office today under the leadership of Commission President Ursula von der Leyen. As the voice of banks active in European wholesale capital markets, we look forward to supporting the work of the new Commission and assisting Commissioner Maria Luis Albuquerque and her team where we can as they seek to build the Savings and Investments Union. Commenting on the appointments, AFME’s CEO, Adam Farkas, said, “On behalf of our members, I want to extend our sincerest congratulations to the members of the new Commission. To ensure the EU remains competitive globally, we need to better mobilise capital and unlock private sector funding. This Commission has rightly recognised that a scaled-up, integrated and more efficient European capital market will be a critical building block to support its broader political and economic objectives. We look forward to working with Commissioner Albuquerque and the other members of the College as they work as a team to address the complexity of the challenges we face.” – Ends –

The Association for Financial Markets in Europe (AFME), in collaboration with eleven other European and international organisations, has today published the seventh edition of the “Capital Markets Union – Key Performance Indicators” report, tracking the progress of Europe’s capital markets against nine key performance indicators and analysing the progress over the past seven years. Adam Farkas, Chief Executive of AFME, said: “Our latest CMU KPIs report demonstrates that EU capital markets continue to face major structural challenges. We are lagging behind other regions across most key areas, including access to finance for corporates and SMEs, FinTech ecosystems, and market liquidity.” “To ensure the EU remains competitive globally, we need bold reforms to better mobilise capital and unlock private sector funding. An integrated and more efficient capital market can fund the initiatives critical to Europe’s economic competitiveness.” Among the key findings of the 2024 report on European capital markets’ performance: EU Capital Markets Falling Behind: Despite some cyclical gains, the EU lags behind the US, UK, and China in most key indicators, such as access to capital, global interconnectedness, and market liquidity. The EU’s capital markets remain fragmented, undermining economic competitiveness on a global scale. ESG Leadership, but Growth Slowing: The EU continues to lead in sustainable finance, with ESG bonds accounting for 13% of total bond issuance in 2024, ahead of the US and UK. However, growth in EU ESG issuance has not kept pace with growth in non-ESG issuance, with the overall share of ESG issuance down from 15% in 2021, signalling a potential plateau. Deteriorating Intra-EU Integration: The report highlights a worrying decline in financial integration within the EU, a trend also noted by the European Central Bank. This fragmentation threatens the EU's overall financial stability and its ability to compete globally. EU Securitisation Market Remains Underdeveloped: The EU securitisation market continues to trail behind those of the US, UK, and Australia. Currently, only 1.9% of outstanding EU loans are transformed into securitised vehicles or loan sales, compared to 7% in the US, 2.8% in Australia, and 2.2% in the UK. Issuers from only 9 of the 27 EU member states utilised securitisation as a source of funding in the first half of 2024. Widening Market Disparities: Northern European nations, such as Luxembourg and the Netherlands, boast deeper capital markets and greater access to finance, while countries in Eastern Europe lag behind. This disparity poses a significant challenge to the EU’s ambition for an integrated capital market. EU FinTech Ecosystem Stalling: Private investment in EU FinTech remains lower than in the US and UK, limiting the region’s progress in digital finance. However, the EU has taken a leadership position in the issuance of tokenised bonds, accounting for 20% of the global market in this emerging area. Addressing the Competitiveness Gap One of the most pressing concerns highlighted in the report is the EU’s annual funding gap of €800 billion. The funding is required for key areas like digitalisation, infrastructure and sustainability all of which are essential for boosting the EU’s long-term competitiveness. Unlocking the potential of capital markets will be key to addressing this shortfall. The report stresses the importance of mobilising household savings, with €11 trillion currently held in low-yielding EU cash and bank deposits. Shifting some of these funds into productive investment vehicles will be essential to strengthening the EU’s capital market ecosystem. Without ambitious structural reforms, the EU risks further market fragmentation and a decline in global market capitalisation. The report warns that while the EU has the scale and resilience to compete with the US and China, significant reforms are needed to overcome internal market fragmentation and to unlock Europe’s full potential. The report was authored by AFME with the support of the Climate Bonds Initiative (CBI), as well as European trade associations representing: business angels (BAE, EBAN), fund and asset management (EFAMA), crowdfunding (EUROCROWD), retail and institutional investors (European Investors), publicly quoted companies (EuropeanIssuers), stock exchanges (FESE), venture capital and private equity (InvestEurope), private credit and direct lending (ACC) and pension funds (PensionsEurope). – Ends –

The Association for Financial Markets in Europe (AFME) has today welcomed the publication of the Financial Conduct Authority’s Policy Statement (PS24/14) for improving transparency for bond and derivatives markets. The FCA model developed after active consultation with the market now better optimises timely transparency, as well as facilitating the adequate protection of investors and liquidity providers from the very real risks associated with overly prompt dissemination of sensitive information for very large or illiquid trades. AFME notes that the FCAs revised approach to bond post-trade transparency is a vital first step on the road to a well-functioning and commercially successful consolidated tape. Victoria Webster, Managing Director of Fixed Income at AFME, commented: “We welcome the publication of the FCA’s policy statement for improving transparency in UK bond markets. We support the FCA’s view that the UK’s new bond transparency regime will do much to assist price formation and proof of best execution while protecting the ability of liquidity providers to appropriately manage the risks they take when dealing in larger sizes and in illiquid bonds. We have long acknowledged that establishing the correct balances between simplicity versus nuance, and sufficient transparency versus adequate protection for market makers, is crucial for a successful transparency regime. We believe the FCA has made significant progress towards accomplishing this challenging task”. – Ends –

The Association for Financial Markets in Europe (AFME) welcomes the opportunity to respond to the European Commission’s targeted consultation on Artificial Intelligence (AI) in the financial sector. James Kemp, Managing Director and Head of Technology and Operations at AFME, said: “While traditional AI techniques remain relevant, recent advancements in Generative AI presentnew opportunities for value creation, particularly in service delivery, software development, and operational efficiencies. Many of the risks associated with AI applications are not new and are commonly encountered with the use of technology. In response, our members have developed mature risk management frameworks, often utilising existing 'Three Lines of Defence' models. These frameworks are designed to align with existing regulatory requirements, standards, and guidance, ensuring compliance with sectoral regulations and supervision. Their goal is to safeguard investor protection, promote financial stability, and support well-functioning markets. Consequently, AFME members do not see that there would be additional benefit gained towards achieving these goals from additional financial services regulation for AI. Among the key points from AFME’s consultation response are: Transformative Potential: AFME members widely recognise AI as transformative for the wholesale banking sector, with significant benefits across multiple areas. Advances in Generative AI are seen as promising for unlocking new value opportunities. Regulatory Perspective: AFME does not advocate for additional AI-specific regulations, as existing regulatory frameworks already encompass AI applications. Members have implemented comprehensive governance and controls driven by existing regulations, and are adapting these frameworks to cover new use cases enabled by Generative AI. EU AI Act: Regarding the EU AI Act, AFME members express a preference for industry-agnostic principles rather than sector-specific guidance. They seek clarity on implementation details applicable across sectors, believing that this approach will facilitate effective regulation without unnecessary sectoral distinctions. – Ends –