The Global Financial Markets Association (GFMA), which represents the common interests of the world’s leading financial and capital markets participants, has appointed a new Executive Director. David Strongin, Managing Director at the Securities Industry and Financial Markets Association (SIFMA), will take on the role with immediate effect. “David has for many years led SIFMA’s cross-border and international policy initiatives and as a result is well-known to financial institutions, regulators and policy-makers globally,” said Simon Lewis, GFMA Chief Executive. “He is held in very high regard by these communities and brings the experience to navigate the complex regulatory issues facing the world’s capital markets.” GFMA brings together three of the world’s leading financial trade associations to address the global regulatory agenda and promote coordinated advocacy: the London and Brussels-based Association for Financial Markets in Europe (AFME), the Asia Securities Industry and Financial Markets Association (ASIFMA), based in Hong Kong, and the New York and Washington-based SIFMA. David Strongin will report to Simon Lewis, GFMA Chief Executive, and will continue to be based in New York. -ENDS-

The Association for Financial Markets in Europe (AFME) has named Frédéric Janbon as its Chairman Elect. Frédéric Janbon will take up the role at the end of September when AFME’s current Chairman, Gaël de Boissard, Global Head of Fixed Income, CEO of the EMEA Region and Member of the Executive Board of Credit Suisse, stands down. Frédéric Janbon is Global Head of Fixed Income, Member of the Executive Board, Corporate & Investment Banking and Member of the Group Executive Committee at BNP Paribas. He has been in his current position heading Fixed Income since 2005. He is a Board member and member of the Executive Committee of AFME and a Board member of Global Financial Markets Association (GFMA). AFME has also named Kostas Pantazopoulos as Vice Chairman Elect. Kostas Pantazopoulos is Global Head of Interest Rate Products at Goldman Sachs. He is a Board member, and member of the Executive Committee, of AFME. Kostas Pantazopoulos will take up the role at the end of September. The current Vice Chairman of AFME, Benoît de Vitry, Group Treasurer of Barclays, will be ending his term of office in December. Gaël de Boissard said: “Frédéric is a valued Board colleague who will bring experience, insight and enthusiasm to the chairmanship. Representing a major European bank, Frédéric is well placed to play a leading role as AFME works with stakeholders across Europe. I would like to thank the Board for its support over the past four years and Benoît for his contribution since the inception of AFME. ” Frédéric Janbon said: “AFME is playing an important and constructive role in financial reform at a European and global level, ensuring that the European capital markets can play their part in the growth and financing of the wider economy. On behalf of the Board I want to thank Gaël for his leadership, and for setting and holding our course through some challenging times for our industry. I am looking forward to continuing this work and guiding AFME in the future.” -ENDS-

Commenting on the publication of the final report of the Parliamentary Commission on Banking Standards, Simon Lewis, chief executive at the Association for Financial Markets in Europe (AFME), said: “The report of the Parliamentary Commission on Banking Standards stresses the crucial role of banks in serving the needs of the real economy. This fundamental point must not be lost as these many and interlinked recommendations are considered. “The report is an important addition to the series of initiatives since the financial crisis to ensure the stability of the financial system. Since 2008 the industry has introduced significant changes to compliance procedures, capital holdings and incentive structures, among others, while operating in a more active regulatory environment. “This report adds another dimension to the post‐crisis response by assessing how we can improve standards in the banking industry, and the suggestions need careful thought. In our submission to the Commission’s work, we stressed that responsibility needs to be embedded at all levels within banks. The operational challenge, including how this applies to all banks with operations in London, should not be underestimated. A key element will be where the line is drawn between the obligations of those working in the banking sector and those in equivalent positions in other sectors.” ‐ENDS‐

Europe’s businesses want more flexibility in accessing funding, through expansion of capital markets channels such as European private placements, infrastructure, real estate, high yield and securitisation in order to improve distribution channels to capital markets to complement existing bank lending, according to a new report from the Association for Financial Markets in Europe (AFME). The Unlocking Funding for European Investment and Growthreport is based on in-depth interviews with borrowers, investors and banks in nine EU countries, carried out for AFME by Oliver Wyman. The study includes new insight from borrowers, owners of small businesses, CFOs of large companies, insurers, pension funds and asset managers on how the capital markets work for them and what changes they think will unlock the investment needed for growth. Commenting on the report, Michael Cole-Fontayn, Member of the Board of AFME and Chairman, BNY Mellon EMEA, said: “Growth and financing of the real economy in Europe clearly faces structural challenges. European businesses have traditionally relied on bank funding rather than accessing the capital markets. Borrower and investor feedback underlines that capital markets channels need to be expanded alongside bank lending to ensure that Europe’s businesses have sufficient funding for economic growth.” Clare Francis, Chair, AFME Financing Growth Working Group and Managing Director, Head of Global Corporates, Lloyds Bank said: “By concentrating on the perceptions and specific concerns raised by the users and providers of financing, we believe this report provides a different perspective to help inform the debate within Europe on actions that can be taken to improve the outlook for growth. Seen through the lens of a diverse range of businesses from across Europe the report provides both clarity and granularity as to where the financing markets are working well and where there are problems to be addressed. “Understanding the reality and issues from the users’ perspective will give greater focus on the key pressure points and practical recommendations for their resolution that have direct support at the grass roots level.” Report Findings: Improving access to finance for SMEs Interviewees believe that lending to small businesses (SMEs) is likely to remain primarily in the hands of banks due to the small size of transactions and the local nature of commercial relationships, although they say that non-bank sources such as fund managers could add some capacity over time. Securitisation could play a larger role, if the economics of SME loan securitisation can be restored, as an efficient way for banks to be able to free up capital and raise cash for further lending to existing or new SME borrowers. SMEs also said that it was not easy to understand the range of government and central bank schemes at national and European level. Improved information and communications would help them to understand what was available and how to obtain it and improve competition and transparency. Hedging for large corporates Large corporates say they do not generally experience problems with accessing funding but they would like to see action on the unforeseen and unintended consequences of regulation which is reducing availability of the products they need to be able to hedge business risk, as well as increasing their cost of capital. More flexibility in accessing funding for large and mid-size corporates Both large and mid-sized corporates would like greater flexibility in accessing funding as they need to be able to tap large pools of cash quickly, depending on market conditions. They say that certain capital market sources of finance, such as the European private placement and high yield bond markets should be expanded, which could be achieved through expanded legislation as well as more harmonised EU insolvency regulations respectively. Almost fifty target actions identified In terms of general themes, interviewees also cited two overarching constraints: the macroeconomic outlook as a barrier to growth and investment and the unforeseen real world consequences of regulation. Overall, the report identifies almost fifty possible targeted actions, each addressing a specific obstacle, which interviewees believed could achieve significant improvements. The obstacles and solutions are largely specific to country, sector or product -- for example, businesses in crisisrelated countries and sectors such as infrastructure finance and commercial real estate have particular issues -- and the solutions will require coordinated actions across industry and public authorities. Infrastructure funding Infrastructure funding is crucial to long term growth and productivity. Historically, infrastructure funding in Europe has been provided by banks. However non-bank funders, such as insurers, could be more active if certain issues were addressed. Investors said they were cautious of highly localised practices in procurement, as well as uncertainty around future tariffs. Governments and policymakers could reassure investors by standardising national or pan-European tariff guidelines and enacting regulatory risk compensation measures, as well as by introducing simpler planning and procurement procedures. Although insurance companies should be well placed to invest, given they generate approximately €1 trillion each year in investable cash flow, uncertainty over impending Solvency II and IORP pension fund regulation is holding back investment in long term asset classes. Insurers are concerned about how mark-to-market volatility for long-term investments is or is not dampened by matching adjustments, as well as how certain discount rates are used and how capital charges for certain real economy asset classes are calibrated. Pension fund asset eligibility should also be reviewed. -ENDS-

Simon Lewis, chief executive, the Association for Financial Markets in Europe (AFME) said: “We welcome the decision to make a legal challenge to the proposed financial transaction tax amongst 11 EU member states, under enhanced cooperation. “This is a tax that will damage markets beyond the 11 states that are considering it, across Europe and also internationally. It will act as a brake on economic recovery by increasing costs to investors. “All the evidence shows that the tax will have serious harmful economic effects in a number of ways: taxing securities will increase the cost of raising capital for Europe’s businesses and increase the cost of debt funding for both businesses and governments. In addition, taxing derivatives will have a negative impact on hedging transactions undertaken by the real economy in order to manage risk.” -ENDS-

Commenting on the European Commission’s proposal for a financial transaction tax issued today, Simon Lewis, the chief executive at the Association for Financial Markets in Europe (AFME) said: “The Commission’s proposal for a financial transaction tax in 11 EU member states is regrettable and likely to serve as another brake on economic growth. “This tax will have a negative impact on business in several ways. The tax on equities will increase the cost of raising capital for Europe’s businesses – and the tax on bonds increases the cost of debt funding for both businesses and governments. The tax on derivatives will also have a negative impact on hedging transactions undertaken by the real economy in order to manage risk. “AFME will continue to analyse the Commission’s proposals not least with regard to their extraterritorial impact, at this time when the EU and US have launched important and timely free trade negotiations. As participants in the G20, the EU and its members have committed to work together to support policies that will lead to sustainable and balanced growth – the imposition of an FTT with extra-territorial reach runs counter to that important objective. It is essential that the economic evidence is fully taken into account as the negotiations are taken forward.” -ENDS-

The Association for Financial Markets in Europe (AFME) and the Securities Industry and Financial Markets Association (SIFMA) today released the following statement after the European Council announcement that it would seek a broad free trade agreement with the United States: “We strongly support a comprehensive US‐EU trade and investment agreement, which should include financial services. “The US and EU financial markets are the most developed and intertwined in the world. We support efforts to initiate negotiations on a comprehensive trade and investment agreement because it presents a unique opportunity to enhance the efficiency of the transatlantic financial markets, facilitate trade, and deliver lower cost products to investors. It will also enhance capital formation for issuers in both the US and EU. “We encourage negotiators to focus on questions of market access, extra‐territoriality, and on enhancing regulatory convergence and efficiency that allows for increased growth and more efficient markets. We look forward to working with negotiators to secure an agreement that is reflective of the global needs of financial services firms and their customers.” ‐ENDS‐

A significant proportion of European investors say that the MiFID II proposal to force all quotes in fixed income instruments to be firm and disclosed to the market, will have a negative impact on trading activity and reduce liquidity, according to new research from the Association for Financial Markets in Europe. In AFME’s Investor Survey of Fixed Income Liquidity, 56% of investors polled said they believe the MiFID II pre-trade transparency regime will have a negative impact on market activity through: a decline in trading volumes; a reduction in transaction size, compromising the execution of large orders; an increase in the cost of trading; or a stop to trading altogether. The fixed income market continues its migration from voice to electronic trading, though more slowly than previously envisaged. More than one third (37%) of respondents said that electronic trading has increased over the past two years and 39% expect it to increase over the next 12 months. However, this growth is evolving from a low base: in 2012, 55% of investors conducted no more than 40% of their trades electronically. The findings also show that the majority (63%) of investors believe a choice of both electronic and voice methods of trading is necessary in order to maintain optimal market liquidity. Compared to the large investors, a significant proportion of small investors¹ (23%) believe that voice is the only method of trading necessary to maintain optimal market liquidity. In addition, the three key reasons highlighted by investors for choosing to trade by voice include ‘to improve liquidity’ (52%), followed by the ‘size of the trade’ (51%) and ‘certainty of execution’ (44%). The Investor Survey of Fixed Income Liquidity findings will be discussed in more detail at AFME’s 8th Annual European Market Liquidity Conference, which takes place in London on 13 February 2013. Christian Krohn, a managing director at the Association for Financial Markets in Europe commented: “The survey findings send out a clear investor message for European policymakers, namely that many investors believe MiFID’s pre-trade transparency proposals² will have damaging effects on trading activity, especially with regard to large trades. The European Council and Parliament amendments tolimit MiFID requirements to trades below a certain size are to be welcomed. However the Council proposal to broaden the scope to illiquid instruments will still hamper trading activity. “The survey also demonstrates the need to maintain the choice of both voice and electronic as methods of execution, which is seen by fixed income investors as essential to maintain optimal market liquidity. “Proposals to force all over-the-counter voice trading to take place under MiFID’s proposed transparency rules will remove this flexibility and will have unintended damaging effects on liquidity.” -ENDS-

Commenting on today’s agreement by European finance ministers on the European Central Bank (ECB) becoming a common bank supervisor, Simon Lewis, chief executive of the Association for Financial Markets in Europe (AFME) said: “ECOFIN’s decision should be welcomed as a major step forward and also an essential element in resolving the Eurozone crisis. “The Single Supervisory Mechanism forms a key component of banking union and the fact that Member States have now reached agreement is a welcome demonstration of the strong political commitment to this important project. It is essential that this momentum is maintained. “Banking Union should enhance the Single Market as a whole and AFME supports the significant efforts to achieve fair and balanced decision‐making for the European Banking Authority (EBA). The EBA should also have authority to develop a supervisory handbook for the Single Market as a whole in order to ensure high quality, consistent supervision for all banks in Europe.” ‐ENDS‐

The US Treasury decision to exempt foreign exchange forwards and swaps transactions from the clearing and exchange trading requirements of the Dodd-Frank Act is a critical step in ensuring the safe functioning of a well performing market and in promoting clarity in the international regulatory regime, according to the Global FX Division¹ of the Global Financial Markets Association2. Subjecting FX transactions to mandatory clearing would have introduced new risks into a stable market that performed well during the crisis with serious negative consequences for corporate and asset manager end-users, who use foreign exchange for international trade and investing and as a key element of their risk management programmes. Research3 shows that the key risk in foreign exchange is settlement risk, comprising 94% of the estimated maximum loss exposure in a trade for FX instruments with a maturity of six months and 89% for instruments with a maturity of two years. Recent consultations from several jurisdictions have consistently focused on settlement risk reduction as being the most appropriate mitigation technique for the FX markets. This settlement risk is already managed effectively through the existing CLS settlement system, which covers 17 currencies and is regulated by the Federal Reserve Bank of New York - who also Chair the joint oversight committee with 21 other Central Banks. The US Treasury decision also recognises the FX industry’s efforts along with DTCC to develop a global trade repository to store FX trade information, thereby providing additional oversight for regulators and transparency for users. The global build out of this repository, already in testing, will increase its effectiveness for regulators and efficiency for participants. James Kemp, managing director of GFMA’s Global FX Division, commented: “We very much welcome the US Treasury ‘final determination’. Moving FX swaps and forwards to centralised clearing would not only have created additional costs for businesses and investors, but also increased systemic risk. After such a detailed consultation period, this final decision from the US Treasury provides the clarity the industry needs to now further develop the infrastructure of the future. “The US Treasury has identified that the key risk in FX is settlement risk and that it is already effectively managed. We urge regulators in other jurisdictions to acknowledge the US Treasury’s key points and follow suit in exempting FX from mandatory clearing and execution requirements. This will ensure that the global FX market is not fragmented into different regimes and remains cost effective for end users”. -ENDS-