Capital Markets

LIBOR

Following the cessation of GBP LIBOR on 1st January 2022, the FCA introduced a synthetic LIBOR rate for 1-, 3- and 6-month tenures to help with the transition of tough-legacy LIBOR contracts. The 1- and 6-month synthetic sterling LIBOR settings will cease at end-March 2023, while the 3-month setting will cease at end-March 2024.

Attention has now turned to transition from USD LIBOR, which will cease at end-June 2023. While the industry continues to push for transition of all instruments referencing USD LIBOR by that date, the FCA is also proposing introducing a 1-, 3- and 6-month synthetic USD LIBOR setting which would cease at end-September 2024. The FCA is consulting on these proposals, and the IA is supportive.

Consolidated Tape

Following on from the joint letter the IA sent to

senior policy makers at both the FCA and HMT which set out our memberships shared position on the core principles which should underpin the regulatory framework for a Consolidated Tape (CT) in the UK, the IA has been and continues to be in regular contact with the FCA to further explore how to establish a workable CT for the UK’s equities, ETF and bond markets. In addition to the above, the IA also published its position paper on developing a consolidated tape for the UK, which outlines the need for:

Structure of a consolidated tape - One tape provider per asset class; equities & ETF, fixed income and (in time) derivatives
A competitive tender process in which a single CTP will emerge
Mandatory contribution - all venues that host trading activity must be required to provide their market data to the tape provider
Voluntary consumption - consumption of the consolidated tape should be voluntary
Cost - the consolidated tape should be cost-effective for all market participants to access

Further information:

Hugo Gordon
Senior Policy Adviser
hugo.gordon@theia.org

Francesca Bluck
Policy Lead
francesca.bluck@theia.org

Fixed Income Stewardship Guidelines

On 24 November, the IA published its Improving Fixed Income Stewardship guidance which sets out how stewardship in corporate fixed income might be improved and is intended to facilitate better stewardship practices and outcomes for issuers and investors in fixed income through a number of recommendations for investors, corporate issuers of listed debt, or those considering issuing debt.

The guidance is aimed at ensuring that corporates fully appreciate the importance of stewardship in corporate debt, and how meeting fixed income investor’s evolving expectations can benefit them through making it easier for issuers to access capital potentially at a lower cost, as well as providing access to a wider investor base, and increase the likelihood that existing investors support new issuances. It also sets out a number of recommendations for investors to maximise the effectiveness of their stewardship in fixed income.

In addition to setting greater expectations on the companies and investors, the guidance also covers the role of syndicating banks and debt underwriters, who should play a critical role in supporting effective stewardship through facilitating greater levels of engagement between issuers and investors, and ensuring that issuers are informed of changing investor expectations.

This report represents the first step on the IA’s work on stewardship in fixed income and the IA and our members look forward to working more with issuers to advance practices across the industry.

Housing Association Guidelines

In November, the IA published updated Governance and Disclosure Guidelines for Housing Association Seeking Capital Markets Funding.

These Guidelines, originally published in 2017, set out investor expectations for housing associations seeking funding, including on disclosures providing transparency as to how

Further information:

Hugo Gordon
Senior Policy Adviser
hugo.gordon@theia.org

Francesca Bluck
Policy Lead
francesca.bluck@theia.org

IA website hub page can be found here.

housing associations are performing and how they are governed. The latest update reflects how investor expectations have evolved over time, particularly with regard to environmental, social & governance disclosures.

We invite all members to share the Guidelines with any housing associations with which they engage.

Wholesale markets review

On 25th November the IA submitted its response to the FCA’s consultation paper on the trading venue perimeter. This is the second consultation paper published by the FCA in response to HMT’s Wholesale Markets Review (WMR).

Some of the key points outlined by the IA within its response are as follows:

Overall, the IA and its members agree with the FCA’s interpretation of the definition of a multilateral system, but consider there to be areas that require further clarity such as the Request For Quote (RFQ) process

There should be a distinction between systems that facilitate trading and those that facilitate communication and data exchange
The IA and its members do not consider Order Execution Management Systems (OEMS) to be within scope of the definition of a multilateral system
The IA advises that the UK should continue to support the development of platforms which encourage innovation and create more competition in the UK market, however the IA cautions that too many MTFs could increase fragmentation of liquidity and result in extra costs for the industry.

The IA’s full response can be found here.

Market Outages

On 26th September ESMA published a consultation paper on how National Competent Authorities (NCAs) should ensure that trading venues have appropriate communication protocols in place in the event of a market outage.

The IA submitted a response to this consultation on 16^th December within our

Further information:

Hugo Gordon
Senior Policy Adviser
hugo.gordon@theia.org

Francesca Bluck
Policy Lead
francesca.bluck@theia.org

IA website hub page can be found here.

response the IA recommends that in the event of a market outage exchanges and trading venues providing the following:

Clear, structured communication, including a standardised protocol followed by all exchanges and trading venues if they experience an outage. It is our view that ideally there should be standard messaging on a global basis including universal standard flags disseminated by venues when they suffer an outage.
Immediate halting of market data. Exchange data should be halted immediately with a clear, standardised message disseminated electronically.
To clarify within one hour whether trades executed from the moment the problem was detected still stand, if they do not stand all orders should be cancelled.
Standard reopening procedures. There should be a standard reopening procedure, including a communication in advance of reopening. For example, “Exchange X will reopen in 15 minutes with an auction”.

In the event that the primary exchange/trading venue is experiencing technical disruptions/difficulties, an industry agreed alternative approach should be identified. The IA proposes a waterfall for dealing with market outages depending on timing and severity, beginning a delayed auction, use of trade-at-last functionality if this is not possible, and in the event of severe outages the use of an alternative platform.

The IA’s full response can be found here.

Further information:

Hugo Gordon
Senior Policy Adviser
hugo.gordon@theia.org

Francesca Bluck
Policy Lead
francesca.bluck@theia.org

IA website hub page can be found here.

Trade Tech

17th-19th April 2023

The IA will be attending TradeTech (17-19 April 2023), which returns to Paris after a year of volatility. The Pandemic. The Ukraine-Russia crisis. Increased Inflation. The macro environment is constantly evolving, and so is our trading landscape.

To match that change, TradeTech is also adapting. We will be hosting our first-ever Data Science in Trading Day exclusively for the buy-side at no additional cost, allowing you to evaluate the latest technology offerings in closed-door roundtable sessions.

At the main conference, you will hear from leading voices from the global equities community, including; BlackRock, Fidelity Investments, SSGA, Jupiter Asset Management, Point 72, Martlet Asset Management, JP Morgan Asset Management, Man Group, T. Rowe Price, Capital Fund Management and the sell side, exchanges and technology partners.

Over 1000 equity leaders will join us to re-connect, build new contacts, and capitalise on opportunities. Will you be?

Review the current agenda here.

Buy side? Claim your complimentary pass here:

Sell side, exchange, or technology partner? Take this discount TTIA10 and check out the pricing packages here.