13 November 2012

ICMA responds to EC Consultation Paper on Liikanen's recommendations

The ICMA has responded to the Commission's consultation on the recommendations of the Liikanen High-level Expert Group. To separate securities trading activity, possibly isolating it from primary market activity, will have potentially significant adverse impacts on the international capital market

Whilst the Group’s report contains many interesting recommendations, the ICMA has determined that it will be of greatest value for its submission to focus on those few points of most direct relevance to the international capital market and where it seems most likely that the ICMA may have distinctive points to contribute.

 In overall terms, the ICMA considers that the recommendation:

(i) to separate securities trading activity, possibly isolating it from primary market activity, will have potentially significant adverse impacts on the international capital market; and

(ii) concerning certain details of how to design bail-in debt is not the best way to develop this important feature of recovery and resolution regimes.

Before covering these points, the ICMA wishes to highlight the existence of other official initiatives concerning similar issues, including the Vickers Report in the UK and the US “Volcker Rule”. Inevitably there are elements of overlap amongst these initiatives and there is a risk that any final proposals which do emerge may not necessarily all fit neatly together, either with respect to their content and/or their timing. Since the implications of any combination of actual proposed changes may differ and cannot be assessed in advance of suitably detailed actual proposals, the ICMA respectfully requests that every effort be made to sustain ongoing dialogues – both between the requisite officials and with the markets. It is in everyone’s best interests that necessary issues are adequately addressed, whilst at the same time avoiding any unnecessary adverse implications for the international capital market.

Full response

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