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ICMA’s position can be summarized as:
ICMA broadly supports the proposed cash penalty mechanism for settlement fails, although it argues that an appropriate calibration of the penalty rates is an essential consideration in its design.
ICMA retains its firm opposition to the mandatory buy-in regime, which it argues is fundamentally flawed and will be detrimental to bond market stability and liquidity.
ICMA proposes that the cash penalty regime be implemented as scheduled, with a higher than proposed penalty rate for bonds. However, the mandatory buy-in regime should not be implemented as scheduled.
The proposed penalty rate for ALL bonds (except SME debt instruments) should be the equivalent of 2.50% annualized.
The mandatory buy-in regime should only be implemented as a ‘last resort’ following an assessment of the impact of the penalty mechanism, and other initiatives, on bond market settlement efficiency rates.