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THE CHIEF EXECUTIVE
Lessons from COVID-19 By Martin Scheck
It is encouraging to see that, despite the ongoing pandemic, the debt capital markets are operating effectively and allowing capital to flow as they should. In the last Quarterly Report, I commented that the powerful central bank intervention had significantly helped restore the functioning of the primary and secondary markets. Since then we have seen a very active primary market, broadening out to include a wider range of credits, including bank capital transactions, some high yield and EM also. Secondary markets have largely recovered from the dislocation during the depth of the crisis, and the repo market, faced with high volume, has been operational throughout, albeit with some dealer constraints and supply concerns. We discuss repo and the secondary markets further inside, drawing upon two recent ICMA studies exploring how they operated during the crisis (TheEuropean-repo-market-and-the-COVID-19-crisis) and (TheEuropean-investment-grade-corporate-bond-secondarymarket-and-the-COVID-19-crisis). A lesson we have all learned is just how successful remote working has proven to be. Our members have been able to undertake their business very successfully with split teams at disaster recovery sites, in the office and at home. And at ICMA we were able to be effective with all of our staff working from home. This is still largely the case although it is great to see our offices led by Hong Kong and then Switzerland starting to reopen on a selective basis depending on how the restrictions are easing in their various countries. I am pleased to say that our staff are all well and have been so throughout the crisis. The immediate priorities of refocussing our work to deal with the most pressing issues thrown up by the crisis were discussed at length in the last Quarterly Report, and much is still ongoing: our COVID-19 hub is updated daily and has received many thousands of visits; and our work
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with the regulatory community has also been important to ensure that deadlines for new legislation, and deadlines for consultation papers, are lengthened where necessary. To a large extent the official sector has made adjustments in response (including in the case of certain prudential measures). This has been welcome. The most imminent implementation remains the SFTR, where ESMA granted three months regulatory forbearance. Our work continues unabated with the very large SFTR task force leading the market to ready itself to be compliant on time on the go-live date of 13 July. However, concerns from all market segments in the context of the mandatory buyin aspect of the CSDR continue to rise, with the elevated level of fails in the crisis serving to re-emphasise starkly the difficulties inherent in this legislation. We continue to discuss the situation in depth with the European Commission and ESMA, asking them to assess the implementation in the light of the lessons learned from the crisis. Perhaps the most important lesson is the centricity of dealer capacity to secondary market functioning. We are pleased to receive the recent ESMA “Survey of CSDR topics to review�, and will certainly be providing our suggestions, and also note that the UK has decided not to implement the CSDR Settlement Discipline regime in 2021. There are more details inside this Quarterly Report. On a positive note, we are pleased to see that the crisis has proved to be a catalyst for the issuance of social and sustainability bonds aligned with the Social Bond Principles and Sustainability Bond Guidelines. Issuance has been accelerating and additional guidance on use cases provided by the Green and Social Bond Principles. The proceeds of these bonds are being put to good use for a variety of social objectives, such as improving access to healthcare and providing support to ease economic hardship caused by the crisis. A further exciting development in the
