This has been an auspicious year for ICMA, the 50^th since we were founded as the Association of International Bond Dealers, at the birth of the Eurobond market. Ever since, in all our various iterations, our mission has been to help the cross-border debt securities markets operate as effectively as possible, to help them intermediate capital flows across borders and to play a full role in facilitating growth and prosperity in the economy. Of course, we did not let this anniversary pass unnoticed and were pleased to welcome many eminent guests and members to a beautiful anniversary dinner at the Guildhall in London last February. We followed this with ICMA’s 50th anniversary AGM and conference in Madrid - with a record attendance for the last two decades.

The core of our work is focused on day-to-day market practices in the debt capital markets and in dealing with the regulatory aspects in which these practices are embedded. Core areas of activity are the primary markets, secondary markets, repo and collateral markets and sustainability, in particular the green and social bond markets.

The year started with the MiFID II/MiFIR implementation on 3 January, the culmination of an enormous amount of work for the industry in 2017 and a regulation whose impact reaches far beyond the borders of the European Union. Has this vast and complex regulatory package achieved its objectives? Take a look at our recent study for our view. It is still early days but clearly the answer is “not yet” and there are unforeseen impacts which detract from the laudable objectives of the EU’s Capital Markets Union, such as improving investor choice.

Aside from MiFID, there were plenty of other European regulations keeping us busy this year: (i) the implementation of the Prospectus Regulation is in full swing; (ii) the CSDR with its attendant proposal for mandatory buy-ins in the event of settlement fails (which we have long advocated against given its detrimental impact on liquidity and market making); and (iii) the vast task of implementing the Securities Financing Transaction Regulation, are just three of many. And whilst

these are all European regulations, they all have extraterritorial impacts, so we have been working hard with our members outside Europe, in particular in Asia, to help them understand the implications for their business and processes.

Brexit and the interest rate benchmark transition project have developed into major ICMA workstreams this year requiring significant focus. On Brexit, we have been particularly concerned about the impact of so-called “cliff-edge risks” which would arise in international capital markets when the UK leaves the EU either on 29 March 2019, if there is no agreement between the EU27 and the UK, or, if there is an agreement, at the end of the transition period. You may have seen ICMA’s correspondence with the leaders of the EU27 and the UK on our concerns, their responses and our further comment and analysis. As we all know the situation on Brexit is very complex and political – of course ICMA as a Swiss association is totally apolitical but the politics will have an

impact on how the markets will operate in future. Hence, we have been following closely and updating our members as extensively as we can.

The interest rate benchmark transition process, spurred by coordinated messages from the official sector primarily in the UK and the US, has developed enormous momentum in 2018. This is perhaps the most fundamental change to financial markets for many decades and impacts almost every user of financial products, both retail and wholesale. ICMA is extensively involved, from the perspective of the bond markets, with direct input to the various working groups in the UK, Switzerland and the rest of Europe and the US. Further information can be found in this Quarterly

Report and on our website.

It is important that ICMA is well represented in important working groups providing input to the public sector authorities on behalf of our members. I am pleased to say this is the case, with membership amongst others in the relevant ECB outreach groups, the stakeholders’ group of ESMA and expert groups of the European Commission. This year has been notable for the increasing involvement of the official sector in the development of the green and social bond markets, one of ICMA’s priorities. We run the Secretariat for the globally relevant Green and Social Bond Principles and in June held their first AGM outside Europe in Hong Kong with the support of the Hong Kong

Monetary Authority (HKMA). We have also been working with the ASEAN regulators as they issue guidelines for social bonds following their 2017 green guidelines and have just held a highly successful Green Bond Conference in Tokyo with over 500 attendees. Back in Europe, in 2017 we

were members of the European Commission’s High-Level Expert Group which helped shape the EU’s Action Plan on Sustainable Finance. Subsequently we were appointed to one of the highly sought-after seats on the Technical Expert Group and are now heavily involved in its work on

EU standards and taxonomy.

ICMA is spending increasing time analysing market structure issues arising from electronification of processes and the application of new technologies. This is on the agenda of all our committees and we are unique in providing mappings of the many different FinTech solutions in the primary, secondary and repo markets on our website. We have been stepping up our interactions with regulators in Europe and Asia as they become more engaged in the topic.

It has been wonderful to see our membership continuing to grow again over the past year, as we add both buy-side and sell-side members from all over Europe and Asia. At 550 ICMA membership stands at the highest level for more than 20 years, which is very encouraging. But of course, for ICMA what really counts is not the overall membership number but the quality and intensity of the

engagement with our members.

Under our current model we have a relatively modest number of full-time employees and so our credibility and effectiveness depend critically on the participation of our members in the various product-specific and regional committees, councils and working groups that we run. Again, this has been at record levels this year, with well over 1,500 individual experts involved from our member firms.

Additionally, roundtables, conferences and calls provide an important medium for communication – as do our website, legal and regulatory helpdesk, quarterly reports, newsletters and social media presence. Usage statistics again reveal a markedly higher level of engagement this year. We remain committed to providing high-quality executive education to market participants. Highlights in 2018 were the introduction of a green bond training course, delivered so far in the UK, Malaysia, Singapore, Hong Kong and Tokyo. We have also seen an upsurge in demand for in-house training. Our Chinese executive education joint venture continues to go well.

Operationally, the Association is in good shape with robust finances, meaning we will not need to increase fees for members in 2019. We are indebted to our committed, active and diverse Board of Directors for the guidance they provide and for generously devoting so much time to ICMA alongside their day-jobs. Notably this year the Board appointed the first ever female chair of ICMA in our 50-year history, Mandy DeFilippo. I am also very grateful to our staff in Europe and Asia for

all their efforts this year on behalf of our members. At times the workload has been immense.

For many of our members 2018 has been a challenging year as they navigate through the choppy waters of the financial markets buffeted by events beyond their control. It has seen the end of the ECB’s huge quantitative easing programme, rising rates in the US, global trade tensions, market fragmentation, Brexit negotiations, and a difficult geopolitical situation. The outlook for the fixed income markets in 2019 is by no means clear. At ICMA most of the workstreams in which we are currently involved are multiyear projects and will continue. But undoubtedly other issues which affect our markets and our members’ day-today business will arise, and we will need to remain nimble to address them and serve our members as well as we possibly can.

Last but not least, many thanks to you, our members, and to all those individuals who have worked with us this year, for your support. We wish you health and success in 2019.

Martin Scheck

martin.scheck@icmagroup.org