At a meeting of ICMA’s Committee of the Regional Representatives (CRR) in November 2022, it was suggested that ICMA should leverage its various initiatives related to fixed income market structure and liquidity to take a more holistic market view, looking also at the inter-dependencies of different markets, to identify potential risks and vulnerabilities. This would include an analysis of the impacts and interplay of prudential, market, and fund regulation. This multi-dimensional perspective is intended to inform recommendations to improve overall market resilience and liquidity. In response to the suggestion, ICMA proposed to create and mobilise a Bond Market Liquidity Taskforce (“Taskforce”) to drive this initiative. The Taskforce is made up of interested ICMA members, representing sovereign, corporate, short-term, and repo markets, including sell side, buy side, and relevant financial market infrastructures.

Phase 1

Following the first meeting of the Taskforce on 19 April, and a subsequent “open-to-all” call with a broader audience of members on 2 May, it was agreed that the Taskforce should approach its work in phases, addressing different bond market segments sequentially. the first phase of the Taskforce’s work will focus on core European sovereign bond markets (Germany, France, Italy, Spain, and UK).

The initial stage of this work, which is currently under way, is for the ICMA Secretariat to undertake an extensive desk study on these markets, trying to map market structure, participants, and dynamics. This will also be supported by data gathering and analysis, which is intended to highlight potential vulnerabilities, particularly in stressed scenarios.

Initial data gathering and analysis has now been shared with Taskforce members for review and feedback on how to advance the work and areas for further qualitative and quantitative exploration.

ICMA is aiming to publish the outcome of Phase 1, along with recommendations to improve market liquidity and resilience, in due course.

Anybody interested in participating in ICMA’s Bond Market Liquidity Taskforce should contact Andy Hill or Nicolette Moser.

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