Fixed Income Pulse: Technical Update

  • London Stock Exchange plc continues to collaborate with MTS S.p.A to ensure that issuers of bonds admitted to London Stock Exchange will be able to maintain ECB collateral eligibility via an additional admission to MTS BondVision Europe MTF (“BondVision”), as noted in its paper available here
  • This arrangement will not be affected by any potential divestment of London Stock Exchange Group Holdings Italia S.p.A (“LSEG Italia”), the parent company of Borsa Italiana S.p.A., including MTS S.p.A,  as announced on 9 October, and offers long-term certainty for issuers on London Stock Exchange’s debt primary markets
  • Securities admitted to London Stock Exchange’s International Securities Market will be covered by this arrangement going forward

London Stock Exchange plc (the “Exchange”, “London Stock Exchange”) published a factsheet in April 2019*, outlining the Exchange’s plan if after the end of the transition period, London Stock Exchange’s Main Market would no longer meet the European Central Bank’s (ECB’s) “acceptable markets” criterion for collateral eligibility for monetary policy and intra-day credit operations.  

The Exchange introduced an arrangement by which issuers of bonds admitted to London Stock Exchange’s Main Market will be able to maintain ECB collateral eligibility via an additional admission to MTS BondVision Europe MTF (“BondVision”), subject to the securities meeting the MTS admission criteria and satisfying all the other ECB eligibility criteria. This arrangement currently is live.

On 9 October, London Stock Exchange Group announced the potential divestment of London Stock Exchange Group Holdings Italia S.p.A (“LSEG Italia”), the parent company of Borsa Italiana, including MTS S.p.A (“The Transaction’”). The Transaction is conditional upon, amongst other things, the divestment of Borsa Italiana or any material part thereof being a condition of any European Commission clearance decision for the Refinitiv transaction (the Refinitiv Transaction). The Transaction is expected to close in the first half of 2021, i.e. after the end of the transition period. LSEG expects to complete the Refinitiv Transaction by the end of 2020 or early in 2021, ahead of completion of this Transaction. For further information, please refer to the announcement here.

London Stock Exchange plc notes that its collaboration agreement with MTS will not be affected by the Transaction and offers long-term certainty for issuers on London Stock Exchange’s debt primary markets. Further, under this agreement, securities admitted to the Exchange’s International Securities Market are included, and in this way will be able to gain ECB eligibility through admission to BondVision.

BondVision is a Multilateral Trading Facility (MTF) included in the list of “acceptable markets” recognised by the ECB. BondVision is organised by MTS S.p.A., and operates as an MTF under the supervision of the Italian regulator, Consob. In April 2019 MTS S.p.A. received the relevant approvals from its Board and amended its rule book accordingly to admit on BondVision Europe MTF financial instruments that are available for trading on London Stock Exchange.

As noted in the factsheet, the process of admission of bonds is automatic and without recourse to the issuer. We therefore do not expect that issuers will become subject to continuing obligations from the perspective of the EU Market Abuse Regulation. 

If you  have any questions, or need any additional information, please contact the Fixed Income team at London Stock Exchange plc - bonds@lseg.com or call us on +44 (0)207 797 3921.
 
Fixed Income team
London Stock Exchange plc
E: bonds@lseg.com
T: +44 (0)207 797 3921
 

 

*Subsequently updated in September 2019, December 2019, June 2020 and November 2020

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