ICMA publishes overview of the European commercial paper market and recommendations for future market development

ICMA has today published a white paper on the European commercial paper and certificates of deposits markets, detailing the structure of the markets, assessing their performance under stress during the Covid-related turmoil of March-April 2020, and outlining recommendations for future developments to market structure to enhance its resilience.

There is no single pan-European market for commercial paper. The market in Europe consists rather of the Euro denominated commercial paper market, largely based in London, the NEU CP market and multiple smaller domestic markets within Europe each with its own legal framework for issuance, market structure, participants and market dynamics. The turmoil of 2020 exposed areas where market functioning and resilience could be improved.

The paper, which has been overseen by the newly constituted ICMA Commercial Paper (and Certificates of Deposit) Committee, consisting of issuers, dealers, investors and financial market infrastructures, highlights the benefits in the creation of a more harmonised, single, multicurrency and pan-European market, consistent with the aims of the Capital Markets Union. Measures to underpin secondary market liquidity and resilience are also identified as key structural enhancements.

ICMA Chief Executive Bryan Pascoe said: “There is a clear opportunity for industry participants to work with central banks and other regulators towards the common goal of developing and strengthening the European short-term credit markets. ICMA looks forward to further engagement with its members and broader market stakeholders in this very important area.’’

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