ICMA Outlines Strategic Priorities to Boost EU Banking Competitiveness and Capital Markets

The International Capital Market Association (ICMA) has issued a position paper urging EU policymakers to link banking competitiveness directly with capital market development. For fintechs and financial institutions, this signals a push to reduce regulatory overlaps that currently stifle balance sheet capacity for essential market-making, underwriting, and repo financing activities across Europe.

What was announced

ICMA’s paper addresses the upcoming EU legislative agenda, positioning banks as the indispensable backbone of resilient debt capital markets. The association argues that banking competitiveness and capital market development must be treated as a single policy challenge rather than separate regulatory silos. Currently, banks are central to bond underwriting, market-making, hedging, and repo financing, yet ICMA highlights that overlapping regulatory requirements can severely constrain their capacity to support these activities.

The association calls for a reform strategy built around three priorities: scale, simplicity, and capacity. Key recommendations include strengthening bond market-making and underwriting capacity by addressing constraints on how banks deploy their balance sheets. In the repo markets, ICMA advocates for more risk-sensitive prudential requirements and improved collateral management to enhance depth and efficiency. Furthermore, the paper suggests simplifying and aligning regulation by reducing unnecessary duplication and removing barriers to cross-border market activity. These reforms are intended to enable banks to play a full role in delivering the EU's Savings and Investments Union ambitions while maintaining robust financial stability and prudential standards.

The companies involved

The International Capital Market Association (ICMA) is a self-regulatory organization and trade association representing participants in the global capital markets. With a membership that includes private and public sector issuers, banks, asset managers, and financial infrastructure providers, ICMA plays a critical role in setting industry standards. The organization is particularly well-known for developing the Global Master Repurchase Agreement (GMRA), which serves as the standard legal framework for international repo transactions.

Operating as a bridge between market participants and regulatory bodies, ICMA focuses on the efficiency and cost-effectiveness of the international debt markets. Its work spans across primary markets, secondary markets, and repo and collateral markets, as well as the integration of sustainable finance and financial technology. By promoting high standards of market practice, ICMA aims to ensure that capital markets remain liquid and resilient. The association maintains a significant presence in major financial hubs, including London, Paris, Brussels, and Hong Kong, reflecting its influence on both European and international financial policy.

What FF News has reported before

FF News has previously tracked ICMA’s efforts to modernize capital market infrastructure through digital innovation. In August 2024, the association released the ICMA Publishes GMRA Digital Assets Annex, which provided a standardized framework for incorporating digital assets into repo transactions. More recently, the association looked toward the long-term impact of decentralized technologies in ICMA Outlines Future of Smart Contracts in DLT Fixed Income Markets. These reports highlight ICMA’s ongoing commitment to ensuring that both legal frameworks and technological standards evolve in tandem with the needs of modern debt markets, particularly as the industry moves toward greater automation and distributed ledger integration.

What this means

This position paper highlights a growing tension between post-crisis prudential safety and the need for economic growth through liquid markets. By framing banking capacity as a prerequisite for the Savings and Investments Union, ICMA is putting pressure on EU regulators to move beyond "regulation by accretion." If policymakers adopt these recommendations, it could unlock significant liquidity, but it also raises questions about how to balance "risk-sensitive" requirements with the potential for increased systemic leverage. The industry is now watching to see if the EU will prioritize the streamlining of its complex regulatory stack to keep European banks competitive against global peers.