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Dept Issuance Market Contact Group (DIMCG)

Dept Issuance market Contact Group (DIMCG)

Objective

The ECB has been considering a concept of European Issuance since 2017, where the ECB/Eurosystem could play an active role in setting up and running such a platform.

On 28 May 2019, a market consultation triggered the initiative on a European Distribution of Debt Instruments (EDDI), based on two components:

  • The preissuance component considered setting up as a centralised auctioning tool for debt instruments would have limited impact on the current competitive space for issuance.
  • However, the  posttrade component considered to develop into a fully-fledged “issuer CSD” to issue EU government and potentially corporate debt from a “neutral” environment.

The ECB never fully released the consultation results, and with changes in the ECB governance the initiative lost momentum.

With the new ECB presidency and a clear and imminent need to support the post-pandemic EU recovery packages, the project received renewed interest.

A Debt Issuance Market Contact Group (DIMCG) was established in 3Q 2020 and a new survey to collect information and data relevant for assessing the risks, costs and potential inefficiencies in the debt issuance transaction chain was launched in December 2020.

Neutrality and costs are drivers of the ECB initiative, which bases its assessment on three main “pillars”:

  • Pillar 1: Identification of EU debt issuance issues and opportunities
  • Pillar 2: Problem identification and standard setting/methodology.
  • Pillar 3: Assessment of existing/emerging market solutions that could solve pillar 1 and 2.

Timeline

It is expected that the DIMCG will issue a final report by September 2021 with recommendations for the way forward. This could take the form of a new CSD, a new issuance process or some other solution to be retained.

DBG´s CSD business is affected

Although not a legislative file, the ECB intention in this field and its business and political implications are most relevant for DBG´s CSD business.