Executive Summary • In 2018 the AFME Industry Utilities Working Group published their first paper, Industry Utilities: APerspective for Capital Markets, discussing the potential future opportunities for utilities and examining the challenges which prevent utilities coming to market. • This second paper has been developed by the Working Group to provide sixteen recommendations to support financial institutions and platform providers who are actively considering, or in the process of, developing an industry utility. • The recommendations address many of the complexities identified in the first paper. They are intended to be applicable to all of the stakeholders involved in utilities projects, and cover the various solutions, and common utility operating models, being developed. • In summary, the recommendations highlight the importance of: - Ensuring that a utility is the right solution to meet existing needs and that upfrontand active commitment from sponsors is secured for the duration of the project; - Prioritising requirements for the interoperability of the proposed utility solution andplacing importance on the use, or creation, of industry minimum standards; -Defining and implementing a consistent governance model for the project that can beused and adapted once the utility is operational; - Delivering timely ‘minimal viable outcomes’ that can quickly demonstrate and buildconfidence in the project and long-term utility solution; and -Dedicating sufficient project investment, time and resources, to integration and thecultural change activities that will be required. • Whilst not exhaustive, the recommendations intend to test assumptions, build awareness and increase the success of utilities projects in capital markets. • AFME looks forward to discussing the recommendations with all industry participants who are engaged in, or planning, a utilities project.

The benefits of financial integrationin the EU are well known and include making both the financial system, and the widereconomy, more resilient, which in turn supports growth. In this short explainer document, AFME highlights the vital role that Banking Union and Capital Markets Union can play in promoting greater financial integration. The document also outlines why these important initiatives should be thought about and promoted together, as they play overlapping and complementary rolesin strengthening the EU financial system. Find out more in our video:

The Global Financial Markets Association (GFMA) and PwC have today published a new report on current trends in technology and innovation and their impact on the investment bank of the future. The report, entitled ‘Technology and Innovation in Global Capital Markets’, examines the key trends which are expected to impact the industry over the next five years, providing a vision for the future and identifying the implications for the industry and for future policymaking. This report builds on the AFME report published in 2018, to now include perspectives from the US and Asia. Among the key findingsfrom the report are: Technology is one of the most powerful levers banks have to address potential disruption, tackle existing industry challenges and deliver future opportunities. While an average of 90% of survey respondents (US 90%, Asia 83%, Europe 95%) identified the opportunity for cost reduction as the most important driver for the adoption of new technologies, only 27% on average (US 27%, Asia 30%, Europe 25%) felt that the current investment allocated by banks to this strategic change was sufficient. There are four core technologies - Data & Analytics, Cloud Computing, Artificial Intelligence (AI) and Distributed Ledger Technology (DLT) – which have the potential to transform banks and the industry. The Global Financial Markets Association (GFMA) brings together three of the world’s leading financial trade associations, The Association for FinancialMarkets in Europe (AFME), the Asia Securities Industry and Financial Markets Association (ASIFMA) andthe Securities Industry and Financial Markets Association (SIFMA).

Executive Summary available in French. The Global Financial Markets Association and New Financial have today published The New Financial Global Capital Markets Growth Index. The report examines the development of capital markets across the globe and demonstrates their importance in supporting sustainable economic growth. It highlights how capital markets can help to diversify funding sources for corporates, increase the capacity of economies to absorb economic shocks and fund more sustainable pension systems. The research also identifies the potential for growth in capital markets and pools of capital around the world. Our goal is for this report to provide a comprehensive and fact-based analysis to assist policymakers’ and market participants in better identifying development gaps and growth opportunities and how to address them, as well as better understanding how deeper capitalmarkets can benefiteconomies. The Global Financial Markets Association (GFMA) represents the common interests of the world's leading financial and capital market participants, and speaks for the industry on the most important global market issues. The Global Financial Markets Association (GFMA) brings together three of the world’s leading financial trade associations, The Association for Financial Markets in Europe (AFME) in London, Brussels and Frankfurt, the Asia Securities Industry & Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in New York and Washington.

This white paper has been developed by the Task Force to explore the ethical considerations of AI. We have grouped the ethical considerations into two themes: • Data Input and Design (e.g. AI acting on data set bias), and • Understanding and Control (e.g. a lack of transparency of AI related decisions). We have made recommendations for how firms can address the ethical considerations of these two themes. In summary firms should: • Apply a critical view of the data sets used for each AI application and perform specific quality control checks from design through to operation; • Train design teams and individuals to be aware of, and mitigate, biases within the function and design of individual AI applications; • Assess what level of ‘explainability’ is necessary for each AI application and take this into account in its design; and • Ensure that all AI applications are subject to a suitable control framework and audit process throughout their lifecycle. AI is a fast-developing technology which is already being applied to specific uses within firms, as well as moving towards larger-scale deployments. Continuing discussions and information sharing on the ethical considerations of AI will be critical for the development of the capability within capital markets.

This paper published by The Association for Financial Markets in Europe (AFME)and Allen & Overy considers the implications of the UK’s withdrawal from the European Union on the continued eligibility of English law governed capital and debt instruments issued by EU27 banks to meet loss-absorbing capacity requirements.

The Association for Financial Markets in Europe (AFME) welcomes the efforts of the co-legislators to move ahead to the trilogue phase in the Risk Reduction Measures (RRM) package. This paper sets out our views on the resolution aspects of the proposals following the European Parliament’s Final Report, and the Council of the European Union’s General Approach. There are several key topics relevant to resolution within the package, including the implementation of the FSB Total Loss-Absorbing Capacity (TLAC) Standard, 2amendments to the Minimum Requirement for own funds and Eligible Liabilities (MREL), and other issues such as the provisions for a new pre-resolution moratorium tool.

The Association for Financial Markets in Europe (AFME) and EY has today published “The Scope and Evolution of Compliance”. The report considers the role of the compliance function within wholesale investment banks and the potential challenges and changes it faces in its structure and approach. It outlines the key considerations for banks’ compliance functions as they seek to adjust and enhance their roles in response to the changing nature of the business and regulatory expectations. To address these challenges, the report offers possible responses and discusses the optimum resource model for compliance: For example: There is an opportunity for compliance to transition from its traditional role into one that provides enhanced strategic advice to senior management. This includes increased oversight of 1st Line Control Function surveillance and testing as a 2nd Line Control Function, greater use of business data to analyse and provide insights to senior management on changing risks and controls, and a greater influence on the management of the regulatory risk framework as a whole. Compliance will become more data and technology dependent as budget challenges and operating effectiveness encourage innovation-driven transformation. But, people and human judgement remain important. There will continue to be significant debate about what the optimum resource model for compliance functions should be, given the challenges as well as the opportunities they face. We hope this report can make a useful contribution to those ongoing discussions.

Available in French, German, Italian and Spanish. This report tracks the progress to date of the European Commission’s flagship Capital Markets Union (CMU) project through seven Key Performance Indicators (KPIs). It is a joint publication with nine trade associations and international organisations representing global and European capital markets stakeholders. It is the first publication in what will be an annual series which will review developments in the CMU project and identify what further work needs to be done. The report also includes the first country-by-country comparison of individual EU Member State progress against the CMU’s objectives. Key findings include: The availability of pools of capital in Europe has shown encouraging improvements in most EU countries in recent years. The amount of household savings invested in capital markets instruments (i.e. equity shares, investment fund shares, bonds, insurance and pensions) has increased from 108.7% of GDP in 2012 to 118.2% of GDP in 2017. Europe continues to over rely on bank lending. European companies continue to over rely on bank lending, with 86% of their new funding in 2017 coming from banks and only 14% from capital markets. European capital markets are showing an encouraging trend towards greater intra-EU integration. Since the aftermath of the financial crisis after the repatriation of some market activities and funding to home countries. Our indicators show growing intra-EU activity between EU Member States in private equity, M&A transactions, debt issuance, and cross-border holdings of portfolio assets. Three years on from the launch of the Capital Markets Union Action Plan, and with the end of the current Commission approaching, this report provides a timely opportunity to review the progress that has been made to date on achieving the CMU’s vital aims.

Europe’s wholesale markets are operating in a time of unprecedented structural change, which will continue throughout the Brexit negotiation period and beyond. AFME is committed to working with its members through these challenging times and our role as the voice of Europe’s wholesale financial markets is more important than ever. We are acutely aware of the concerns our members and their clients face in relation to Brexit and the risks it poses for creating market fragmentation. We will continue our fact-based engagement with policymakers across the EU27 and in the UK, to make the case for how important it is that Europe’s market eco-system continues to function efficiently and effectively. AFME remains focused on fostering deeply integrated capital markets which enable our membership across the geography of Europe to serve clients with maximum efficiency and minimum disruption. Whatever the outcome of the Brexit negotiations we stand ready to support our members to transition to new regulatory and political landscapes. Despite such challenges there are also profound opportunities. As we enter a period of relative regulatory stability, now is the time for the industry to focus on tackling longer term structural issues. As the title of this year’s Annual Review suggests, re-wiring Europe’s capital markets to ensure they are as effective as possible will be essential for financing growth and investment in years ahead including delivering a credible Capital Markets Union. FinTech developments are revolutionising our industry, enabling enhanced risk management, driving cost savings for firms and significantly improving user experiences. There remains significant potential for firms to utilise technology collaboratively to tackle common challenges in areas such as cybersecurity, anti-money laundering, improving operational resilience and streamlining post trade processes.In this context, AFME is well positioned to remain a trusted partner for its members to lead on addressing these industry opportunities and to work on creating more efficient, client-centric and resilient capital markets in years to come. We are delighted to be holding our first ‘Transforming Global Capital Markets through Technology’ conference in Paris this autumn. This is an event we hope will become the leading European forum for innovation in FinTech and wholesale capital markets. I am now approaching the end of my first year as Independent Chairman of AFME. This year has seen us continue to pay close attention to maintaining our high standards in governance, risk management and financial control on behalf of our Board and membership.I would like to conclude by thanking my fellow Board members for their hard work and wise counsel over the last year. In particular, we are grateful to our outgoing Vice Chair Kostas Pantazopoulos of Goldman Sachs, who is stepping down from the Board after eight years. We also say farewell and thank you to founding AFME Board member, Gianluca Cugno of Banca IMI. Thank you also to Clare Woodman of Morgan Stanley, who has served in the role of AFME Treasurer with great distinction, and will now hand over that role to Ricardo Laiseca of BBVA. Michael Cole-FontaynChairman Association for Financial Markets in EuropeSeptember 2018