AFME calls for harmonised asset seg rules

A lack of harmony in asset segregation rules has riled market participants.
By Paul Walsh
The Association for Financial Markets in Europe (AFME) has joined numerous industry participants in calling for greater harmonisation of asset segregation rules across European regulations.

AIFME’s latest report entitled “Principles of Asset Segregation, Due Diligence and Collateral Management” suggests there is no consistency of the definition of asset segregation rules across various pieces of European regulation including AIFMD, CSDR and UCITS V.

The association has also recommended key principles for asset segregation including that internal accounts should be fully segregated and identify the immediate client holding the assets.

It also asserts that external accounts should be segregated between proprietary assets and securities account holder assets and that in the event of an insolvency of a securities account provider, client asset protection is prioritised.

“EU regulations currently create a fragmented approach to account segregation. Given this patchwork of legislation, asset segregation lacks coherence and creates a level of uncertainty and confusion among industry participants,” said Werner Frey, managing director of the AFME Post Trade division.

Talk over harmonised asset segregation rules have led to much debate in the industry.

Europe’s securities and markets authority (ESMA) launched a consultation on asset segregation in July with the aim of broadening understanding of asset segregation rules and to address uncertainty across regulations.

In addition Euroclear’s head of government affairs Paul Symons also indicated that inconsistencies in asset segregation rules outlined under various European regulations were causing market confusion.