European Central Bank issues new capital rules

Capital markets lawyers are preparing to get to grips with new rules from the European Central Bank governing international debt securities that can be considered eligible collateral.

The new rules, set to come into force on 30 June, introduce a new form of global note and also mean the end of the common depository (the current holding place for global notes). The changes affect sovereign and supernational issuers which are part of the G10 or the European Economic Area and which issue bonds in euros. Capital markets lawyers will need to draft new securities documentation to ensure their clients comply with these rules by the deadline.

Allen & Overy has been at the forefront of these changes, advising the principal organisations behind the initiative, which includes the two clearing systems Euroclear Bank and Clearsteam Banking Luxembourg, as well as the International Capital Market Services Association and the International Capital Markets Association.

A&O international capital markets partner Roger Wedder-burn-Day has also drafted the New Global Note. A standard market protocol is also being drawn up.