The Global Financial Markets Association (GFMA) has published a letter addressed to the European Commission and the European Securities and Markets Authority (ESMA) on the consistent regulatory treatment for incidental foreign exchange (FX) transactions related to foreign securities settlement (FX security conversions).

GFMA argues that FX security conversions, that are entered into solely to effect the purchase or sale of a foreign security, should be considered to be a bona fide spot transaction where the settlement period is greater than two days. On that basis, it requests the Commission and EU national competent authorities to confirm that FX security conversions are not financial instruments under the Markets in Financial Instruments Directive but equally to consider whether European Markets Infrastructure Regulations are not invoked either.

View Consistent Regulatory Treatment for Incidental Foreign Exchange (FX) Transactions Related to Foreign Securities Settlement – “FX Security Conversions”, 25 March 2014