Understanding the Asia-Pacific Equities IOI Charter

Bloomberg together with ASIFMA (Asia Securities Industry and Financial Markets Association) last week co-hosted a webinar on the introduction of the Asia-Pacific Equities IOI Charter, which provides additional guidance for market participants who issue and react to IOIs on a bilateral basis in APAC markets. Developed over the last year, market participants, industry bodies and trading technology providers have collaborated to create a robust operating framework to improve the quality of Indications of Interest (IOIs) in the region.

Bringing together Asia’s buy-side and sell-side, the Charter aims to ensure the definitions of IOIs are interpreted consistently among all the major industry participants and maintain rigorous operational conduct. The Charter borrows from the terms developed by AFME (The Association for Financial Markets in Europe) in 2017 for their Framework for Indications of Interest.

Currently, more than ten major firms have agreed in principle with the contents of the Asia Pacific Equities IOI Charter and are working to implement and align their procedures, behaviours, and internal policies with the Charter.

A discussion took place during the webinar among key industry participants and contributors, including representatives from BlackRock, Franklin Templeton Investments, Credit Suisse, Morgan Stanley, ASIFMA, Asia Trader Forum and Bloomberg.

Lyndon Chao, Managing Director, Head of Equities & Post Trade at ASIFMA said, “We are very grateful for the wonderful collaboration across the industry to make this work and develop industry standards that we can all adhere to. There was a very active debate in order to get the Charter to a stage that can help the industry re-build trust with industry participants and regulators and we look forward to implementing next steps as this evolves.”

Buy-side Views

When discussing the challenges of IOIs with the buy-side, George Molina, SVP, Head of Global EM Equity Trading at Franklin Templeton Investments said, “In the past, IOIs had no formal structure and regulation, which led to lax standards of conduct and mistrust. With the help of organisations like Bloomberg and ASIFMA, we now have a framework with which sell-side and buy-side participants can sign-up and apply the Charter to their respective firms, re-building trust in IOIs.”

“The Charter creates accountability around IOI’s but there is still much more to be done in terms of due diligence and implementation,” said Simon Williams, Managing Director, Head of APAC Equity Trading at BlackRock. “By bringing buy-side and sell-side perspectives together, we brought consistency of views by leveraging current frameworks that were already familiar.”

Sell-side Views

From the sell-side perspective, Patrick Kelly, Managing Director, Head of Equity Client Trading and Execution APAC at Credit Suisse said, “The introduction of IOI qualifiers a decade ago was a great step forward for the industry. But today, it is important to further standardize our approach, because the interpretation of IOIs has become too varied among the buy-side and sell-side over the years. By further clarifying IOI use cases with the Charter, it allows us to operate in a safer environment from a regulatory perspective and increases client confidence in the IOIs they are receiving.”

Murat Atamer, Head of Asia ex Japan Equity Execution Services at Morgan Stanley added, “The Charter has not only helped level the playing field, but it has also allowed sell-side firms to fully understand the concerns of the buy-side. However, unique challenges from added data surveillance and best execution measurement techniques will also be introduced as a result. We are excited this opens a new era via the use of cutting-edge quantitative techniques for IOIs where they can be used for what they were originally designed for, which is liquidity sourcing and risk sharing for the buy-side.”

If you have any questions regarding the Asia Pacific Equities IOI Charter, or would like to be included on ASIFMA’s list, please email Lyndon Chao, Head of Equities, at equities@asifma.org. To watch a replay of this webinar, please visit this link.

To find out more about the common practices and standards for communicating indications of interest and trade advertisements on the Bloomberg Professional service, please go to BIAG-GO-