The Midway Point - 'The year the world goes to vote’
Earlier in the year I wrote about 2024 being ‘the year the world goes to vote’ – since then we have seen snap elections being called, new governments elected to power, and the occasional heated live debate, highlighting the good, the bad and the ugly of global politics. There will no doubt be many more twists and turns throughout the remainder of the year. While we may sometimes feel like passengers on the political merry-go-round, seeing democracy in action is something we shouldn’t take for granted.
Boosting Europe’s Capital Markets by Empowering Securities Lending & Borrowing
A change of government is often followed by a flurry of activity in public and government affairs offices across the globe, as businesses take the opportunity to engage and inform policy makers on the issues impacting their industry. The same is true for the securities lending and borrowing markets, with ISLA publishing its 2024-2029 manifesto – How to Boost Europe’s Capital Markets by Empowering Securities Lending & Borrowing, outlining our views and recommendations on how our members and the market we represent, can support EU policy makers and regulators in addressing the significant funding challenges that Europe faces.
The recommendations outlined in the paper transcend the entire value chain of financial services, ranging from how more UCITS and EU pension funds can benefit from securities lending, and how banks and brokers can better access lenders, to how to drive digitisation and make EU markets more efficient and resilient. Ultimately, this paper highlights the pivotal role that the product plays in the wider development and functioning of the Capital Markets Union (CMU) and will form the basis for our advocacy work in the EU.
State of the Market
Looking specifically at our market, and as I write this blog, the team and I working closely with our friends at Clearstream, on the next edition of our bi-annual Securities Lending Market Report, due to be published in the coming weeks. On reviewing and analysing some of the market data, and whilst the headlines might show a drop in revenues, context is key. Elections and fluctuating interest rates have brought volatility to the markets which have inevitability fuelled increased activity across equities and fixed income. We have seen Asia and the US perform well, and the search for new liquidity pools in the Middle East goes from strength to strength. It’s clear that our market continues to find growth even against the most challenging headwinds.
Speaking of disruptive forces, since my last blog, T+1 has of course gone live in the US, and while there was much fanfare and market commentary, the transition itself came and went with minimal disruption, which is a testament to the preparedness of the market. With many jurisdictions setting their own Accelerated Settlement go-live dates, all eyes will continue to be on the US as the global markets look to learn and develop their own plans. At ISLA, our Regulation & Market Practice team continues to be active on the EU and UK Accelerated Settlement Taskforces, ensuring our members remain informed in our ISLA Accelerated Settlement (T1) Working Group, while also working on updating our industry best practice to reflect the challenges, outcomes, and impact of financial markets moving from T+2 to T+1.
Liquidity remains in focus, and this year has seen the Middle East move front and centre in that search. With open markets, a clear growth ambition and strengthening market frameworks, the region offers fertile ground for the industry. Throughout the remainder of the year, we will support our members’ growth in the region through the continued publication of our industry guides. Following the success of our Kingdom of Saudi Arabia guide published in February, I’m pleased to announce that the next guides covering Abu Dhabi and Dubai, will be published in the coming months.
ISLA is committed highlighting the value of securities lending and borrowing to the broader capital markets and financial sector and to this end, we recently launched the ISLA Securities lending & Borrowing Hub. From exploring market mechanics to current regulatory frameworks, the Hub covers a range of topics as well as useful links to related content and further resources, including industry guides. This online resource aims at demystifying securities lending and borrowing, end-to-end, for a range of audiences from new market entrants to regulators and policy makers.
Collaboration is Key
Many of the challenges that we face can only be overcome through collaboration across the industry. Integral to this is the forming of networks and relationships, where it was incredible to see such a large proportion of the industry represented at our 31st Annual Securities Finance & Collateral Management Conference in Geneva. With 600 market participants attending the conference, it did not disappoint in terms of attendance; the agenda certainly resonated as we saw a packed auditorium from start to finish. With everything from geopolitics and regulation to some excellent panels covering liquidity and product innovation, as well as the continued evolution in lending supply, the conference highlighted just how vibrant and interconnected our industry truly is. I’d like to personally thank all the speakers, panellists and attendees to this year’s event. You can read about some of our key takeaways from the event here.
While the summer holidays may be an initial priority for most of us, the Events team at ISLA are busy planning our various conferences, as well as regional and educational briefings to the end of the year. We are very much looking forward to connecting with local market participants and members in Italy, as we run our inaugural Milan Briefing in September, alongside our third ISLA Connects Educational Briefing on Legal Frameworks for new or recent entrants to our markets. Later in the autumn and following our flagship 14th Annual Post Trade Conference in London, we are set to return to Paris followed by Frankfurt.
One Global Advocacy Voice Across EMEA & the Americas
Over 2024, ISLA has experienced one of its greatest evolutions yet, through the creation and incorporation of a US-based affiliate, ISLA Americas. This is the realisation of a long-term ambition for the Association. Overtime, ISLA Americas will look to serve regional members across the Americas, together with current members operating global businesses, where ISLA has seen a notable increase in demand to produce a more cohesive output, reflecting multijurisdictional operating models and a growing desire to provide one global advocacy voice across both regions. I’m incredibly proud to get to this position and I’m looking forward to working closely with Fran Garritt and the ISLA Americas Board of Directors to support the growth of the business over the coming period.
I want to thank our members for their continued support through 2024, I wish you all an enjoyable and refreshing summer break. Please do get in contact with the team should you require information about any of the above.
Andrew Dyson
CEO
