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Foreword In our Market Highlights section, we cover some of the

changing dynamics observed during the second half
of the year. These were notably driven by liquidity and Against this backdrop, the securities lending
market requirements, evidenced by the large variance market has shown extreme resiliency,
in collateral preferences throughout the period, volatile serving its role as a liquidity and credit
money market rates, and the ever-present regulatory
requirements to adhere to. intermediation mechanism for institutional
investors, who during volatile periods were
From a regulatory perspective, EU governing bodies confronted with the need to adjust their
decided to postpone a few important pending portfolios as frequently as we have ever seen
Alessandro Cozzani regulations due to the pandemic, acknowledging that
working regimes were being disrupted and therefore
Deputy Chairman, ISLA Board impacting regulatory preparedness. CSDR was allowing us to continue working and being productive
postponed by a year to February 2022, NSFR was in a “contactless” environment. The ISLA team were
postponed in the UK by six months to January 2022. hard at work to bring you market and regulatory news,
Welcome to ISLA’s 14th edition of the Securities Lending Meanwhile, in the US the Federal Reserve published its strengthening and adding to our working groups, as well
Market Report. final NSFR rules, which saw a calibration towards a more as preparing and hosting virtual events. A few weeks
benign treatment for repo transactions. ago, we launched a weekly newsletter covering the full
During these extraordinary times, where working breadth of the securities lending regional markets in the
routines are being disrupted and life at home is in In a year characterized by disruption and volatility, one EMEA region, sourced from the industry’s latest trade
perpetual flux, there are few things that are constant in would have expected all this to have had some effect publications. Be sure to check out all this and more on
this sea of change. I hope you will find some comfort in on the year-end reporting period. Notoriously choppy our new webpage domain www. islaemea. org.
reading through this edition of the Market Report, one of due to its importance for many financial disclosures,
the customary pieces that ISLA has been publishing for the year-end went by without so much as a hiccup. I hope you enjoy this edition of the Securities Lending
many years. Granted, we did see some richness in repo markets, Market Report, featuring some interesting articles on
but nothing that we hadn’t experienced before, and the year’s events from the perspective of beneficial
As we look back on 2020, it has been a tale of two only for a week or so. Despite market participants owners, an update on ETFs and the steady progress this
cities; the first half of the year characterised by extreme predicting large liquidity imbalances driven by the asset class is making in Europe, as well as an analysis of
volatility and large drops in valuations for global indices, confluence of Brexit go-live and market volatility, it the future or securities services in the new digital era. I
while the second half was a tale of recovery, with seems as though the UK’s departure from the European am happy to see that all of them are underpinned by a
news of the vaccine bringing impetus to the markets Union was nothing more than a calendar date for theme of transformation and evolution, one that ISLA is
and taking equity valuations to new highs. Against this the securities lending markets. I’d like to think this proud to help you navigate.
backdrop, the securities lending market has shown was due to the years of preparation and countless
extreme resiliency, serving its role as a liquidity and legislative delays, which allowed everyone to be ready In closing, I would like to thank our data partners:
credit intermediation mechanism for institutional to trade with the right entity in the right jurisdiction. Triparty agents BNY Mellon, Euroclear, Clearstream and
investors, who during volatile periods were confronted JP Morgan; market data firms Datalend, IHS Markit and
with the need to adjust their portfolios as frequently as Digital connectivity was definitely one of the themes FIS Global for providing the backdrop to our analysis of a
we have ever seen. of the year, with technology taking centre stage in uniquely remarkable year.

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