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ISLA MANIFESTO 2024
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Priorities & As the table below shows, there is a very significant gap between total assets, available supply and assets on loan.

Financial Assets held in EU (in Billion €) as of Q4 2023
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Recommendations for the Total Assets Assets Available Actual Assets % On Loan

On Loan
For Lending
New Legislative Term Total 82,000 3,630 326 9.0%

UCITS 8,400 2,490 194 7.8%

In the following, we provide several recommendations that ISLA believes would help to bolster the Pension funds 3,370 522 32 6.1%
competitiveness of EU capital markets, whilst also strengthening Europe’s market resiliency. These are
grouped under four key themes that provide overall direction for a future strategy to optimise securities
lending and borrowing as a core channel to support Europe’s funding needs. Such a strategy should focus on:
• Total securities held by EU-based investors is estimated at around €82 trillion (as of
Q4 2023) of which approximately €3.6 trillion is currently available for lending.

• Securing and expanding supply-side channels by mobilising significant additional • UCITS hold approximately €8.4 trillion in assets (10%), of which €2.5 trillion (27%)
securities in EU lenders’ portfolios are available for loan; yet only €194 billion (7.8%) are actually out on loan.
• Optimising and enhancing demand-side channels - by better connecting the supply • Pension fund assets have doubled to €3.37 trillion since 2008, according to the
and demand for securities ECB, and make up some 4.1% of total assets held; yet only €32 billion (6.1%) of the
lendable assets are actually lent out.
• Advancing EU infrastructure to further drive forward market efficiency and
digitisation • A significant amount of euro-denominated securities available for securities
lending comes from outside Europe with non-EU lenders making up some 75% of
• Improving the financial stability data reporting framework for securities lending available supply and 63% of on-loan balances. These lenders include large SWFs
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and borrowing to ensure market resiliency and international asset managers as well as non-EU central banks with significant
reserves also held in European government bonds.

1. Securing & Expanding Supply Channels

One of the conditions for a deep and liquid financial market, is to ensure that securities can move freely
between market participants. The mechanism enabling this flow is securities lending and borrowing.
Yet, for securities lending and borrowing to be able to play its full role, asset owners must be further
encouraged to lend their assets into the market which can be done by making the regulatory requirements
more practical in line with market practice.

The supply of assets typically comes from long-only investors largely managing buy and hold portfolios
such as pension funds, asset managers through UCITS, insurance companies, central banks and SWFs.

8 Data provided to ISLA by S&P Global Market Intelligence
9 Data provided to ISLA by S&P Global Market Intelligence