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4 Securities Lending Market Report | H1 2024 5

Foreword

>>> H1 2024

I’d like to welcome you to ISLA’s 21st edition of the Securities Lending Market Report.

While data is at the heart of not only this report but also the went to vote in June, polls predicted that there would be At ISLA, our advocacy remit continues to grow with active
wider industry, correct context is key. The financial services heavy gains for the Eurosceptic far right parties however, engagement across EMEA to influence on behalf of the
sector is now more than ever reactive to external influences the three pro-EU groups managed to maintain their majority industry and keep an open dialogue with members, through
from the economy, new technology, and geo-politics, that in the Parliament. Nevertheless, the rise of the populist our working groups. I would like to thank our members for
without this context on how external factors are impacting parties in national governments, and thus representatives their invaluable contributions and continued support.
data trends, erroneous conclusions about the state of the in the European Council, will likely impact the direction of The industry will no doubt continue to be shaped by
industry could be drawn. travel in the future. regulatory and political agendas which can create both
Since the inaugural ISLA Market Report in 2014, no single As policy makers take up their new roles towards the latter opportunities and risks, however with data and the correct
theme has influenced our market commentary as much as half of the year, ISLA will be active in Brussels and across context setting, I’m confident that securities lending will
financial regulation. From Short Selling Reviews to the EU Europe, working to position securities lending as a tool to continue to grow and demonstrate its vital contribution to a
Money Market Reform and from SFTR reporting to Basel support the aims of the CMU by helping to unlock untapped healthy and robust global financial system.
prudential implementation, our industry has been so directly supply to aid liquidity, and tweaking existing rules to make Bringing it back to this report, I would like to thank the
and indirectly intertwined with varying pieces of legislation, them more capital efficient. You can read our full suite of team at Clearstream for providing the fixed income market Andrew Dyson, CEO, ISLA
that to be successful in this business, a deep understanding policy recommendations in our manifesto document here. commentary. I‘m sure their insights help provide you further
of the regulatory landscape is paramount. context of how our industry has performed during the first
Accelerating the settlement cycle to T+1 is a key example of
A decade down the line and the backdrop is no different the blurring lines between regulation and politics with many half of the year.
as we find ourselves gripped in the thralls of Accelerated governments viewing the shortening of settlement times as Additionally, I would like to thank our data partners - tri-
Settlement and on the brink of finalising the Basel III a driver of growth and global alignment, so much so, that party agents BNY Mellon, Euroclear, Clearstream, and JP
Endgame. However, as political, and regulatory agendas the move to T+1 has quickly moved from an ‘if’ to a ‘when’. Morgan, as well as data aggregators; DataLend, S&P Global, Deep and open capital markets
become increasingly connected, so does the need to add It has become a popular subject of debate with supporters and FIS Global for providing the underlying data, without
‘public affairs’ to the growing list of necessary skills as the arguing for reduced settlement risk and increased efficiency, which, it would not have been possible to compile this are one of the strongest indicators
industry searches for future growth. while opponents raise concerns over its necessity, report. of a healthy economy and with
I’ve already written about 2024 being the year the world operational challenges arising from the fragmented nature Andrew Dyson
goes to vote, with leadership contenders across the world of Europe’s infrastructure and potential unintended CEO, ISLA governments hoping to bounce
speaking on everything from inflation and migration to the consequences. Where normally an analysis of the costs back after recent disruptions
green agenda and defence budgets.. and benefits should be made clear, global competitiveness
seems to have taken precedent.
Deep and open capital markets are one of the strongest
indicators of a healthy economy and with governments With financial stability across the globe being a key area
hoping to bounce back after recent disruptions, many of economic policy to watch out for, and raising additional
politicians are keen to highlight their economic prowess by funds through taxation to incentivise investment flows
discussing previously niche topics of financial regulation and becomes a priority to fund future expansion, the rise of far-
central banking while working with industry and regulators right parties in Europe may hinder EU-level development on
to build more robust and competitive capital markets. grounds of national sovereignty.

A case in point is the EU’s Capital Markets Union (CMU). With a potential re-write of Basel III front and centre in the
Launched in 2014, the CMU aims to unlock the potential US, short-selling bans grabbing headlines in Asia and the
for growth in capital markets, however progress has been opening up of markets in the Middle East, the importance of
stunted due to the ever-present tug of war between the well measured engagement with not only policy makers but
long-term ambition of the European Commission and the also politicians, regulators and wider stakeholders has never
near-term priorities of the Member States. As Europeans been greater.