This, ISLA’s sixth Securities Finance Market Report, continues to provide not only some very interesting insights into the securities lending industry, but also highlights some implications for the broader financial markets against a backdrop of increasing geopolitical, economic and regulatory change.
The next 18 months will see the full implementation of the Securities Financing Transactions Regulation (SFTR) by ESMA across Europe. The SFTR will provide regulators and policy makers with detailed information that can be used in the context of managing and better understanding systemic risk a cross financial markets. However, it will be important to put any data produced within the SFTR in proper context and we believe that this report continues to provide that context today as the reporting regimes develop.
The now well established reporting and analytical framework seen in our previous reports is used again. This allows for our current findings to be assessed in their proper historical context and makes trend analysis more relevant. In line with previous reports, we concentrate predominately on the traditional securities lending markets which operate between institutional investors (beneficial owners) who lend their securities either directly or via agents (custodial banks, asset managers or specialist firms etc.) to prime brokers and other principal borrowers. We also review the breadth and depth of this market both regionally and from the perspective of the mix of asset classes which are lent, and how the relationship with collateral and the borrowers is evolving.
As ever we welcome all suggestions as to how this report may be developed for future publications.
The full report is available here.