It’s great news that the International Securities Lending Association (ISLA) is expanding to the US by assuming the responsibilities of RMA and creating one trade association, as confirmed in an email issued today. RMA has led US industry efforts for regulatory engagement and education but ISLA will now add its own spin on things.
According to ISLA CEO Andy Dyson as published by ISLA, “In line with the needs of our members, much of our work is increasingly global in nature. By opening an affiliate in the United States, we will be able to significantly enhance our capabilities across the Americas and deliver better outcomes for our wider membership.”
For their part, we understand that RMA has increasingly seen securities lending as a side-activity to its main business of credit and risk management for banks. It’s planned merger with the Bank Administration Institute will increase its focus on core bank activities. The transition to ISLA will give the RMA securities lending committee a home with an organization globally focused on industry needs and consolidates the existing cooperation between ISLA, RMA and PASLA.
Once ISLA has settled in, we see a number of opportunities for the group to help improve market conditions. These include:
- Returning to a regular data release product. RMA used to publish quarterly securities lending data, which we thought was a helpful effort to deliver market transparency, but stopped this practice in 2011/2012. There were data elements besides market size like collateral holdings not available elsewhere that supported client benchmarking. ISLA has been publishing regular global and regional market data snapshots in their regular Securities Lending Market Reports. We think that applying this transparency in the US would aid conversations with regulators and the public.
- Revisiting content at the annual October conference. We understand that ISLA will be taking over the RMA Securities Lending Conference this year. RMA has been the pre-eminent meeting spot for agent lenders, borrowers and service providers to network. ISLA’s annual conference has succeeded in Europe by bringing in a diverse group of market practitioners, regulators, technology firms and outside commentators as speakers (they’ve even invited Finadium on occasion.). By applying their European-style content thinking to RMA’s framework, we think that attendees would benefit, and may even want to stay an extra day for meetings to take advantage of fresh education and perspectives.
- Generating efficiencies in US and global advocacy, education and committee work by adding borrowers and other members. Part of why ISLA is successful in Europe is because it has scale and represents the entire industry. RMA on the other hand has been for agent lenders. By expanding membership to borrowers, technology firms and others, ISLA can build the resources to engage in the level of US advocacy work that has made it highly effective elsewhere. It can also combine the resources of the US and European versions of the same committee, for example the various technology committees, which will reduce duplication and resources drain for members. This makes sense especially when the issues are often the same regardless of geography.
We have always liked the proactive position that ISLA takes on education and regulatory commentary. RMA has always done some of this, but the entrance of ISLA into the US means that there will be an organization with a larger DNA for these activities. Greater direct engagement with regulators and other stakeholders ought to result in a better understanding of the value of securities lending to US capital markets.
We look forward to seeing ISLA in the mix.