The two findings that we particularly wish to draw the Commission’s attention to relate to:
- The growing disproportionate imbalance between securities held by UCITS that are available for lending vs UCITS securities actually on loan – showing major untapped potential for improving liquidity in the market.
- The continued developing trend of government bonds, in particular EU government bonds, being used in securities lending transactions – showing potential rising risks of a liquidity squeeze in those instruments, which could impact EU governments’ costs of funding.
The full response can be found at http://www.isla.co.uk/wp-content/uploads/2017/03/ISLA_CMU_response1.pdf