South African
23 January 2024
SASLA chairperson Michael Wright speaks to Carmella Haswell ahead of the Association’s annual Securities Finance and Collateral Management conference, where he explores the Association’s evolution and how the group is working to open up the South African market
Image: stock.adobe/161154145
Michael, having been with SASLA for almost two decades, how have you seen the Association evolve over this time?
SASLA started in the 1990s as the Securities Finance Committee within the Banking Association of South Africa (BASA). Four large local banks and a few local branches of international banks were the founding members on the committee. New members joined the committee as the product expanded in the South African markets. The members were from various sectors of the financial market, including brokers, exchanges, central securities depositories (CSDs), asset managers and pension funds.
Eventually there were more non-banking members than banking members and the decision was made that we needed to create a separate association to look after all interests in the securities lending market. BASA retained a permanent non-voting seat on the SALSA executive committee with the Johannesburg Stock Exchange (JSE) and Strate. Today, SASLA has more than 20 members, comprising banks, insurance companies, pension funds, asset managers and service providers.
How are advancements within the securities finance industry shaping the attitudes of market participants in South Africa?
The Global Financial Crisis highlighted several shortcomings in the policies and practices of both financial institutions and regulators. In response to these shortcomings, the financial authorities initiated regulatory reforms in several areas to increase the resilience of the financial system. These reforms contributed to significant change in the equity securities lending markets internationally, and for the South African market.
At a high level, these reforms had implications in three main areas: the transparency of the securities lending market and participants’ risk management practices; the cost of intermediation in the lending market; and the management of collateral.
With market participants witnessing an increase in demand domestically and abroad for securities financing activities in South Africa, how is the Association helping to open the market to foreign investors?
The limitation on accepting non-rand securities as collateral has made the onshore market less attractive to offshore clients. This restriction is still in force, with between 40 per cent to 50 per cent of the ZAR market being traded offshore. The industry has been in discussions with regulators regarding potential relaxation of some of these restrictions on non-rand collateral. The adoption of a global triparty system has the potential to address some of these challenges and contribute to the market's further development.
With one month to go until SASLA’s Securities Finance and Collateral Management Conference, what can delegates expect from the event?
The SASLA Conference offers a chance to network with industry experts, discover the latest trends and innovations, and gain insights into the status of the securities lending market, as well as where it may be heading.
With expert keynote speakers, interactive panel discussions led by industry peers and networking opportunities, we will be tackling some of the more pertinent topics impacting the securities lending market in South Africa.
What will be the key talking points among speakers at the event? What are you most looking forward to at the conference in February?
The two main themes of the conference are diversity in the industry and the ability to adapt to survive in the digital age. In saying that, the key issue in the market at the moment is collateral management and the need to unlock liquidity through securities lending and repo.
I am looking forward to our guest speakers. We have managed to secure some amazing speakers from outside of the industry that will talk to the themes of the conference. The Association has also secured, as our keynote speaker, one of South Africa’s top-rated economists, Goolam Ballim, the chief economist for Standard Bank Group.
SASLA started in the 1990s as the Securities Finance Committee within the Banking Association of South Africa (BASA). Four large local banks and a few local branches of international banks were the founding members on the committee. New members joined the committee as the product expanded in the South African markets. The members were from various sectors of the financial market, including brokers, exchanges, central securities depositories (CSDs), asset managers and pension funds.
Eventually there were more non-banking members than banking members and the decision was made that we needed to create a separate association to look after all interests in the securities lending market. BASA retained a permanent non-voting seat on the SALSA executive committee with the Johannesburg Stock Exchange (JSE) and Strate. Today, SASLA has more than 20 members, comprising banks, insurance companies, pension funds, asset managers and service providers.
How are advancements within the securities finance industry shaping the attitudes of market participants in South Africa?
The Global Financial Crisis highlighted several shortcomings in the policies and practices of both financial institutions and regulators. In response to these shortcomings, the financial authorities initiated regulatory reforms in several areas to increase the resilience of the financial system. These reforms contributed to significant change in the equity securities lending markets internationally, and for the South African market.
At a high level, these reforms had implications in three main areas: the transparency of the securities lending market and participants’ risk management practices; the cost of intermediation in the lending market; and the management of collateral.
With market participants witnessing an increase in demand domestically and abroad for securities financing activities in South Africa, how is the Association helping to open the market to foreign investors?
The limitation on accepting non-rand securities as collateral has made the onshore market less attractive to offshore clients. This restriction is still in force, with between 40 per cent to 50 per cent of the ZAR market being traded offshore. The industry has been in discussions with regulators regarding potential relaxation of some of these restrictions on non-rand collateral. The adoption of a global triparty system has the potential to address some of these challenges and contribute to the market's further development.
With one month to go until SASLA’s Securities Finance and Collateral Management Conference, what can delegates expect from the event?
The SASLA Conference offers a chance to network with industry experts, discover the latest trends and innovations, and gain insights into the status of the securities lending market, as well as where it may be heading.
With expert keynote speakers, interactive panel discussions led by industry peers and networking opportunities, we will be tackling some of the more pertinent topics impacting the securities lending market in South Africa.
What will be the key talking points among speakers at the event? What are you most looking forward to at the conference in February?
The two main themes of the conference are diversity in the industry and the ability to adapt to survive in the digital age. In saying that, the key issue in the market at the moment is collateral management and the need to unlock liquidity through securities lending and repo.
I am looking forward to our guest speakers. We have managed to secure some amazing speakers from outside of the industry that will talk to the themes of the conference. The Association has also secured, as our keynote speaker, one of South Africa’s top-rated economists, Goolam Ballim, the chief economist for Standard Bank Group.
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