Why has ISLA decided to rebrand its annual conference?
Ed Oliver: The industry and where securities lending sits within it has changed in the past few years. Organisations have rebranded their securities lending business around collateral management—it’s a definite trend. In our day-to-day work, we’re not just talking about securities lending, but repo and collateral management, too. We have to help clients with how they handle their collateral associated with the move towards centrally cleared derivatives. Securities lending is the proverbial cog in a machine. It’s a part of a bigger business and we wanted to reflect that in the title of the conference and the content.
Mark Barnard: The market has evolved. Managing the asset side of your balance sheet with regards to securities lending has changed. The use and management of a balance sheet is much more of a securities finance/collateral management function than ever before. Ultimately, the options and practices available to best manage the long and short side of your book have never been greater.
Arguably, we are a business in transition. As we continue to move forward and add more products to the securities finance world, we are probably going to find that a more derivatives-based ethos is going to come into play in the near future. This reflects the step forward in the market and in the behaviours and the underlying business drivers that now exist within the old school, stock lending world.
How is the rebranding going to be reflected in the conference’s content?
Barnard: On a personal level, I’ve taken a very specific view of not researching the conference agenda from prior years. That doesn’t reflect that the content was wrong in the past, the 2014 agenda should reflect what is salient in the market today, and what I think is going to be salient in the market over the next eighteen months to two years.
With the subject matter and the topics, we’ve looked at what are presently the key themes within securities finance/collateral management. Financing, collateral management, securities lending, beneficial owners’ awareness, and a regulatory awareness—they are key areas of focus. We want to have an array of debates that touch on those key topics. Our objective is to try to make the conference more multi-asset class, too. Yes, equity is still clearly the driver, but the challenges we face are more asset-broad.
Oliver: I’ve been asked why we’re not doing a regulatory panel, for example. The reality is that regulation touches upon everything that we have on the agenda, and it isn’t coverable in a single, 40-minute session. We instead have sub-sets of content that will reflect their own regulatory impact. Whether it’s repo or securities lending, bank or asset manager, each will have its own regulatory effects.
How is the conference organised?
Oliver: We’ve moved the roundtables, which were traditionally during one of the main conference afternoons, to Tuesday, after the regulatory updates from ISLA. We wanted to shorten the two main conference days to maintain the core of the delegates, so that once the conference sessions finish on those two mornings, delegates can network.
Barnard: One of the things we have worked hard on this year is that the audience must be connected to the subject matter. We don’t want the content to be so granular that we lose delegates—it has to be digestible.
To achieve this we have structured the daily agenda in two sets of two panels. Those pairs will be connected in their subject matter, so there is fluidity between the first and second conference debate. Hopefully that means that people who have a specific interest in one topic can see both panels without changing their business day too much. It also makes things a lot more interesting because the audience can hear one aspect of the debate, then can hear an alternative perspective.
This year, are there any ‘educational’ roundtables aimed at filling gaps
in knowledge?
Oliver: If you look at the cash debate, which is the second pair of panels on the first morning, the first part of that is talking about central bank versus bank policies and how central bank policies have affected the money markets. I know, for me, that’s something I’m very conscious has had an impact, but I’m not necessarily sure what it is about what the central banks have been doing that has had that impact and how banks have responded to it.
Therefore, before we get into the more obvious question—how do you make money in a low yield environment—we needed to to put some educational framework into place about how we got here. We hope we have achieved that on the cash debate.
We’ve also done that on the collateral debate, which is the first set of panels on the second day. Bill Hodgson, who is an independent industry expert in the collateral space, is moderating a panel that is going to talk about how regulators have been mandating central counterparties (CCPs) for OTC derivatives, and what the challenges are that result and how the buy side has had to react to those challenges. It’s useful for our industry to have the background as to why we’re talking about CCPs and the requirements for more collateral.
In the cash and collateral debates, we’ve tried to set up a couple of panels that describe why we’re here and then the second panels focus more on why securities finance is key, practically, to providing the solution to those issues.
What else will be different about this year’s conference?
Oliver: We’ve deliberately put a beneficial owner perspective right at the very end of the two days. We’ve started with the demand side, because we want to see what hedge funds and banks are saying, and then go into intermediary subjects, such as cash and collateral, where we’ll have practitioners talking about the reality of the new environment that we’re in. Within these panels we expect panellists to come up with suggestions about how beneficial owners can benefit from some of these new trends. So we’ve left beneficial owners to the end, so they can react to everything they hear over the two days.
Barnard: We also want the moderators to keep the conference moving quickly. Instead of picking someone who is a market practitioner, who might have a spin on a particular subject, we have asked practitioners to moderate who are passive in regards to the subject matter.
They are clearly experts in their fields, and they are connected or indirectly connected to the business, so I believe they are well positioned to ask the questions, and more importantly, ask the challenging questions that follow up as a consequence. We’ve chosen punchy moderators who aren’t afraid to go off-piste. If they hear a comment that they are not happy with, they need to let panelists know. I don’t think anyone wants to hear similar ideas—we want to get both sides of the story.
A good example of this will be the repo versus central banks debate. Instead of having all banks talking about their positions and views, we have two central banks and two banks. Hopefully, there will be an instance of challenging and readdressing some of the debates that are coming through.
Finally, what is the thinking behind the keynote speakers?
Oliver: Dr Levin Holle of the German finance ministry is delivering the keynote speech that will open the conference. He’s very well regarded within German financial circles.
Barnard: Holle has an active role in policy setting across the EU. Having someone like Holle discussing how central banks have historically set policy will definitely help us with how we see our business forming over the coming years.
Oliver: Former Italian football referee Pierluigi Collina, who is speaking at the end of conference, is clearly a non-traditional keynote speaker, and from my perspective, someone pan-European is critical. More than half of delegates will be non-English, so we need to reflect that. Everyone is aware of Collina—he also has a financial background.
It’s always instructive to hear how people in other businesses deal with issues that we come across. He’ll talk about taking responsibility and decision making in pressurised situations, which he is qualified to do, given that he’s refereed a World Cup final. It is also World Cup year and I think it gives an extra buzz to what Collina can present on.
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