Five trade associations representing the securities lending industry have established a working group to collaborate on priority issues in global lending.
This includes ESG integration and ongoing efforts to promote the benefits of regulated and transparent short-selling to liquid and sustainable capital markets.
The founding members of this working group are the Canadian Securities Lending Association (CASLA), the International Securities Lending Association (ISLA), the Pan Asia Securities Lending Association (PASLA), the Risk Management Association (RMA) and the South African Securities Lending Association (SASLA).
They indicate that all recognised securities lending associations, and other financial market associations with an interest in securities lending, are welcome to join the group, which will convene quarterly through virtual meetings.
The group first met in July and will build on the momentum generated in developing the Global Framework for ESG and Securities Lending (GFESL), which was published in May. It aims to foster a collaborative approach to issues relevant to global securities lending by sharing experience, insights and resources.
It will also provide a common front that will strengthen communication with financial regulators, financial infrastructure entities and standard-setting bodies worldwide.
One of its initial projects is to create a library of ESG resources that will bring together the work conducted by the individual member associations. It will develop ESG guidelines and thought leadership around stewardship, voting rights, collateral and transparency, taking into account that regulation of sustainable finance and market practice are at different stages in their evolution in different regions.
CASLA president Don D’Eramo says: “With the ongoing globalisation of the securities lending industry it is undeniable that there is a need for a harmonised approach to key themes which impact us all across the globe. CASLA is pleased to work in closer collaboration with our global partners as we tackle similar responsibilities, albeit with regional nuances for the advance and sustainability of our market and its shareholders.”
ISLA CEO Andrew Dyson comments: “The work that we have already done together confirms that cross-association collaboration will be increasingly important as our members demand common solutions to global issues. The creation of this group provides an ideal platform to develop and reflect upon how we want to respond to these challenges and opportunities that resonate across all of our markets.”
“Participants in the securities lending market have global reach and global priorities,” says Paul Solway, PASLA director and communications officer. “The industry needs to work together to advance our shared priorities. We want to ensure that securities lending increases returns for lenders, supports liquidity and price discovery, and contributes to more sustainable financial markets.”
“While our respective associations already cooperate in the service of our industry, coordinating in this way will expand the positive impact of our work regarding ESG, short selling and other global industry priorities,” says RMA director of securities lending and market risk Fran Garritt.
“Although there is a growing demand from investors who recognise that ESG disclosure is vital for good investment decisions, there is no agreed international framework yet for SLB,” says SASLA chairperson Michael Wright.
“SASLA hopes that the Global Framework for ESG and Securities Lending is a first step towards the convergence of existing metrics and standards. Markets do differ, but the underlying principles remain the same and hence collaboration is key to ensure a sustainable securities lending market with guiding best practices,” says Wright.
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