RMA: Tax law and regulation compatibility are a must
09 October 2018 Miami
Image: Shutterstock
Understanding what regulators want to achieve and ensuring tax law is compatible with those goals is important for the securities lending industry, according to speakers at the 35th Risk Management Association (RMA) Conference on Securities Lending.
In a panel, which covered recent efforts by the RMA, speakers discussed the changing industry landscape in the face of new regulations, such as Securities Financing Transaction Regulation (SFTR) and updates to Basel III.
For example, RMA’s tax committee is working towards educating tax authorities on securities lending to ensure that tax law and regulation work in tandem.
RMA’s tax committee expects to engage in future regulations with tax authorities on this, and one speaker said a big part of this is organising and coalescing a collective voice in the securities lending industry.
The panellist said that the perception of securities lending may not reflect the real industry, while another said that much media coverage of the industries focuses only on short selling and ignores the value of liquidity.
One problem brought by regulators is the expectation that securities lending transactions will end be made longer. The speaker said that this was an issue because certain members of the community are attempting to resist the risk of a fixed-term transaction.
RMA has been working on advising an approach to new regulations coming into effect, such as the SFTR, which will change the landscape of reporting in the industry.
On SFTR, one of the speakers said there might be a “tendency to go back into our respective cocoons when something like SFTR comes into play”, but he was trying to find ways to explain SFTR to clients and find conclusions to those sorts of transparency regulations on the horizon.
In a panel, which covered recent efforts by the RMA, speakers discussed the changing industry landscape in the face of new regulations, such as Securities Financing Transaction Regulation (SFTR) and updates to Basel III.
For example, RMA’s tax committee is working towards educating tax authorities on securities lending to ensure that tax law and regulation work in tandem.
RMA’s tax committee expects to engage in future regulations with tax authorities on this, and one speaker said a big part of this is organising and coalescing a collective voice in the securities lending industry.
The panellist said that the perception of securities lending may not reflect the real industry, while another said that much media coverage of the industries focuses only on short selling and ignores the value of liquidity.
One problem brought by regulators is the expectation that securities lending transactions will end be made longer. The speaker said that this was an issue because certain members of the community are attempting to resist the risk of a fixed-term transaction.
RMA has been working on advising an approach to new regulations coming into effect, such as the SFTR, which will change the landscape of reporting in the industry.
On SFTR, one of the speakers said there might be a “tendency to go back into our respective cocoons when something like SFTR comes into play”, but he was trying to find ways to explain SFTR to clients and find conclusions to those sorts of transparency regulations on the horizon.
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