ISLA: Asia is going to be a huge influence in the future
20 June 2019 Madrid
Image: Shutterstock
Looking to the future, Asia is going to be “hugely influential” to the industry, according to a panellist, when asked what region will set the global geo-political agenda for the next three to five years at this year’s International Securities Lending Association event in Madrid.
The panellist said: “The speed to innovation, the data/digital space, the fintech world and the investment that’s out there and how they are trying to get them to buy/share into Europe is almost frightening with the speed it is progressing.”
The audience were also asked the same question. North America was top of the list to set the geo-political agenda at 53 percent, while Europe come in second at 27 percent.
Although the panellist thought Asia would be “hugely influential”, only 20 percent of the audience agreed.
The Middle East and Russia both scored 0 percent. Discussing the Middle East, one panellist said that business opportunities such as securities lending opening up in Saudi Arabia and other parts of the Middle East are “positive”.
The panellist said: “I think it’s clear that there’s not going to be one political region that is going to dominate the agenda in the next three to five years.”
They added: “I think everyone in attendance is dealing with a lot in Europe, whether it’s the regulations that are coming through at the moment, the new European Commission that will start over the course of the next six months, and of course Brexit. A lot of our clients are based in the US and with Donald Trump starting his election campaign already for next year, that will also dominate the agenda for the next 12 months.”
The panellists also discussed what they see to be the biggest driver for change in the industry today and in the foreseeable future.
One speaker suggested that ESG and sustainability is “massive”.
The speaker added: “It’s something that has been discussed a lot at this conference and will continue to be discussed. It falls into every activity that takes place on the buy-side and securities lending isn’t going to be untouched by that.”
The audience attending the session were also asked the same question. Regulation come in on top with 61 percent, followed by the sustainable finance agenda at 17 percent.
Others included technology at 11 percent, changing retail sentiment at 6 percent and fee compression within asset management at 6 percent.
The panel also discussed securities lending revenues. One speaker explained that it’s no secret that securities lending revenues have been challenged.
They commented: “There was a lack of conviction among the hedge fund community which led to less specials trading and in turn that has led to less return on cash investment opportunities.”
According to the speaker, technology is “going to play a huge role in the industry going forward. I think it is going to be a real focus”.
One panellist was also asked how they thought the market had changed. The panellist suggested that there has been a “quite significant” change.
The speaker explained: “I think the market is better joined up and there is a level of transparency that didn’t exist in the past. Some of that has been forced onto us by regulation but I do think transparency has changed the market.”
“I think there’s now a greater level of understanding of how the market fits together, which I don’t think there was in the past.”
The panellist continued: “I think it’s a positive change because it’s such a fundamental part of liquidity in the market.”
Another speaker added: “From the buy-side, there has been this drive for collateral management and the understanding that securities lending is part of the facilitator to be able to raise and post collateral effectively. I don’t think it’s about the short selling conversation anymore, it’s about liquidity.”
“Now ESMA understands the role that securities lending plays, there is no doubt that this industry has history associated with it because of what happened during the crisis.”
Finally, the panel concluded by discussing the Securities Financing Transactions Regulation (SFTR).
A panellist said that although SFTR has been a “fairly dark shadow, it is going to do some good as well as create some headaches”.
Another speaker commented: “I think that once we get through the headaches, there will be a lot of creativity in the market. We are already seeing a lot of vendors out there looking to leverage opportunities.”
The panellist said: “The speed to innovation, the data/digital space, the fintech world and the investment that’s out there and how they are trying to get them to buy/share into Europe is almost frightening with the speed it is progressing.”
The audience were also asked the same question. North America was top of the list to set the geo-political agenda at 53 percent, while Europe come in second at 27 percent.
Although the panellist thought Asia would be “hugely influential”, only 20 percent of the audience agreed.
The Middle East and Russia both scored 0 percent. Discussing the Middle East, one panellist said that business opportunities such as securities lending opening up in Saudi Arabia and other parts of the Middle East are “positive”.
The panellist said: “I think it’s clear that there’s not going to be one political region that is going to dominate the agenda in the next three to five years.”
They added: “I think everyone in attendance is dealing with a lot in Europe, whether it’s the regulations that are coming through at the moment, the new European Commission that will start over the course of the next six months, and of course Brexit. A lot of our clients are based in the US and with Donald Trump starting his election campaign already for next year, that will also dominate the agenda for the next 12 months.”
The panellists also discussed what they see to be the biggest driver for change in the industry today and in the foreseeable future.
One speaker suggested that ESG and sustainability is “massive”.
The speaker added: “It’s something that has been discussed a lot at this conference and will continue to be discussed. It falls into every activity that takes place on the buy-side and securities lending isn’t going to be untouched by that.”
The audience attending the session were also asked the same question. Regulation come in on top with 61 percent, followed by the sustainable finance agenda at 17 percent.
Others included technology at 11 percent, changing retail sentiment at 6 percent and fee compression within asset management at 6 percent.
The panel also discussed securities lending revenues. One speaker explained that it’s no secret that securities lending revenues have been challenged.
They commented: “There was a lack of conviction among the hedge fund community which led to less specials trading and in turn that has led to less return on cash investment opportunities.”
According to the speaker, technology is “going to play a huge role in the industry going forward. I think it is going to be a real focus”.
One panellist was also asked how they thought the market had changed. The panellist suggested that there has been a “quite significant” change.
The speaker explained: “I think the market is better joined up and there is a level of transparency that didn’t exist in the past. Some of that has been forced onto us by regulation but I do think transparency has changed the market.”
“I think there’s now a greater level of understanding of how the market fits together, which I don’t think there was in the past.”
The panellist continued: “I think it’s a positive change because it’s such a fundamental part of liquidity in the market.”
Another speaker added: “From the buy-side, there has been this drive for collateral management and the understanding that securities lending is part of the facilitator to be able to raise and post collateral effectively. I don’t think it’s about the short selling conversation anymore, it’s about liquidity.”
“Now ESMA understands the role that securities lending plays, there is no doubt that this industry has history associated with it because of what happened during the crisis.”
Finally, the panel concluded by discussing the Securities Financing Transactions Regulation (SFTR).
A panellist said that although SFTR has been a “fairly dark shadow, it is going to do some good as well as create some headaches”.
Another speaker commented: “I think that once we get through the headaches, there will be a lot of creativity in the market. We are already seeing a lot of vendors out there looking to leverage opportunities.”
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