Reflections of the CEO

Brexit | Europe Commission & Parliament | Pledge FAQs | CSDR

Whilst in the previous update we highlighted the growing breadth and depth of our membership, the past two weeks have shown this to be true also in the context of our work on behalf of the industry.

As I think more broadly about the about the future of our markets, ISLA spent invaluable time this week in Brussels looking more closely at what will happen there over the next 12 to 18 months. Whilst the UK continues to be fixated with Brexit, this was not a topic that featured that heavily during our discussions, as 2019 is in fact a period of considerable change for the European Union itself. In 2019, key offices of the President of the European Council and the European Parliament will change, whilst Mario Draghi’s mandate at the ECB will end.  At the same time, November will see the arrival of a new Commission and Parliament. In the case of the Parliament, the expected loss of UK participation from the centre ground could change some of the dynamics around the legislative process, producing different priorities and focus. For our markets, we have to remain mindful of these changes and where appropriate, work to ensure that the role that securities lending plays more broadly within the capital markets is socialised to new Members of Parliament and others.

As we look ahead to the formation of the new Commission and Parliament, we are therefore beginning to look closely at the key issues and areas of focus that will drive much of the legislative process over the next five years. Whilst we are still to formulate our policy objectives, it is already clear that a number of initiatives that will come from the new Commission will be closely linked to the securities lending markets and therefore drive our advocacy and communications efforts. In particular, we know that there will be potential policy inputs around sustainability and governance, further prudential regulation in the form or Basel IV, as well as a developing technology and digitalisation agenda.

Looking to ongoing initiatives and more immediate priorities for our members, the past fortnight saw the release of two important publications by ISLA. The first was our formal FAQs document on our recently released GMSLA Pledge Collateral Master Agreement. Once again, this was developed in association with Clifford Chance to support potential users of the agreement and provide a consistent platform for clarification and implementation of best practice.  Earlier this week, we also published a white paper on the implementation of the CSDR. Through our active CSDR Working Group, we have been looking at the implications and direct day-to-day impacts of the new fines and mandatory buy-in regimes.  This paper is just the first phase of a series of initiatives that aims to truly understand CSDR in the context of current post trade and settlement practices, and what specific procedures and protocols the industry needs to address collectively to avoid the extremes of the new legislation.

Andrew Dyson, CEO

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