Reflections of the ISLA AGM & Securities Finance Forum

After months of lockdowns and grappling with the fallout of the global pandemic, I was delighted to see many of our members join us for an informal drinks evening here in London last week. From my personal perspective, this was the first face-to-face event that I had been able to attend since February 2020, and it was great to see a further glimmer of normality returning to our lives. Having said that, and as I chatted to guests, it was apparent that the world is definitely now a very different place to the one pre-COVID, with discussions still dominated by the pandemic and related issues such as flexible working and limited face-to-face interaction.

In the two days preceding the drinks reception, we also ran our Annual General Meeting for our members, and for the first time, a Securities Finance Forum for the wider industry and interested stakeholders. Unfortunately concerns around COVID and general restrictions on travel meant that we took the decision that both events would be delivered virtually.

In looking at the agenda, which was its normal mix of key updates, presentations and active debate, I was struck by several reoccurring and prevailing themes over the two days that were built around the twin themes of ‘influencers’ and ‘influences’. I thought I would take this opportunity to mention some personal highlights.

On day one of the event, we heard from the business leaders who explored how the idea of the office is no longer a ‘one size fits all’ approach, and how many firms are on very different paths in this area. We heard how some institutions have achieved what looks like normality in terms of office attendance, whilst others are still predominately working remotely. Although in the short term I would expect some sort of normality and balance to prevail, there is no doubt that things like flexibility and the general working environment will become an increasing influence when it comes to talent recruitment and retention.

Later in that first day, we heard from a number of global institutional investors, who provided something of a snapshot as to what the future might look like. I have said in earlier blogs, that there is increasingly less capital within the ecosystem of our markets, to support the needs and aspirations of both the lender and borrower communities. This will, in my view, only get worse with the rolling implementation of Basel IV. Consequently, the idea of a greater preponderance of direct or peer-to-peer trading was discussed.

After hearing from a number of influencers on the first day of the Forum, the second day afforded the opportunity to think more about the key influences that are driving our market. Inevitably, there was much discussion on technology and the role of digitalization. From my perspective, it was interesting to see how younger institutions are now seen alongside some of the more developed and major incumbent players in our markets. There is no doubt previously we have seen how innovation can occur around the periphery of our markets. What we are now witnessing is that digitalization is fundamentally forcing change through into the core of our markets. ISLA has been working hard in the past two years to play an active role on the industry’s digital journey, and I would highlight once again the work we have done on the development of the Common Domain Model and more recently the publication of the legal Clause & Taxonomy that together will aid both standardization and ultimately digitalization.

The second area that was discussed in great length was sustainability. I’ve said before how sustainability is probably the single most important influence on the way we will think about securities lending over the next three to five years. Discussions on this session only underlined those sentiments. Without clear and decisive action from the regulatory community, market participants are clustering around associations and other interest groups to seek guidance and clarity as they look to develop effective sustainable strategies. Securities lending is no different, and we are working extensively with member firms and other stakeholders including groups such as the PRI to develop those standards that will allow securities lending to coexist within a sustainable framework.

Before I close, I would just want to highlight the final session of the two days which was a spotlight on diversity and Inclusion. As moderator of this discussion, I was delighted to be joined by Julia Hoggett, CEO at the London Stock Exchange, Marshall Bailey OBE, Chairman of MUFG Securities and the Financial Services Compensation Scheme and Daniel Danso, Global Diversity and Inclusion Leader at Linklaters. Whilst we have all attended sessions focusing on this very important topic, I felt that the session last week provided a fresh and dynamic perspective. The panel not only talked passionately about what they believe are the challenges in this area, but sought to outline practical and pragmatic ways to take this agenda forward.  This and all other sessions can be accessed on the event platform on catch-up, and will also be made available on the ISLA website early next week.



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