Since the publication of the first ISLA Council for Sustainable Finance (ICSF) position paper, it has become clear that global economic recovery from the effects of the COVID-19 crisis will occur at a slow pace. We recognise that the road to a sustainable recovery, and growth thereafter, must be based upon mature, consistent and evidence-based decisions that include key stakeholders and allow for appropriate reflection.
In the first position paper, we noticed that an inconsistent approach by global regulators on short-selling temporary bans was counterproductive, and that further positive guidance on best practice was required. We received many questions on how ICSF would envisage such positive guidance moving forward, and we did further analysis to form our position on such guidance.
In this second position paper, Reinforcing Global Sustainable Finance by Improving Guidance on Securities Lending, we shift the debate beyond short selling to call for holistic guidance on any measures that may significantly affect sustainable securities lending, and suggest a schedule towards which stakeholders may work together. This guidance would serve to establish a consistent global approach to various measures that may impact upon sustainable securities lending. It would recommend that measures be evidenced based, proportional, aligned with the Principles for Sustainable Securities Lending (PSSL), involve informing the key stakeholders regularly about the market participants’ behaviour, and (crucially) be subject to continuous review.
To this end, ICSF, with its global mission and Partners, is well positioned to identify the key stakeholders and facilitate a forum with a view to testing the ideas outlined in this paper.
ICSF will endeavour to initiate the discussion by hosting a preliminary roundtable in the near future.