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ISLA MANIFESTO 2024
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Compiled Recommendations

Securing & Expanding Supply Channels Advancing EU Infrastructure to Further Drive Forward
Market Efficiency & Digitisation
Europe should take a consistent and pragmatic view across legal financial frameworks that may impact market
liquidity, both addressing regulatory conflicts and utilising consistent definitions and concepts across jurisdictions,
to mobilise and facilitate the growth of supply channels of securities across all investor groups. For the purposes of encouraging cross border investment and innovation in the EU, whilst also acknowledging the
fragmentation across national markets – ISLA would recommend the following:
I. Review the UCITS framework (Efficient Portfolio IV. Considering the increased use of securities lending I. Complete a full cost-benefit analysis on the current IV. Provide political support for the uptake of the
Management techniques) to improve consistency of through online retail platforms, investor protection CSDR penalty regime implemented in February FINOS Common Domain Model for SFTs, Bonds
interpretation of the Directive across EU Member efforts should include raising awareness and 2022 in order to fully comprehend and analyse its and Derivatives markets, to reduce the regulatory
States and remove regulatory obstacles to further transparency about the benefits/risks of securities effectiveness in improving settlement efficiency burden and cost for regulators in the EU, whilst
facilitate the participation of funds in securities lending. across EU capital markets. Adjust (increase) penalty promoting a level of standardisation across markets
lending. This includes the consistent use of pledge V. Provide explicit recognition of activities such as rates accordingly for instrument types that have not for lifecycle events, thus improving interoperability
mechanisms as an acceptable form of collateral securities lending and borrowing within defined demonstrated a sustainable improvement over time. and communication across the EU capital markets.
arrangement. legislation, such as the Sustainable Finance

II. Ensure the upcoming EBA’s technical standards Disclosure Regulation (SFDR), whereby EU II. Consider securities borrowing transactions as V. Continue to focus on developing a sturdy legislative
resulting from CRR do not unduly penalise banks regulators officially acknowledge that engagement the primary tool to aid and improve settlement framework to embolden participation in the market
when engaging in securities lending and borrowing in the activity, so long as it complies with an efficiency and refrain from imposing any additional for digital assets including, MiCA, MiFID II and
transactions with unrated entities such as UCITS in institutions overall responsible investment regulatory burdens, such as progressive penalties, the DLT Pilot Regime for Market Infrastructures
particular. policy, does not negatively impact a firms overall from these types of transactions to ensure that they based on DLT to create harmonisation and remove
sustainability objective. remain viable to be used for operational efficiency uncertainty for businesses by outlining clear and
III. As part of the local implementation of the EU and increasing liquidity. concise definitions and use cases.
FASTER Directive, promote clear, un-ambiguous and VI. Ensure that the upcoming review of the PEPP
forward-looking legislation, including a harmonised framework enables and incentivises EU pension III. Complete full cost-benefit analysis, working with
EU wide definition of beneficial ownership, funds to make more of their assets available for the financial services industry, to evaluate the pros
taking into account widely accepted international securities lending. Encourage additional Member and cons of accelerating the settlement cycle to T+1
standards, such as the OECD guidelines and sure States to drive forward the consistent introduction in Europe, carefully assessing its impact on liquidity
consistency of interpretation between Member of capital markets based personal pension schemes, vs competitiveness vis-à-vis third countries.
States. as recently took place in Germany.
Improving the Data Reporting Framework for SLB

Optimising & Enhancing Demand Channels to Ensure Market Resiliency & Financial Stability

Europe should support the demand for the borrowing of securities through effective and pragmatic regulation and The EU must ensure that the regulatory burden imposed by SFTR is balanced against the benefits of improved
review the SSR accordingly. Key aspects of the EU SSR review should include: financial stability and risk mitigation.
I. Revising the public disclosure of individual net II. Increasing the disclosure threshold for net short I. The Commission should proceed with updating II. The review regarding minimum haircuts should be
short positions with aggregated net short position position reporting from 0.1% to 0.2% to reduce SFTR and address outstanding challenges that based on a thorough cost benefit analysis using the
reporting to reduce imitative behaviour. administrative burden for firms, with the option to will allow policy makers to have more accurate enhanced SFTR data, post the initial review, in order
reduce to 0.1% in particular market circumstances data surrounding securities lending and borrowing to properly assess the impact of certain SFTs and
through ESMA’s supervisory powers. activity. their overall contribution to a build-up of leverage
in the financial system before imposing further
prudential requirements such as minimum haircut
floors on non-centrally cleared SFTs.