Global ISF News

Reeve Serman, president of the Canadian Securities Lending Association (Casla), reveals the organisation’s work agenda for the next 12 months

Since Casla’s inception only three some years ago, it has established itself as a credible, industry-recognised association both in Canada and abroad.

Casla will continue to work on expanding its reach and develop meaningful working relationships with various government, regulatory and industry associations such as the RMA, ISLA and PASLA, with the further objective of aligning the Canadian securities lending market with global standards and continuing to strive for best practice.

Clients continue to become more sophisticated and knowledgeable in the securities lending space and the more educated they are about the product and market the better business decisions will be made from a risk and reward perspective.

Casla will continue to pursue educating the market by sharing and distributing related information, primarily through its website, and increasing awareness to its membership and all industry participants of current market developments.

Recently, Casla followed and shared information about the Investment Industry Regulatory Organization of Canada’s changes and requirements to short selling activities, the Ministry of Finance’s adjustment of the definition of a qualified security for lending under Section 260 as well as the robust industry debate relating to Dodd-Frank Section 165 (d) and (e).

All of these impact our market one way or another and organisations should be aware and react in an appropriate and applicable manner.

Casla recently voted in a new legal subcommittee which has representation from multiple financial institutions and is well-positioned to represent Casla in its future project work.

Speaking of projects, collateral has a major global focus and is always a topic of healthy debate at all industry conferences and among market participants. The industry expects to see a sharp increase in demand for high-quality collateral for balance sheet and liquidity purposes and there are even talks of a serious liquidity squeeze for high-quality collateral.

Additionally, VAR credit models’ correlation risk between loan and collateral portfolios also present a solid business case for equity as a viable and risk-prudent collateral asset class when taken as collateral against equity loans.

In this context, Casla is currently in the process of establishing a working committee to review regulatory collateral requirements for securities lending activity with the objective of determining appropriate collateral requirements from a risk, liquidity and efficient markeet perspective as well as aligning collateral rules with other establishd efficient markets in which our clients participate.