The working group seeks closer collaboration on global priorities while recognising regional differences, with initial focus on ESG
(Hong Kong/Johannesburg/London/Philadelphia/Toronto) A number of associations representing the majority of global securities lending market participants today announced that they had formed a group to facilitate collaboration and better coordinate their efforts. The global group, which first met in July, will collaborate on global priorities such as the integration of environmental, social and governance (ESG) factors in securities lending programmes and advocating the benefits of transparent and regulated short-selling to liquid and sustainable capital markets.
Building on inter-association coordination to develop the Global Framework for ESG and Securities Lending (GFESL), which was released in May, the group aims to develop a more collective approach to matters of global relevance for securities lending. Through sharing resources, insights and experiences, it also seeks to enable more impactful engagement with regulators, exchanges and other standard-setting bodies in all regions.
The founding members of the group are the:
- Canadian Securities Lending Association (CASLA)
- International Securities Lending Association (ISLA)
- Pan Asia Securities Lending Association (PASLA)
- Risk Management Association (RMA)
- South African Securities Lending Association (SASLA)
All recognised securities lending associations and other financial markets associations with an interest in securities lending are welcome to join the group, which will meet virtually on a quarterly basis.
Among its first actions, the group is building a library of ESG resources that draw on the work of different associations. This will be curated to reflect the rapid evolution of ESG in securities lending and made available on each association’s website. The group will also be working together to develop ESG guidelines and thought leadership in areas such as stewardship, voting rights, collateral and transparency in the lending chain, while recognising that sustainable finance regulation and market practice are at different stages of development in different geographies.
“With the ongoing globalisation of the securities lending industry it is undeniable that there is a need for a harmonised approach to key themes which impact us all across the globe.” said Don D’Eramo, President of CASLA. “CASLA is pleased to work in closer collaboration with our global partners as we fundamentally tackle similar responsibilities, albeit with regional nuances for the advancement and sustainability of our market and its stakeholders.”
“The work that we have already done together confirms that cross association collaboration will be increasingly important as our members demand common solutions to global issues. Whilst it is important to recognise that we are likely to see different priorities coming from the regulatory community, by aligning our efforts where appropriate we can share experiences and best practice ideas to pursue better outcomes for our members and wider industry stakeholders. The creation of this group provides an ideal platform to develop and reflect upon how we want to respond to these challenges and opportunities that resonate across all of our markets”, said Andrew Dyson, CEO, ISLA.
“Participants in the securities lending market have global reach and global priorities,” said Paul Solway, Director and Communications Officer at PASLA. “The industry needs to work together to advance our shared priorities. There are real differences between regions and even markets within a region, but we can all learn from others in seeking to implement best practice. We want to ensure that securities lending increases returns for lenders, supports liquidity and price discovery, and contributes towards more sustainable financial markets. This group is a great way to pursue those goals together.”
“While our respective associations already cooperate productively in service of the industry, coordinating in this way will greatly expand the positive impact of our work regarding ESG, short selling, and other industry global industry priorities,” said Fran Garritt, Director, Securities Lending and Market Risk at RMA.
“Although there is growing demand from investors who recognise that ESG disclosure is vital for good investment decisions, there is no agreed international framework yet for SLB,” said Michael Wright, Chairperson of SASLA. “SASLA hopes the Global Framework for ESG and Securities Lending (GFESL) is a first step towards the convergence of existing metrices and standards. Through sharing resources, insights, and experiences, it will enable more impactful engagement with regulators, exchanges, and other standard-setting bodies in all regions. Indeed, markets do differ, but the underlying principals remain the same and hence collaboration is key to ensure a sustainable securities lending market with guiding best practices.”
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