15 April 2021
ISLA Insights
A weekly roundup of industry-related news articles from across the EMEA regionSIGN UP ⋅   SHARE
Regulation & Policy
The Financial Stability Board has published FAQ on implementation of data standards for securities financing transactions. The guidance aims to "promote a common approach and to further help national implementation of the SFT Data Standards", according to the FSB.
Full Story: Financial Stability Board (12 Apr.) 
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The European Securities and Markets Authority has made public final guidance on transparency and reporting of periodic information for trade repositories. The guidance streamlines trade repositories' procedures and ensures data used to determine supervisory fees is accurate, ESMA says.
Full Story: Securities Finance Times (09 Apr.),  European Securities and Markets Authority (06 Apr.) 
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Firms have begun voluntarily complying with the EU Sustainable Finance Disclosure Regulation ahead of a June deadline, but many are struggling with data issues that have been raised. "Behind the scenes, many firms will struggle to source data points," Element 22 partner Mark Davies says. "We know that there is both a lag in terms of the timing and availability of information but also that some of this data has not been published."
Full Story: Global Investor (subscription required) (09 Apr.) 
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Danish authorities have charged six individuals, three from the US and three from the UK, with defrauding tax authorities in connection with a yearslong investigation into a $2.1 billion scandal involving so-called cum-ex trades. Prosecutors say those charged are "central principals behind the fraud, which was committed by means of help from the German North Channel Bank".
Full Story: Bloomberg (13 Apr.),  BBC (free registration) (13 Apr.) 
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Industry Developments
Lendable assets reached a record $30 trillion worldwide during the first quarter, while securities finance revenue climbed 15% compared with Q1 of 2020 to $2.6 billion. Broken down by region, Asia-Pacific had a 6% year-over-year decrease in equity finance revenue, the Americas had a 13% increase and Europe had a 5% increase.
Full Story: Global Investor (subscription required) (12 Apr.) 
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Saudi Arabia's stock exchange is restructuring into Saudi Tadawul Group ahead of an initial public offering this year. The restructured company has four subsidiaries: the Tadawul exchange, a clearing centre, a depository and a technology-services provider.
Full Story: Arabian Business (United Arab Emirates) (07 Apr.),  Reuters (07 Apr.) 
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The International Capital Market Association has revised a guide on the EU repo market to incorporate the latest guidance from regulators and to help market participants cope with pain points. The revision comes from the ICMA European Repo and Collateral Council's operations group and guide working group.
Full Story: Securities Finance Times (12 Apr.) 
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ISLA has added HQLAx, a startup securities lending platform that uses distributed-ledger technology, as a member.
Full Story: ISF (subscription required) (12 Apr.) 
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Lloyd Sebastian, vice president of client strategy and experience at asset-servicing firm CIBC Mellon, discusses the market for securities services in Canada and what lies ahead for the sector.
Full Story: Global Custodian (UK) (free content) (08 Apr.) 
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ESG
Environmental, social and governance scores have been incorporated into Citigroup's securities services data platform, Citi Velocity Clarity, as the bank responds to clients' growing need to understand ESG exposure. "The ability to understand ESG exposure has become imperative across the entire industry as investors, advisers and regulators are increasingly asking for transparency from asset managers and asset owners," says Fiona Horsewill, global head of data for Citi securities services.
Full Story: ISF (subscription required) (07 Apr.),  Global Custodian (UK) (subscription required) (07 Apr.),  Reuters (08 Apr.) 
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Technology & Digital
Interoperability is essential to successful use of distributed-ledger technology in post-trade processes, according to a report by the European Central Bank. "In addition, DLT-based solutions should be underpinned by strong governance, with interests aligned and properly monitored," the report states.
Full Story: Finextra Research (13 Apr.) 
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Claire Calmejane, chief innovation officer at Societe Generale, and Sohail Raja, the bank's UK chief digital officer and head of electronic execution platforms for global markets, discuss how digitisation has expanded from retail services to the wholesale business and how that affects securities services.
Full Story: Securities Finance Monitor (subscription required) (07 Apr.) 
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Post-Trade & Settlements
Reducing the settlement cycle for US equities to one business day after execution would significantly reduce market volatility, executives from Depository Trust & Clearing Corp. say. "This would substantially reduce the burden on the industry in terms of having to post margin with the central counterparty clearinghouse and reduce the period of credit risk that we have from two days to one day," says Murray Pozmanter, DTCC's head of clearing agency services and global business operations.
Full Story: Asset Servicing Times (12 Apr.),  ISF (subscription required) (09 Apr.) 
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Advocacy & Brexit
A cross-party group of members of the UK Parliament and business executives have formed a commission to press for a better EU trade deal, after an earlier Brexit committee failed to make headway.
Full Story: Financial Times (subscription required) (11 Apr.) 
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Market Infrastructure
Regulatory initiatives such as the EU Securities Financing Transactions Regulation are forcing the securities lending industry to rethink operational practices. However, many operations remain manual and nonstandardised, and ISLA is "optimistic that adoption of a 'common domain model' establishing a common data template for data transfer will encourage interoperability between legal entities and between the different systems that firms maintain internally", says Adrian Dale, head of regulation and market practice.
Full Story: Funds Europe (April 2021) 
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ISLA News
ISLA is delighted to announce the release of the final bankruptcy remoteness opinion, Freshfields Opinion -- Belgian Law (BNYM SA/NV), to complete the documentation suite that supports the Global Master Securities Lending Agreement (Security Interest over Collateral -- 2018 Version).
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ESMA has published an updated statement on the implementation of legal entity identifiers (LEI) requirements for non-EEA third-country issuers, extending the forbearance period for reporting under EU SFTR until 10 October 2022.
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Hosted by members of ISLA's Legal and RegTech teams, the latest Legal & Regulatory Broadcast Podcast provides commentary and updates on the association's key priorities across advocacy, regulatory, market practice and legal.
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writer, Pulitzer Prize winner
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