ISLA: Industry associations stronger together
21 June 2024 Switzerland
Image: SFT
Some of the industry鈥檚 most influential associations were represented at the International Securities Lending Association's (ISLA) conference this week on the 鈥業ndustry Associations鈥� Update: Finding Common Ground鈥� panel discussion.
It consisted of representatives from the International Capital Market Association (ICMA), the International Swaps and Derivatives Association (ISDA), the Alternative Investment Management Association (AMIA), the Global Peer Financing Association (GPFA) and, of course, ISLA.
True to its title, the overall sentiment of the panel was one of solidarity 鈥� a collection of individuals and organisations who all have the same overall goal of representing their members and improving the industry.
The importance of this approach was highlighted by Bryan Pascoe, CEO of ICMA, when he said: 鈥淲hen we advocate on a collective basis, it is even more powerful than when you are on your own.鈥� He did caveat this with the point that the associations must not duplicate functions and roles unnecessarily.
At the same time, the growing complexity of financial markets inevitably requires different skills and strategic thinking that a 鈥榗ollective mind鈥� of multiple agencies can achieve.
This role of advocacy was front and foremost for the panel in representing the interests of their members, all noting that working closely with regulators and lawmakers was key.
This takes multiple forms, from one association currently taking the US Securities and Exchange Commission (SEC) to court over the securities lending and short selling rules brought into place in October 2023, to simply 鈥渟triving to be part of the conversation from the earliest stage鈥�, as one speaker put it.
鈥淲e are now at a point where people come to us and ask 鈥榠f we did this, what do you think?鈥�,鈥� he continued.
Basel Endgame, too, was a topic often touched upon during the discussion, though the foundations of this wave of regulatory agendas lies firmly in the 2008 financial crisis, which one panellist described as a 鈥渟eminal鈥� moment in our industry.
As another speaker describes it, 鈥渁 big part of what we do since the finance crisis is defending short selling as a good thing鈥�.
Short selling bans, he argued, have proved to be ineffective, noting that through the work of associations educating appropriate bodies and regulators, most markets now realise this.
Discussing some of the more immediate potential regulatory changes hitting the industry, one speaker highlighted the importance of ensuring new rules are 鈥渞isk appropriate, not just higher鈥�. Specifically, he said, his association is 鈥渇ighting aggressively to make sure clearing is not disincentivised鈥�.
The need for industry associations can still be seen, the panel noted, citing the rapid growth of the GDFA, which was only founded four years ago.
Looking to the future, the panel were asked what are their priorities in the coming years.
Liquidity, as highlighted a number of the speakers, will be crucial, as well as market resilience, and how industry associations can address these issues.
Regionally, emerging markets were also seen as a key area, with the Middle East 鈥� particularly Saudi Arabia 鈥� and China both flagged as places to watch.
Both the US, and any future EU implementation of T+1, was an area one speaker considered to be 鈥渢he elephant in the room鈥�.
But perhaps a nice bookend to the discussions, one speaker once again emphasised the collaboration between the industry associations represented as a final noteworthy effort in coming years.
It consisted of representatives from the International Capital Market Association (ICMA), the International Swaps and Derivatives Association (ISDA), the Alternative Investment Management Association (AMIA), the Global Peer Financing Association (GPFA) and, of course, ISLA.
True to its title, the overall sentiment of the panel was one of solidarity 鈥� a collection of individuals and organisations who all have the same overall goal of representing their members and improving the industry.
The importance of this approach was highlighted by Bryan Pascoe, CEO of ICMA, when he said: 鈥淲hen we advocate on a collective basis, it is even more powerful than when you are on your own.鈥� He did caveat this with the point that the associations must not duplicate functions and roles unnecessarily.
At the same time, the growing complexity of financial markets inevitably requires different skills and strategic thinking that a 鈥榗ollective mind鈥� of multiple agencies can achieve.
This role of advocacy was front and foremost for the panel in representing the interests of their members, all noting that working closely with regulators and lawmakers was key.
This takes multiple forms, from one association currently taking the US Securities and Exchange Commission (SEC) to court over the securities lending and short selling rules brought into place in October 2023, to simply 鈥渟triving to be part of the conversation from the earliest stage鈥�, as one speaker put it.
鈥淲e are now at a point where people come to us and ask 鈥榠f we did this, what do you think?鈥�,鈥� he continued.
Basel Endgame, too, was a topic often touched upon during the discussion, though the foundations of this wave of regulatory agendas lies firmly in the 2008 financial crisis, which one panellist described as a 鈥渟eminal鈥� moment in our industry.
As another speaker describes it, 鈥渁 big part of what we do since the finance crisis is defending short selling as a good thing鈥�.
Short selling bans, he argued, have proved to be ineffective, noting that through the work of associations educating appropriate bodies and regulators, most markets now realise this.
Discussing some of the more immediate potential regulatory changes hitting the industry, one speaker highlighted the importance of ensuring new rules are 鈥渞isk appropriate, not just higher鈥�. Specifically, he said, his association is 鈥渇ighting aggressively to make sure clearing is not disincentivised鈥�.
The need for industry associations can still be seen, the panel noted, citing the rapid growth of the GDFA, which was only founded four years ago.
Looking to the future, the panel were asked what are their priorities in the coming years.
Liquidity, as highlighted a number of the speakers, will be crucial, as well as market resilience, and how industry associations can address these issues.
Regionally, emerging markets were also seen as a key area, with the Middle East 鈥� particularly Saudi Arabia 鈥� and China both flagged as places to watch.
Both the US, and any future EU implementation of T+1, was an area one speaker considered to be 鈥渢he elephant in the room鈥�.
But perhaps a nice bookend to the discussions, one speaker once again emphasised the collaboration between the industry associations represented as a final noteworthy effort in coming years.
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