ISLA: The new frontier
20 June 2025 Spain
Image: Rong/stock.adobe.com
Bringing the second day of the 32nd Annual 糖心vlog Finance & Collateral Management Conference to a close, panellists gathered to review the evolution of securities lending within new frontiers, where emerging markets and future areas of growth were central to the discussion.
The event, hosted by the International 糖心vlog Lending Association (ISLA), took place this week in Madrid, Spain.
While previous sessions had focused on geopolitics and the impact of instability, as well as upgrades to market structure, the 鈥楨mbracing New Frontiers鈥� panel looked specifically at the market themselves, through the eyes of the representatives of these regions.
Setting the scene of securities lending and what the new frontier entails, one panellist began to describe his thoughts on emerging market access. He believes it is important to understand what it means to be able to purchase and sell securities within a market.
Most emerging markets are calibrated as being an investor direct (ID) market 鈥嗏�� where investors have a direct relationship with the exchange, the securities regulator, and the central bank. The speaker indicated that if the person in questions is a financial institution, this then brings about a whole different consideration. This is just the starting point for entering a market.
Some of the key considerations the speaker encouraged the audience to keep in mind, when looking to access an emerging market, included available financing; existing hedging solutions; the existing short sell market; and where securities borrowing and lending, as well as collateral as a broader construct, sit within the market.
Moving the conversation forward, a polling question was asked to the audience, which read: Which new markets are you most interested in when it comes to securities lending? Out of the available options, the Middle East was the leading region of interest for participants, followed by APAC, LatAm, and Europe.
One speaker commented that the Saudi market is 鈥減retty dynamic鈥� in terms of the changes it has faced and its agility in adapting to market infrastructure alterations. Moreover, they believed that Saudi Arabia securities lending is at the forefront of the transformation the region is seeing, which is supported by innovative technology and the advancement of regulations.
From a Middle East perspective, the panellist noted that Saudi Arabia aims to set itself as a financial regional hub with a robust local financial ecosystem.
Moving over to Asia, the region鈥檚 representative spoke about the recent changes. He noted that there had been some major tilts in terms of market structure, for example, South Korea banned securities borrowing and lending, and short selling activity, providing a 鈥渞eset鈥� across the market.
Notably, there is a deep engagement within this market, where participants have provided feedback and come together to produce something that is consolidated, clear, and simple, so stakeholders are able to understand the key issues.
One of the large challenges in APAC, for one panellist, is the linguistic and legal structure differences between the numerous Asian markets. There are differences in terms of the calibration of the markets, where they are in terms of growth, and their capital market structure, they added. While there have been many changes within APAC, it has been an interesting time, and participants remain cautiously optimistic about what is next.
Continuing to explore emerging markets, a representative on the panel highlighted the Latin American region, with a core focus on Brazil, which is 鈥渘aturally鈥� the largest market in LatAm. According to the panellist, Brazil has an approximate US$700 billion market cap, with US$20 billion on loan at over 300 basis points. These 鈥渟ignificant鈥� figures were said to be largely due to the recent work undertaken by the Brazil stock exchange, B3.
To help further the securities lending market in Brazil, ISLA has set up a Latin America working group, and has been working with B3 over the past year on several topics, which has led to the creation of several sub working groups which focused on borrowers, tax, and legal, for example.
Once it has tackled certain hurdles, the association will look to focus on post-trade operations and some of the custody issues associated with the region. The panellist pinpointed other challenges relating to default risk and systemic risk 鈥� systemic risk being a primary concern for B3 and the central bank. They warned that there is still much to be done. And with that, other regions in LatAm 鈥� Chile, Columbia, Peru 鈥� are looking to get started on securities lending next year.
As the panel came to an end, one speaker encouraged participants to lean on the associations (such as ISLA and the Pan Asia 糖心vlog Lending Association) as they look to turn challenges into opportunities through education and engagement.
In terms of engagement, the panellist highlighted that the use of working groups, where members come together to coalesce around a market or thematic, is the engine of an association, and that it is also important for firms, to an extent, to lean on their peers.
The event, hosted by the International 糖心vlog Lending Association (ISLA), took place this week in Madrid, Spain.
While previous sessions had focused on geopolitics and the impact of instability, as well as upgrades to market structure, the 鈥楨mbracing New Frontiers鈥� panel looked specifically at the market themselves, through the eyes of the representatives of these regions.
Setting the scene of securities lending and what the new frontier entails, one panellist began to describe his thoughts on emerging market access. He believes it is important to understand what it means to be able to purchase and sell securities within a market.
Most emerging markets are calibrated as being an investor direct (ID) market 鈥嗏�� where investors have a direct relationship with the exchange, the securities regulator, and the central bank. The speaker indicated that if the person in questions is a financial institution, this then brings about a whole different consideration. This is just the starting point for entering a market.
Some of the key considerations the speaker encouraged the audience to keep in mind, when looking to access an emerging market, included available financing; existing hedging solutions; the existing short sell market; and where securities borrowing and lending, as well as collateral as a broader construct, sit within the market.
Moving the conversation forward, a polling question was asked to the audience, which read: Which new markets are you most interested in when it comes to securities lending? Out of the available options, the Middle East was the leading region of interest for participants, followed by APAC, LatAm, and Europe.
One speaker commented that the Saudi market is 鈥減retty dynamic鈥� in terms of the changes it has faced and its agility in adapting to market infrastructure alterations. Moreover, they believed that Saudi Arabia securities lending is at the forefront of the transformation the region is seeing, which is supported by innovative technology and the advancement of regulations.
From a Middle East perspective, the panellist noted that Saudi Arabia aims to set itself as a financial regional hub with a robust local financial ecosystem.
Moving over to Asia, the region鈥檚 representative spoke about the recent changes. He noted that there had been some major tilts in terms of market structure, for example, South Korea banned securities borrowing and lending, and short selling activity, providing a 鈥渞eset鈥� across the market.
Notably, there is a deep engagement within this market, where participants have provided feedback and come together to produce something that is consolidated, clear, and simple, so stakeholders are able to understand the key issues.
One of the large challenges in APAC, for one panellist, is the linguistic and legal structure differences between the numerous Asian markets. There are differences in terms of the calibration of the markets, where they are in terms of growth, and their capital market structure, they added. While there have been many changes within APAC, it has been an interesting time, and participants remain cautiously optimistic about what is next.
Continuing to explore emerging markets, a representative on the panel highlighted the Latin American region, with a core focus on Brazil, which is 鈥渘aturally鈥� the largest market in LatAm. According to the panellist, Brazil has an approximate US$700 billion market cap, with US$20 billion on loan at over 300 basis points. These 鈥渟ignificant鈥� figures were said to be largely due to the recent work undertaken by the Brazil stock exchange, B3.
To help further the securities lending market in Brazil, ISLA has set up a Latin America working group, and has been working with B3 over the past year on several topics, which has led to the creation of several sub working groups which focused on borrowers, tax, and legal, for example.
Once it has tackled certain hurdles, the association will look to focus on post-trade operations and some of the custody issues associated with the region. The panellist pinpointed other challenges relating to default risk and systemic risk 鈥� systemic risk being a primary concern for B3 and the central bank. They warned that there is still much to be done. And with that, other regions in LatAm 鈥� Chile, Columbia, Peru 鈥� are looking to get started on securities lending next year.
As the panel came to an end, one speaker encouraged participants to lean on the associations (such as ISLA and the Pan Asia 糖心vlog Lending Association) as they look to turn challenges into opportunities through education and engagement.
In terms of engagement, the panellist highlighted that the use of working groups, where members come together to coalesce around a market or thematic, is the engine of an association, and that it is also important for firms, to an extent, to lean on their peers.
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