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ISLA: With great opportunity comes complexity
19 June 2026 Portugal
Image: Sean_Hsu/stock.adobe.com
Bringing attendees back for day three of the ISLA 33rd Annual Securities Finance & Collateral Management Conference, the ‘Leaders’ Perspectives & Predictions’ panel provided a candid look at how the industry’s players are reviewing their operating models and trading strategies and where the market stands.
Opening the panel with their thoughts on the market, panellists noted that the industry is well-functioning, resilient, and its ability to absorb the amount of market activity that has been seen this year is “impressive”.
In addition, one panellist summed up the market with one word: converging. Structurally, they anticipated that the market was heading to an outcome-led financing market. The risk is complexity, because the industry is more connected, customised, and sophisticated.
Complexity could become the price of that progress unless the infrastructure keeps up with the pace of the level of customisation that is being seen across products, they warned.
Reviewing the market, it was noted that this current period of expansion is unlike what has been seen before. Struggling to not be too complacent or overconfident with what the market is witnessing across every segment and region, they noted that this period of growth has further to go and engagement is on the rise.
The panel shared visuals to help attendees understand the level of performance being seen in the securities finance market, the summary was “everything is going up”. The equity ball continues to roll, and what has been seen in segments such as AI infrastructure and semiconductors “has been huge”.
The run-up to this transformation has been something “we haven’t seen for almost a generation of people in this business”, one panellist stated. It was noted that macroeconomic headwinds have not held back asset prices from rising.
Moving the discussion forward, it was noted that there are a number of emerging markets and markets where intrinsic value lending has been significant and a big market driver. These factors led to the question: what does it take to build scale in new markets?
One panellist advised that patience is required for entrants to new markets, because it takes time. In terms of scale and liquidity, participants must identify the friction points early and address them as part of the development as opposed to doing so once already live.
Friction could appear within the legal and regulatory framework. From an agent lender perspective, the priority is to align as much as possible with international standards. In addition, friction can appear from an operational standpoint, and this is where scalability can be lost. To solve this, automation and thinking ahead on what the operating model will look like is key.
Collateral development was also flagged in the discussion. The key collateral questions participants need to ask themselves are: do you have confidence in your security interests and your ability to liquidate the collateral in the event of a default?
Viewing the regulatory landscape, it appears that the current environment seems much more solutions-focused than ever. There are many opportunities arising and participants are thinking about how they can capitalise on those opportunities.
When considering regulation, the panel said that the industry has adapted to the current frameworks that sit around capital structure, there is a general optimism around the finalisation of capital rules. However, the industry is entering an environment where, depending on the region, there could be some tailwinds in terms of how the regulatory framework enables firms to do business.
There are some big market structure regulatory changes coming in, whether that be T+1 in Europe, extended trading hours in the US, or revision to new securities lending rules. A panellist said that new and upcoming regulation should help firms to do more business, as a financial industry, to support the growth of capital markets.
Concluding the panel, the speakers provided their final thoughts and predictions for the market. One panellist highlighted the convergence of traditional and digital markets, and predicted that over the next two years, firms will have a scalable model that will support both tokenised securities and TradFi securities.
Another prediction related to the headlines around the implementations of AI, tokenisation, and digital assets. This will start to come from the horizon and into a closer view over the next 12 months, and will be talked about as part of the business.
Opening the panel with their thoughts on the market, panellists noted that the industry is well-functioning, resilient, and its ability to absorb the amount of market activity that has been seen this year is “impressive”.
In addition, one panellist summed up the market with one word: converging. Structurally, they anticipated that the market was heading to an outcome-led financing market. The risk is complexity, because the industry is more connected, customised, and sophisticated.
Complexity could become the price of that progress unless the infrastructure keeps up with the pace of the level of customisation that is being seen across products, they warned.
Reviewing the market, it was noted that this current period of expansion is unlike what has been seen before. Struggling to not be too complacent or overconfident with what the market is witnessing across every segment and region, they noted that this period of growth has further to go and engagement is on the rise.
The panel shared visuals to help attendees understand the level of performance being seen in the securities finance market, the summary was “everything is going up”. The equity ball continues to roll, and what has been seen in segments such as AI infrastructure and semiconductors “has been huge”.
The run-up to this transformation has been something “we haven’t seen for almost a generation of people in this business”, one panellist stated. It was noted that macroeconomic headwinds have not held back asset prices from rising.
Moving the discussion forward, it was noted that there are a number of emerging markets and markets where intrinsic value lending has been significant and a big market driver. These factors led to the question: what does it take to build scale in new markets?
One panellist advised that patience is required for entrants to new markets, because it takes time. In terms of scale and liquidity, participants must identify the friction points early and address them as part of the development as opposed to doing so once already live.
Friction could appear within the legal and regulatory framework. From an agent lender perspective, the priority is to align as much as possible with international standards. In addition, friction can appear from an operational standpoint, and this is where scalability can be lost. To solve this, automation and thinking ahead on what the operating model will look like is key.
Collateral development was also flagged in the discussion. The key collateral questions participants need to ask themselves are: do you have confidence in your security interests and your ability to liquidate the collateral in the event of a default?
Viewing the regulatory landscape, it appears that the current environment seems much more solutions-focused than ever. There are many opportunities arising and participants are thinking about how they can capitalise on those opportunities.
When considering regulation, the panel said that the industry has adapted to the current frameworks that sit around capital structure, there is a general optimism around the finalisation of capital rules. However, the industry is entering an environment where, depending on the region, there could be some tailwinds in terms of how the regulatory framework enables firms to do business.
There are some big market structure regulatory changes coming in, whether that be T+1 in Europe, extended trading hours in the US, or revision to new securities lending rules. A panellist said that new and upcoming regulation should help firms to do more business, as a financial industry, to support the growth of capital markets.
Concluding the panel, the speakers provided their final thoughts and predictions for the market. One panellist highlighted the convergence of traditional and digital markets, and predicted that over the next two years, firms will have a scalable model that will support both tokenised securities and TradFi securities.
Another prediction related to the headlines around the implementations of AI, tokenisation, and digital assets. This will start to come from the horizon and into a closer view over the next 12 months, and will be talked about as part of the business.
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