CASLA: Geopolitics presents heavy impact on financial legislation
03 June 2025 Canada
Image: SFT
Now more than ever, financial services legislation is being heavily impacted by the geopolitics that is going on all around the world, said Farrah Mahmood, director of regulatory affairs at the International Securities Lending Association (ISLA).
The statement was made at the 15th Annual Conference on Canadian Securities Lending in Toronto, which was hosted by the Canadian Securities Lending Association (CASLA).
Mahmood reviewed the previous year, in which an unprecedented number of elections took place globally, and which brought with it “a significant amount of uncertainty” around new policies. In 2025, the market is starting to see the implementation of these new political mandates take effect.
“There's definitely been a shift in sentiment towards more nationalist, protectionist, more inward looking policies in some of the big key jurisdictions across the globe,” she continued, “which unfortunately is leading to a much more fragmented regulatory landscape for us.”
From a trade association perspective, Mahmood emphasised how the role of organisations such as ISLA, will be even more focused on advocating for the market, ensuring there is consistency in terms of cross-border business and with regards to the key themes.
According to Mahmood, the current key themes in the market are: competitiveness and simplification; digital innovation and operational resilience; and retail.
Speaking to the market from a Canadian perspective, Laura Paglia, president and CEO of the Investment Industry Association of Canada (IIAC), agreed that the region has seen a new focus on competitiveness.
Paglia suggested that Canada has a highly fragmented regulatory system, with 13 provinces, and no national regulator. “As Canadians, we have been highly tolerant and patient of that in the past as it results in duplication, cost, and wasted resources,” she added.
This patience now seems to be waning, and so discussions which did not previously meet fruition, are being had directly.
The session entitled ‘Regulators & Policymakers: Global Perspectives on Shifting Views and Assumptions’ discussed competitiveness in respect of the US Securities and Exchange Commission’s (SEC’s) Regulation SHO.
Paglia asked: “When do we align globally and when do we not align globally?” Specifically, she indicated that regulators are exploring short sales that fail to settle, without evidence of a large problem.
The Canadian Investment Regulatory Organization (CIRO) previously published a proposal suggesting there would be mandatory buy-ins on short sales in Canada, in keeping with Regulation SHO in the US. This proposal faced a number of concerns, which Paglia highlighted as she compared the core differences between the US and Canada, for example, Canada has more illiquid assets.
As a key message, Paglia said: “We have a tendency in regulatory making to make the cost of implementation and the ‘how’ of implementation a consideration after the rule is made. You have got to look at that part first. And you must prove that the additional obligation that you're putting on market participants makes economic sense.”
The session moved on to discuss the SEC’s 10c-1a regulation, which is facing an implementation deadline in-line with Rule 13f-2.
Providing his perspective on the matter, Thomas Veneziano, head of product, Americas, at Pirum, said: “These two rules have been deemed by the industry as contradictory.” This contradiction has led to a lawsuit brought about by a group of beneficial owners.
He explained: “If you look at a lot of the articles that are out there, the beneficial owners may have about a 70 per cent chance of winning that case. In that scenario, you would probably see both rules go back to the SEC for some time for a revision or potentially a withdrawal.”
The situation speaks to the geopolitical landscape which is seeing a pullback from the regulatory regime in the US, noted Veneziano.
While 10c-1a is set to go live on 2 January 2026, the industry is currently in the “limbo stage” in respect to this regulation.
Turning to Nancy Steiker, senior director, global securities finance product management at FIS, Mak asked how she sees 10c-1a impacting the US securities lending market.
In her concluding remarks, she said: “It’s one sided reporting, where the lender is taking on all of the cost. How is this going to impact what they are charging for their borrows or their loans? The numbers just don't add up for the amount of modifications that go on a day, on a contract, and reportable events, and how they're going to recoup their build costs.
“If a loan is going to be a losing cost for a lender, it might actually contract liquidity in the market. It's just going to be a snowball, and the cost of borrowing is just going to get higher and higher.”
The statement was made at the 15th Annual Conference on Canadian Securities Lending in Toronto, which was hosted by the Canadian Securities Lending Association (CASLA).
Mahmood reviewed the previous year, in which an unprecedented number of elections took place globally, and which brought with it “a significant amount of uncertainty” around new policies. In 2025, the market is starting to see the implementation of these new political mandates take effect.
“There's definitely been a shift in sentiment towards more nationalist, protectionist, more inward looking policies in some of the big key jurisdictions across the globe,” she continued, “which unfortunately is leading to a much more fragmented regulatory landscape for us.”
From a trade association perspective, Mahmood emphasised how the role of organisations such as ISLA, will be even more focused on advocating for the market, ensuring there is consistency in terms of cross-border business and with regards to the key themes.
According to Mahmood, the current key themes in the market are: competitiveness and simplification; digital innovation and operational resilience; and retail.
Speaking to the market from a Canadian perspective, Laura Paglia, president and CEO of the Investment Industry Association of Canada (IIAC), agreed that the region has seen a new focus on competitiveness.
Paglia suggested that Canada has a highly fragmented regulatory system, with 13 provinces, and no national regulator. “As Canadians, we have been highly tolerant and patient of that in the past as it results in duplication, cost, and wasted resources,” she added.
This patience now seems to be waning, and so discussions which did not previously meet fruition, are being had directly.
The session entitled ‘Regulators & Policymakers: Global Perspectives on Shifting Views and Assumptions’ discussed competitiveness in respect of the US Securities and Exchange Commission’s (SEC’s) Regulation SHO.
Paglia asked: “When do we align globally and when do we not align globally?” Specifically, she indicated that regulators are exploring short sales that fail to settle, without evidence of a large problem.
The Canadian Investment Regulatory Organization (CIRO) previously published a proposal suggesting there would be mandatory buy-ins on short sales in Canada, in keeping with Regulation SHO in the US. This proposal faced a number of concerns, which Paglia highlighted as she compared the core differences between the US and Canada, for example, Canada has more illiquid assets.
As a key message, Paglia said: “We have a tendency in regulatory making to make the cost of implementation and the ‘how’ of implementation a consideration after the rule is made. You have got to look at that part first. And you must prove that the additional obligation that you're putting on market participants makes economic sense.”
The session moved on to discuss the SEC’s 10c-1a regulation, which is facing an implementation deadline in-line with Rule 13f-2.
Providing his perspective on the matter, Thomas Veneziano, head of product, Americas, at Pirum, said: “These two rules have been deemed by the industry as contradictory.” This contradiction has led to a lawsuit brought about by a group of beneficial owners.
He explained: “If you look at a lot of the articles that are out there, the beneficial owners may have about a 70 per cent chance of winning that case. In that scenario, you would probably see both rules go back to the SEC for some time for a revision or potentially a withdrawal.”
The situation speaks to the geopolitical landscape which is seeing a pullback from the regulatory regime in the US, noted Veneziano.
While 10c-1a is set to go live on 2 January 2026, the industry is currently in the “limbo stage” in respect to this regulation.
Turning to Nancy Steiker, senior director, global securities finance product management at FIS, Mak asked how she sees 10c-1a impacting the US securities lending market.
In her concluding remarks, she said: “It’s one sided reporting, where the lender is taking on all of the cost. How is this going to impact what they are charging for their borrows or their loans? The numbers just don't add up for the amount of modifications that go on a day, on a contract, and reportable events, and how they're going to recoup their build costs.
“If a loan is going to be a losing cost for a lender, it might actually contract liquidity in the market. It's just going to be a snowball, and the cost of borrowing is just going to get higher and higher.”
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