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ISLA releases Basel III securities finance report
18 June 2026 US
Image: ARAMYAN/stock.adobe.com
As the global implementation of Basel III reaches an important milestone, the International Securities Lending Association (ISLA) has shared its latest report: ‘Basel III - The Securities Financing Market Toolkit’.
Co-authored with Capital Credit Ratings, this paper serves as the 2026 update to ISLA’s 2023 report and provides a comprehensive analysis of the Basel framework, as well as a review of the evolving securities finance capital efficiency toolkit.
Farrah Mahmood, head of Advocacy, Public Policy, and Regulatory Strategy at ISLA, says: “Navigating the complexities of the Basel III Endgame implementation across key jurisdictions requires deliberate planning and actionable strategies.
“This paper provides ISLA members with the mechanisms, from central clearing and credit ratings to robust netting frameworks, that are needed to safeguard their competitive positioning.”
The paper explores a number of distinct tools available to the industry to help manage capital exposure, including: central counterparty clearing (CCP): leveraging qualifying central counterparties (QCCPs) to achieve risk-weighted asset reduction and netting efficiencies.
It also includes credit rating agencies (CRA): utilising regulated credit ratings to alleviate infrastructural gaps for unrated buy side funds.
In addition, pledge structures are a part of the toolkit: employing security interest frameworks as an alternative to title transfer.
Lastly, netting and legal constructs are on the list: using close-out netting and Cross-Product Master Netting Agreements (CPMA) to collapse multi-product exposures.
Mark Faulkner, co-founder, Capital Credit Ratings, adds: “As more than a decade of regulatory engagement, commentary, consultation, and advocacy draws towards a close, the focus of the securities finance industry, the broader capital markets and all participants therein now inevitably turn towards implementation and execution.
“We are delighted to play a role, alongside ISLA, in this review of the tools in the Basel III toolkit. A special thanks also, to Christian Dale at Barclays and Jan Treuren at CBOE Clear, for their valuable inputs into this paper.”
Co-authored with Capital Credit Ratings, this paper serves as the 2026 update to ISLA’s 2023 report and provides a comprehensive analysis of the Basel framework, as well as a review of the evolving securities finance capital efficiency toolkit.
Farrah Mahmood, head of Advocacy, Public Policy, and Regulatory Strategy at ISLA, says: “Navigating the complexities of the Basel III Endgame implementation across key jurisdictions requires deliberate planning and actionable strategies.
“This paper provides ISLA members with the mechanisms, from central clearing and credit ratings to robust netting frameworks, that are needed to safeguard their competitive positioning.”
The paper explores a number of distinct tools available to the industry to help manage capital exposure, including: central counterparty clearing (CCP): leveraging qualifying central counterparties (QCCPs) to achieve risk-weighted asset reduction and netting efficiencies.
It also includes credit rating agencies (CRA): utilising regulated credit ratings to alleviate infrastructural gaps for unrated buy side funds.
In addition, pledge structures are a part of the toolkit: employing security interest frameworks as an alternative to title transfer.
Lastly, netting and legal constructs are on the list: using close-out netting and Cross-Product Master Netting Agreements (CPMA) to collapse multi-product exposures.
Mark Faulkner, co-founder, Capital Credit Ratings, adds: “As more than a decade of regulatory engagement, commentary, consultation, and advocacy draws towards a close, the focus of the securities finance industry, the broader capital markets and all participants therein now inevitably turn towards implementation and execution.
“We are delighted to play a role, alongside ISLA, in this review of the tools in the Basel III toolkit. A special thanks also, to Christian Dale at Barclays and Jan Treuren at CBOE Clear, for their valuable inputs into this paper.”
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