The outlook for the coming 12 months is one of a fast-evolving marketplace, according to Andrew Dyson, CEO of the International Securities Lending Association (ISLA).
He explains that the narrative of increasing risk-weighted asset (RWA) cost creates adaptation and possibility for beneficial owners, agents and borrowers.
In addition, regulator focus around the globe will continue to require diligent navigation and present both challenges and opportunities for all market participants in 2024.
ISLA has released the 20th edition of its Securities Lending Market Report, which helps market participants to better understand the key trends and influences across the industry.
The report highlights that more than 60 countries will hold regional legislative and presidential elections this year. “With the new governments come the promise of new regulation, which will no doubt impact how we do business,” notes Dyson.
The Association will focus on identifying opportunities to influence, educate and communicate to those who will drive policy, regulation and legislation, ensuring the markets are positioned in the proper context.
ISLA anticipates the emergence and growth of new markets such as the Middle East. The region is a focus for ISLA members, as this market aims to diversify its economies and further develop its financial markets.
The opening of new lending markets for offshore participants, particularly in Saudi Arabia and the Philippines, has given ISLA cause for optimism that revenue opportunities will materialise for early adopters.
Dyson adds: “As we go to press, the short selling landscape in South Korea continues to be under regulatory scrutiny, limiting revenue opportunities in that market.”
The market will also face the introduction of a number of new technologies and platforms to simplify, standardise and alleviate regulatory burdens in 2024.
The space will become more competitive according to Dyson, as new players enter the market with new solutions across the pre- and post-trade area.
In conclusion, Dyson says: “While our marketplace has always witnessed continuous evolution, often the rate of change appears to lag behind expectations.
“The same cannot be said when considering the outlook for 2024, when a real, notable shift is evident. The influence of RWA costs is driving change for all market participants.”
