APAC’s evolving markets
31 March 2026
Looking at the Pan Asia Securities Lending Association 2026 conference in Bangkok, Hansa Tote reveals market themes, trends, and projections discussed by industry participants
Image: stock.adobe.com/kinwun
Experts gathered in Thailand to discuss the securities finance industry, exploring how APAC’s markets need to adapt to AI, digital assets, and accelerated settlement timelines, in addition to pressing global issues such as netting, capital, and frameworks.
APAC market flows
Industry participants reviewed the securities finance market across Asia, in a panel titled ‘APAC Market Flows’, discussing regional flows, issuance, hedging, and the continued growth of derivatives and directed trading.
2025 into 2026 has been a “standout year” stated Poya Agha-Bozorgi, head of Delta-One-Structured Products and Securities Lending Trading, Asia, at Morgan Stanley, who highlighted that assets under management (AUM), balance increases, and revenue increases have been hitting all-time highs across the industry.
He also noted that direct investments into hedge funds have increased, including the growth of separately managed accounts (SMAs). As a result, this has put increased requirements on firms to “sweat” assets more, in addition to increased asset requirements, balance sheet requirements, and funding requirements — all in an environment where capital is constrained.
“In terms of outlook for 2026, it is a very consistent message. It is trying to monetise assets for beneficial owners, monetise their balance sheet, and monetise their funding capabilities in a capital-efficient manner that helps us scale and leverage relationships,” he added.
As the industry moves to shorter settlement cycles, Nehal Mehra, head of securities financing and global collateral for Asia Pacific, at BNY, said this will drive the need for quicker collateral mobility and a more resilient and integrated front-to-back settlement and financing process. He noted that is where investment in automation is going to continue, adding, “T+1 creates challenges, but we already have T+0 with Connect which provides a good example to consider.”
Mehra drew a comparison between the two types of markets: those that are fundable through triparty and synthetics, and those that are in physical and synthetic forms. He noted the question is “more about where the supply comes from, as opposed to how do you finance it, and how do banks and brokers source that funding requirement and that supply in a way that is optimal for their constraints.”
He added there is another cross section of markets where financing is more challenging, with barriers to how you could typically have a fungible securities financing market driven by infrastructure, regulation, and tax, such as Taiwan and Korea. He stated it is those complexities and constraints that drive innovation in the market, noting Taiwan is a “fantastic” example of where we are seeing developments.
From a sovereign wealth perspective, the securities financing industry has continued to evolve in terms of the spectrum of products being presented, with Yin Yin Ng, GIC, senior vice president, Balance Sheet Management Group, noting that, over the years, it has changed from securities lending to securities financing in order to include synthetic as well as physical transactions.
In terms of collateral evolution, she noted that more markets, including Taiwan and Korea, have demanded to be collateralised.
Daniel Tse, managing director of Futu Securities, furthered the discussion, saying the firm has been using AI for several years, from the front line to compliance. He emphasised that AI streamlines the analytical and repetitive aspects of market operations, freeing up valuable time for humans to focus on strategic thinking and make optimal business decisions.
Tse also explained that AI is beneficial in regards to shorter settlement timelines, and added that when trading moves to T+0, AI-powered automation will be key.
During the discussion, it was noted that Korea has extended its trading hours by different exchanges, and this is going to continue, meaning operational friction is now a competitive disadvantage requiring automation across the lifecycle to allow firms to predict utilisation, cost, balance sheet, and shortfall of inventory.
Panellists concluded that no one market is the same, highlighting that issues are not consistent across markets. “For example, China or India has no physical securities finance market that is permissible for foreign institutional investors,” Mehra noted.
When talking about innovation in securities financing, panellists were asked what would be most beneficial to each of them. Agha-Bozorgi said he would like data-driven decision making to allow them to forecast market trends and understand flows, allowing them to anticipate needs and efficiently manage them, rather than reacting.
During the discussion, Mehra shared he expects that 2026 will continue to be a year of innovation. “Many years ago, it was a securities lending conference, now it is a securities finance conference, and that reflects the innovation that we continue to see,” he added noting that, “no panel is complete without the mention of AI.”
This led to panellists being asked if they view emerging technologies as embellishments to allow people to make better decisions, rather than replacing humans.
Panellists said the technology has already started to prove AI can be the accelerator in automating and redefining manual processes and analytics.
The consensus showed that allowing AI to make more “challenging” decisions will be beneficial for everyone, and that by developing technology to take on the more onerous responsibilities, humans are able to spend more time thinking about client needs while not being “overloaded with information”, therefore making more informed decisions.
Navigating the compliance and regulatory maze
Geopolitical fragmentation has had a tangible impact on policy priorities of governments globally, shifting focus from financial reform, according to Farrah Mahmood, head of advocacy, public policy, and regulatory strategy at the International Securities Lending Association (ISLA).
Speaking on a panel titled: ‘Legal, Compliance, and Regulatory: Navigating the Maze’, panellists discussed critical issues such as netting, technology, regulation, as well as the impact of geopolitics on the securities finance market.
Opening up the discussion, Mahmood noted that over the past 18 months, firms are having to navigate an increasingly fragmented regulatory environment.
“Because of jurisdictional geopolitical tensions, more nationalist, inward looking measures to ensure the competitiveness of one’s own market and one’s own nation are being created”, she highlighted.
Highlighting the role of regulators following the 2008 financial crisis, she said that the market is now moving in the direction of deregulation and simplification, something she warns is a “double edged sword”.
She elaborated: “Obviously, the loosening of rules brings with it several business opportunities, but at the same time much higher compliance costs overall as you navigate that very, very different landscape.”
Changing topics, Mahmood discussed Basel III, highlighting its global implementation is at a “fascinating” stage of divergence.
She continued: “Conversely to the West, many APAC jurisdictions have already crossed the finish line, whereas the US for example, are still debating the Endgame, with other jurisdictions, simply waiting to see what the US does with their re-proposal.
“If we look at the EU, we’ve seen a very deliberate pivot, although the Capital Requirements Regulation is already in place, they’ve just recently launched a new ‘Banking Competitiveness package’ which is Brussels’ attempt to ensure that European Banks aren’t being put at a disadvantage.
“We have seen several large Member States like France and Germany call for a re-opening of the Basel rules depending on how far the US diverges from the original Basel requirements.
“In the UK, the Prudential Regulation Authority (PRA) has now finalised the vast majority of its Basel rules. However, they have held back on one critical piece on market risk, and they have stated that they are explicitly waiting for the US re-proposal which is expected imminently, I understand.”
Mahmood underscored that this puts a global spotlight on the US, saying that, based on recent information, she anticipates a much softer version.
Discussing ISLA’s advocacy, Mahmood says the association is “very much” focussed on advocating for a review on the treatment of funds that are currently unrated and therefore receive 100 per cent risk weighted assets (RWA). In Europe, ISLA has been having discussions on use of pledge for undertakings for collective investment in transferable securities (UCITS), she noted, before detailing that last summer, the association received a favourable recommendation from the European Securities and Markets Authority (ESMA), suggesting to the commission that they adjust the UCITS rules to allow for other types of collateral arrangements.
“We have also had a dialogue with the likes of the Securities Industry and Financial Markets Association (SIFMA) in the US, and ISLA Americas with regards to getting recognition for pledge type transactions for US Banks, as well, which has always been a stumbling block,” she added.
To conclude this section of the panel, Mahmood noted that the prudential regulators have a wider lens than just the banks, and there is now a new focus on the non-banking sector and non-financial bank intermediation, something she described as “slightly ironic” as the success of regulating the banking sector has now migrated activities to the non-bank space, and in 2026, non-banks account for just over 50 per cent of global financial assets.
She referenced a report from the Financial Stability Board (FSB) that highlighted a growing area of concern regarding securities financing transactions involving non-banks, saying that the FSB is particularly concerned about ‘hidden leverage’ and the lack of transparency in how these non-banks manage collateral during periods of stress. “We expect there to be new proposals coming on this in 2026, across various jurisdictions,” she said.
From another perspective, one panellist described what they have seen over the last 18 months as very interesting, highlighting an increase in securities lending activity in APAC creating competition between regulators to create a favourable environment for firms, in addition to an increase in bespoke structures and the involvement of sovereign funds in securities lending.
They went on to detail that in China, long standing issues around netting are expected to be mitigated by the enterprise bankruptcy law, which is currently in its third draft and expected to come into force in the next couple of years. They detailed that the law states that when using a master documentation stipulated by a regulator, clean netting is permitted.
The panelist also explained that regulators are encouraging the use of Chinese government bonds, which have a low yield, and act as cheap collateral. They added that the Hong Kong and People’s Republic of China governments are trying to work together to strengthen market structure and cross-boarder activity.
They also noted that, despite people’s questioning, Hong Kong is adequately regulated, with regulators having published a roadmap to position the region as a global fixed income financial hub, with plans to create a clearing house to improve the efficiency of collateral in addition to creating cross collateralisation between exchanges.
Panelists were posed the question of: “How are we doing when faced with the future of technology, and how can the regulatory and compliance world help to support and recognise that there will need to be guardrails?”
In response, Sonia Lim, partner, financial markets at Simmons & Simmons, noted the speed of which technology such as AI and digital assets are moving, describing it as “mind boggling”.
“The main reason for the confusion is that technology is evolving, but the regulatory frameworks have not quite caught up, causing regulators to grapple with dealing with the risks created by technology, while not stifling innovation,” she explained.
Lim described AI as “disruptive”, and said it has the potential to disrupt the lifecycle of securities financing and highlighted that firms are increasingly using it for middle and back office functions such as anti-money laundering (AML) checks and credit assessments. She explained that its role is likely going to expand into client services such as selecting stocks, transaction reporting, and trading support.
“AI brings about efficiency, it helps us day to day if used correctly,” Lim stated, adding the caveat that there are growing concerns around the risks, especially around understanding how it works, and ensuring it behaves as intended.
Rounding off the panel Lim told attendees that digital assets are a key theme alongside AI when looking to the future, as it offers a number of benefits, such as faster settlement, 24/7 trading, and improved access to collateral and assets. She says that despite the benefits, the key questions are around whether digital assets can be operationalised and adopted at scale, both things she noted are likely to take time for a number of reasons, such as a required level of understanding around tokenisation, the need to introduce new service providers such as digital custodians, and the question of how are digital assets traded and transferred.
The fast and the curious
Harmonisation, or a lack thereof, was the pressing topic for one panel titled ‘The Fast and the Curious: Cracking the Enigma of Code ’, with numerous speakers citing fragmentation across APAC’s markets as the leading cause of difficulty.
APAC’s markets are complex, according to Florence Lam, co-head of Prime Finance, Asia (excluding Japan), at Nomura, who attributes this to the fact there are 10 distinct markets, each with their own regulatory frameworks, short sale rules, and are often covered by one or two trading teams.
“Further complexity is added by the limited liquidity pool in certain markets across APAC, in addition to the higher percentage of hard-to-borrow securities, driving us to adopt a more agile approach that lends itself to innovation and creativity in securities lending technology,” Lam added.
Ben Challice, CEO of Pirum, highlighted that Asia has historically aligned with the West regarding legal entity constructs and the way that technology is implemented across them, and that recently, he has seen an unprecedented level of autonomy from the different markets due to a growth in revenue and activity.
“In most cases, Asia is outstripping Europe from a revenue perspective” EquiLend’s Andrew McCardle, head of account management and client success, Asia, said, adding that, from technological and support perspectives, infrastructure is typically more aligned to European and North American models. He linked this to Lam’s comments, noting that a lot of market struggles across APAC are due to the lack of uniformity of market regulators.
McCardle further added that regulation in Asia changes at a much quicker pace in comparison to Europe and North America — “There can be instances here [in Asia] where an exchange decides to change the short selling limits at lunchtime, or says they are going to make an announcement at the end of the day, and nobody is quite aware of what is going to happen”.
Concluding this section of the panel, Jason Wells, managing director and regional head of agency lending trading financing solutions across Asia Pacific at State Street, and chairman of the Securities Finance Association, stated that over the last decade, institutions have had to focus technology investment toward solving regulatory for a slew of transparency requirements such as the Securities Financing Transactions Regulation (SFTR) in Europe. This has drained resourcing which could have otherwise been deployed in a region like APAC where the fragmented regulatory landscape requires customisation of technology to be able to service opportunities safely at scale.
Despite this, Wells said that, as these investments are now largely complete in Europe, there is now capacity to invest more in the promising APAC region.
Moving the conversation on, David Lewis, senior director of FIS Global began discussing his view on the use of AI in the industry, saying it will have a positive impact, only if it is not spread too thinly across multiple issues. “There is much too much in the press and in people’s expectations that AI is suddenly going to fix everything and we will be able to save massive headcounts. We can all be more efficient, and AI is going to help, but not if we just spring it into everything.”
Also commenting on AI, Challice mentioned the need to lay the foundations more appropriately in terms of having normalised, aggregated data to train AI models on in order to allow the AI to have a beneficial impact.
McCardle stated the question comes to how much will firms be willing to provide data to outside providers to build models utilising that firm’s data, and that this has potentially far reaching questions from a compliance and confidentiality perspective. The question is when will people be willing to outsource AI rather than keep it inhouse and proprietary.
In relation to 24/7 trading, there is a lot of frustration in Asia, with settlement times ranging from T+0 to T+2.
There needs to be better automation, whether that is evolving AI to facilitate it, or better settlement rails, noted Challice.
“Ultimately, securities finance is increasingly post-trade driven. It is the post-trade lifecycle events that need to be processed in an efficient manner given the number of actors within that chain of whether it be the central securities depository through to an agent or a custodian, through to a principal and a broker dealer on the other side. All of the communication rails that have to happen in between, not to mention the financial market infrastructure that also supports that,” he explained.
Lam referenced conversations she had had recently regarding fintech, particularly the concept of the ‘digital employee’ — bots that platform users can talk to, to extract data about the competitive landscape, or the state of the market. She said that this raised strategic questions for her, such as will flows consolidate to a few providers with strong digital capabilities, or should she develop her own agents that can read across all fintech data?
In response, Lewis highlighted the importance of human interaction, saying that, although bots might save money, there is still value in relationships between people.
Wells agreed, emphasising to the audience that the conference demonstrated that appetite remains stronger than ever for human connection and networking opportunities. He said that he felt that data analysis and mining of public short sale or semi-public SBL information will present quick gains to those who harness AI for this purpose, however, in the field of financing and investment he concluded “I think that there is a long way to go before that edge is solved by machine learning or AI, because there is still a lot of the human component and negotiation skill that comes into it”.
McCardle underscored that AI is additive, and stated: “It does not replace people, it is another tool in people’s armor, another quiver in their bow. It is up to individual firms to decide how to implement and utilise it to gain an advantage.”
APAC market flows
Industry participants reviewed the securities finance market across Asia, in a panel titled ‘APAC Market Flows’, discussing regional flows, issuance, hedging, and the continued growth of derivatives and directed trading.
2025 into 2026 has been a “standout year” stated Poya Agha-Bozorgi, head of Delta-One-Structured Products and Securities Lending Trading, Asia, at Morgan Stanley, who highlighted that assets under management (AUM), balance increases, and revenue increases have been hitting all-time highs across the industry.
He also noted that direct investments into hedge funds have increased, including the growth of separately managed accounts (SMAs). As a result, this has put increased requirements on firms to “sweat” assets more, in addition to increased asset requirements, balance sheet requirements, and funding requirements — all in an environment where capital is constrained.
“In terms of outlook for 2026, it is a very consistent message. It is trying to monetise assets for beneficial owners, monetise their balance sheet, and monetise their funding capabilities in a capital-efficient manner that helps us scale and leverage relationships,” he added.
As the industry moves to shorter settlement cycles, Nehal Mehra, head of securities financing and global collateral for Asia Pacific, at BNY, said this will drive the need for quicker collateral mobility and a more resilient and integrated front-to-back settlement and financing process. He noted that is where investment in automation is going to continue, adding, “T+1 creates challenges, but we already have T+0 with Connect which provides a good example to consider.”
Mehra drew a comparison between the two types of markets: those that are fundable through triparty and synthetics, and those that are in physical and synthetic forms. He noted the question is “more about where the supply comes from, as opposed to how do you finance it, and how do banks and brokers source that funding requirement and that supply in a way that is optimal for their constraints.”
He added there is another cross section of markets where financing is more challenging, with barriers to how you could typically have a fungible securities financing market driven by infrastructure, regulation, and tax, such as Taiwan and Korea. He stated it is those complexities and constraints that drive innovation in the market, noting Taiwan is a “fantastic” example of where we are seeing developments.
From a sovereign wealth perspective, the securities financing industry has continued to evolve in terms of the spectrum of products being presented, with Yin Yin Ng, GIC, senior vice president, Balance Sheet Management Group, noting that, over the years, it has changed from securities lending to securities financing in order to include synthetic as well as physical transactions.
In terms of collateral evolution, she noted that more markets, including Taiwan and Korea, have demanded to be collateralised.
Daniel Tse, managing director of Futu Securities, furthered the discussion, saying the firm has been using AI for several years, from the front line to compliance. He emphasised that AI streamlines the analytical and repetitive aspects of market operations, freeing up valuable time for humans to focus on strategic thinking and make optimal business decisions.
Tse also explained that AI is beneficial in regards to shorter settlement timelines, and added that when trading moves to T+0, AI-powered automation will be key.
During the discussion, it was noted that Korea has extended its trading hours by different exchanges, and this is going to continue, meaning operational friction is now a competitive disadvantage requiring automation across the lifecycle to allow firms to predict utilisation, cost, balance sheet, and shortfall of inventory.
Panellists concluded that no one market is the same, highlighting that issues are not consistent across markets. “For example, China or India has no physical securities finance market that is permissible for foreign institutional investors,” Mehra noted.
When talking about innovation in securities financing, panellists were asked what would be most beneficial to each of them. Agha-Bozorgi said he would like data-driven decision making to allow them to forecast market trends and understand flows, allowing them to anticipate needs and efficiently manage them, rather than reacting.
During the discussion, Mehra shared he expects that 2026 will continue to be a year of innovation. “Many years ago, it was a securities lending conference, now it is a securities finance conference, and that reflects the innovation that we continue to see,” he added noting that, “no panel is complete without the mention of AI.”
This led to panellists being asked if they view emerging technologies as embellishments to allow people to make better decisions, rather than replacing humans.
Panellists said the technology has already started to prove AI can be the accelerator in automating and redefining manual processes and analytics.
The consensus showed that allowing AI to make more “challenging” decisions will be beneficial for everyone, and that by developing technology to take on the more onerous responsibilities, humans are able to spend more time thinking about client needs while not being “overloaded with information”, therefore making more informed decisions.
Navigating the compliance and regulatory maze
Geopolitical fragmentation has had a tangible impact on policy priorities of governments globally, shifting focus from financial reform, according to Farrah Mahmood, head of advocacy, public policy, and regulatory strategy at the International Securities Lending Association (ISLA).
Speaking on a panel titled: ‘Legal, Compliance, and Regulatory: Navigating the Maze’, panellists discussed critical issues such as netting, technology, regulation, as well as the impact of geopolitics on the securities finance market.
Opening up the discussion, Mahmood noted that over the past 18 months, firms are having to navigate an increasingly fragmented regulatory environment.
“Because of jurisdictional geopolitical tensions, more nationalist, inward looking measures to ensure the competitiveness of one’s own market and one’s own nation are being created”, she highlighted.
Highlighting the role of regulators following the 2008 financial crisis, she said that the market is now moving in the direction of deregulation and simplification, something she warns is a “double edged sword”.
She elaborated: “Obviously, the loosening of rules brings with it several business opportunities, but at the same time much higher compliance costs overall as you navigate that very, very different landscape.”
Changing topics, Mahmood discussed Basel III, highlighting its global implementation is at a “fascinating” stage of divergence.
She continued: “Conversely to the West, many APAC jurisdictions have already crossed the finish line, whereas the US for example, are still debating the Endgame, with other jurisdictions, simply waiting to see what the US does with their re-proposal.
“If we look at the EU, we’ve seen a very deliberate pivot, although the Capital Requirements Regulation is already in place, they’ve just recently launched a new ‘Banking Competitiveness package’ which is Brussels’ attempt to ensure that European Banks aren’t being put at a disadvantage.
“We have seen several large Member States like France and Germany call for a re-opening of the Basel rules depending on how far the US diverges from the original Basel requirements.
“In the UK, the Prudential Regulation Authority (PRA) has now finalised the vast majority of its Basel rules. However, they have held back on one critical piece on market risk, and they have stated that they are explicitly waiting for the US re-proposal which is expected imminently, I understand.”
Mahmood underscored that this puts a global spotlight on the US, saying that, based on recent information, she anticipates a much softer version.
Discussing ISLA’s advocacy, Mahmood says the association is “very much” focussed on advocating for a review on the treatment of funds that are currently unrated and therefore receive 100 per cent risk weighted assets (RWA). In Europe, ISLA has been having discussions on use of pledge for undertakings for collective investment in transferable securities (UCITS), she noted, before detailing that last summer, the association received a favourable recommendation from the European Securities and Markets Authority (ESMA), suggesting to the commission that they adjust the UCITS rules to allow for other types of collateral arrangements.
“We have also had a dialogue with the likes of the Securities Industry and Financial Markets Association (SIFMA) in the US, and ISLA Americas with regards to getting recognition for pledge type transactions for US Banks, as well, which has always been a stumbling block,” she added.
To conclude this section of the panel, Mahmood noted that the prudential regulators have a wider lens than just the banks, and there is now a new focus on the non-banking sector and non-financial bank intermediation, something she described as “slightly ironic” as the success of regulating the banking sector has now migrated activities to the non-bank space, and in 2026, non-banks account for just over 50 per cent of global financial assets.
She referenced a report from the Financial Stability Board (FSB) that highlighted a growing area of concern regarding securities financing transactions involving non-banks, saying that the FSB is particularly concerned about ‘hidden leverage’ and the lack of transparency in how these non-banks manage collateral during periods of stress. “We expect there to be new proposals coming on this in 2026, across various jurisdictions,” she said.
From another perspective, one panellist described what they have seen over the last 18 months as very interesting, highlighting an increase in securities lending activity in APAC creating competition between regulators to create a favourable environment for firms, in addition to an increase in bespoke structures and the involvement of sovereign funds in securities lending.
They went on to detail that in China, long standing issues around netting are expected to be mitigated by the enterprise bankruptcy law, which is currently in its third draft and expected to come into force in the next couple of years. They detailed that the law states that when using a master documentation stipulated by a regulator, clean netting is permitted.
The panelist also explained that regulators are encouraging the use of Chinese government bonds, which have a low yield, and act as cheap collateral. They added that the Hong Kong and People’s Republic of China governments are trying to work together to strengthen market structure and cross-boarder activity.
They also noted that, despite people’s questioning, Hong Kong is adequately regulated, with regulators having published a roadmap to position the region as a global fixed income financial hub, with plans to create a clearing house to improve the efficiency of collateral in addition to creating cross collateralisation between exchanges.
Panelists were posed the question of: “How are we doing when faced with the future of technology, and how can the regulatory and compliance world help to support and recognise that there will need to be guardrails?”
In response, Sonia Lim, partner, financial markets at Simmons & Simmons, noted the speed of which technology such as AI and digital assets are moving, describing it as “mind boggling”.
“The main reason for the confusion is that technology is evolving, but the regulatory frameworks have not quite caught up, causing regulators to grapple with dealing with the risks created by technology, while not stifling innovation,” she explained.
Lim described AI as “disruptive”, and said it has the potential to disrupt the lifecycle of securities financing and highlighted that firms are increasingly using it for middle and back office functions such as anti-money laundering (AML) checks and credit assessments. She explained that its role is likely going to expand into client services such as selecting stocks, transaction reporting, and trading support.
“AI brings about efficiency, it helps us day to day if used correctly,” Lim stated, adding the caveat that there are growing concerns around the risks, especially around understanding how it works, and ensuring it behaves as intended.
Rounding off the panel Lim told attendees that digital assets are a key theme alongside AI when looking to the future, as it offers a number of benefits, such as faster settlement, 24/7 trading, and improved access to collateral and assets. She says that despite the benefits, the key questions are around whether digital assets can be operationalised and adopted at scale, both things she noted are likely to take time for a number of reasons, such as a required level of understanding around tokenisation, the need to introduce new service providers such as digital custodians, and the question of how are digital assets traded and transferred.
The fast and the curious
Harmonisation, or a lack thereof, was the pressing topic for one panel titled ‘The Fast and the Curious: Cracking the Enigma of Code ’, with numerous speakers citing fragmentation across APAC’s markets as the leading cause of difficulty.
APAC’s markets are complex, according to Florence Lam, co-head of Prime Finance, Asia (excluding Japan), at Nomura, who attributes this to the fact there are 10 distinct markets, each with their own regulatory frameworks, short sale rules, and are often covered by one or two trading teams.
“Further complexity is added by the limited liquidity pool in certain markets across APAC, in addition to the higher percentage of hard-to-borrow securities, driving us to adopt a more agile approach that lends itself to innovation and creativity in securities lending technology,” Lam added.
Ben Challice, CEO of Pirum, highlighted that Asia has historically aligned with the West regarding legal entity constructs and the way that technology is implemented across them, and that recently, he has seen an unprecedented level of autonomy from the different markets due to a growth in revenue and activity.
“In most cases, Asia is outstripping Europe from a revenue perspective” EquiLend’s Andrew McCardle, head of account management and client success, Asia, said, adding that, from technological and support perspectives, infrastructure is typically more aligned to European and North American models. He linked this to Lam’s comments, noting that a lot of market struggles across APAC are due to the lack of uniformity of market regulators.
McCardle further added that regulation in Asia changes at a much quicker pace in comparison to Europe and North America — “There can be instances here [in Asia] where an exchange decides to change the short selling limits at lunchtime, or says they are going to make an announcement at the end of the day, and nobody is quite aware of what is going to happen”.
Concluding this section of the panel, Jason Wells, managing director and regional head of agency lending trading financing solutions across Asia Pacific at State Street, and chairman of the Securities Finance Association, stated that over the last decade, institutions have had to focus technology investment toward solving regulatory for a slew of transparency requirements such as the Securities Financing Transactions Regulation (SFTR) in Europe. This has drained resourcing which could have otherwise been deployed in a region like APAC where the fragmented regulatory landscape requires customisation of technology to be able to service opportunities safely at scale.
Despite this, Wells said that, as these investments are now largely complete in Europe, there is now capacity to invest more in the promising APAC region.
Moving the conversation on, David Lewis, senior director of FIS Global began discussing his view on the use of AI in the industry, saying it will have a positive impact, only if it is not spread too thinly across multiple issues. “There is much too much in the press and in people’s expectations that AI is suddenly going to fix everything and we will be able to save massive headcounts. We can all be more efficient, and AI is going to help, but not if we just spring it into everything.”
Also commenting on AI, Challice mentioned the need to lay the foundations more appropriately in terms of having normalised, aggregated data to train AI models on in order to allow the AI to have a beneficial impact.
McCardle stated the question comes to how much will firms be willing to provide data to outside providers to build models utilising that firm’s data, and that this has potentially far reaching questions from a compliance and confidentiality perspective. The question is when will people be willing to outsource AI rather than keep it inhouse and proprietary.
In relation to 24/7 trading, there is a lot of frustration in Asia, with settlement times ranging from T+0 to T+2.
There needs to be better automation, whether that is evolving AI to facilitate it, or better settlement rails, noted Challice.
“Ultimately, securities finance is increasingly post-trade driven. It is the post-trade lifecycle events that need to be processed in an efficient manner given the number of actors within that chain of whether it be the central securities depository through to an agent or a custodian, through to a principal and a broker dealer on the other side. All of the communication rails that have to happen in between, not to mention the financial market infrastructure that also supports that,” he explained.
Lam referenced conversations she had had recently regarding fintech, particularly the concept of the ‘digital employee’ — bots that platform users can talk to, to extract data about the competitive landscape, or the state of the market. She said that this raised strategic questions for her, such as will flows consolidate to a few providers with strong digital capabilities, or should she develop her own agents that can read across all fintech data?
In response, Lewis highlighted the importance of human interaction, saying that, although bots might save money, there is still value in relationships between people.
Wells agreed, emphasising to the audience that the conference demonstrated that appetite remains stronger than ever for human connection and networking opportunities. He said that he felt that data analysis and mining of public short sale or semi-public SBL information will present quick gains to those who harness AI for this purpose, however, in the field of financing and investment he concluded “I think that there is a long way to go before that edge is solved by machine learning or AI, because there is still a lot of the human component and negotiation skill that comes into it”.
McCardle underscored that AI is additive, and stated: “It does not replace people, it is another tool in people’s armor, another quiver in their bow. It is up to individual firms to decide how to implement and utilise it to gain an advantage.”
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