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Location: M&G, 10 Fenchurch Avenue, London EC3M 5AG
Time: 2.30 – 4.30pm
The Chair opened the meeting and welcomed the members and observers. Members discussed the benefits of the embedded practices around DE&I, which support a diverse workforce, encourage future talent pipelines and which are perceived as BAU across the market. There has been some divergence in recent times, in terms of policy and taxonomy but the principles remain in focus for many participants. Authorities continue to support initiatives which promote more diverse firms and inclusive workplace cultures, whilst recognising the need to remove duplicative reporting requirements. Representatives from Euroclear presented on the CREST transformation programme, which will improve resilience and leverage group functionality to improve the central securities depository services to the UK market. Changes will be phased in over several years, with the new platform being fully integrated by 2030. CREST will embark on significant engagement with the market to ensure development is in line with market expectations. A further update was provided on improved same-day securities finance returns functionality, which has been delayed due to feedback from market participants. This is likely to be deployed after the UK transitions to T+1 settlement regime. The Committee discussed the need for improved data integrity and management across the market, as participants deploy greater automation in securities lending practices. The speed and methods in which data is communicated between parties brings risks and costs, which can be mitigated where recommended best practices are adopted. Whilst the market has demonstrated resilience, agent lender disclosure and standard settlement instruction information, which are symptoms of legacy architecture, should be considered a focal point for improvement across the market. Technology budget is constrained for many participants which can lead to delays in implementation of automated solutions however some members noted regulatory mandates may be necessary. Members noted a busy start to the year and the impact of geopolitical changes on securities lending activity, including decreasing spreads in treasury markets. High quality liquid assets saw stronger demand compared to the previous year, indicating robust funding activity. Firms continue to seek capital-efficient structures to optimise operations and drive profitability. The broker market remains active in total return swaps highlighting continued demand for these financial instruments. Demands for more automation and greater functionality are widespread across the market, as participants seek greater efficiency in existing markets and increase activity in developing markets. An increase in activity from neo-brokers was noted and if their activity follows best practice in relation to securities financing services offered. ISLA representatives provided an overview of securities lending recalls in light of UK T+1 accelerated settlement regime, highlighting changes to recommended best practices, a greater adoption of automation which resulted in an increase in recall rates. This necessitates further adjustments to ensure efficient management of the recall process. Further discussion centred on future changes to UK CSDR legislation to reduce ambiguity on transactions which are within scope and to provide clarity on exemptions for future dated securities financing trades. The Chair of the sub-committee provided an update to members, covering developments in UK and European tax and regulation. ISLA continues to advocate for members in jurisdictions where changing rules will impact securities lending activity. The sub-committee continues to monitor the EU Faster directive (initiative for simplification of EU-wide withholding tax) which is due for implementation in 2028. Germany is expected to implement first, in 2027, with implications for UK investor documentation. The sub-committee also noted the SEC had delayed the compliance date for the clearing mandate for eligible repurchase transactions. Direct participants now have until 31 December 2026 to clear eligible cash market transactions and 30 June 2027 to clear eligible repurchase transactions. The Committee noted the publication of the UK Accelerate Settlement Taskforce T+1 implementation plan in February and that the EC published the European legislative proposal, which is in line with the UK. No further business was discussed. Nina Moylett, M&G Chair Ina Budh-Raja, BoNY Devi Aujeet, Barclays Tim McLeod, Blackrock Andy Krangel, Citi Habib Motani, Clifford Chance Johanne Armita, Goldman Sachs Jamie Anderson, HSBC Godfried de Vidts, ICMA Andrew Dyson, ISLA Harpreet Bains, JP Morgan Krishan Chada, Morgan Stanley Tim Smollen, MUFG Simon Dunderdale, M&G Plc Morten Gevoll, Norges Bank IM Matt Neville, State Street Global Markets Alan Barnes, FCA Ellie McCormack, FCA Jack Skinner, DMO Davina Stickland, Blackrock (Tax & Regulatory sub-committee) Caroline Dawson, Clifford Chance (Tax & Regulatory sub-committee) Shikha Kalra, HSBC (Tax & Regulatory sub-committee) Adrian Dale, ISLA (Tax & Regulatory sub-committee) Simon Dolan, Bank of England Kirstine McMillan, Bank of England Malek Salisbury-Jones, Bank of England Adam Jacobs-Dean, AIMAMinutes
Item 1: Introductory Remarks
Item 2: Diversity, Equity & Inclusion
Item 3: CREST Development Program
Item 4: Data Integrity in Securities Finance Markets
Item 5: 2025 Outlook for Securities Lending
Item 6: ISLA: Securities Lending Recalls
Item 7: SLC Tax & Regulatory sub-committee update
Item 7: AOB
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