ISLA has issued an updated ALD approval of principals best practice paper.
The update relates to the provision of information regarding evidence of authority and capacity which a principal requires in order to engage in Securities Lending transactions.
Copies can be found here
ISLA Responds to Central Bank of Ireland consultation on UCITS rulebook (CP84)
ISLA has submitted a response to the CBI's consultation on proposed revisions to its UCITS rulebook. The consultation concerns the CBI's approach to implementing the derogation from the collateral diversification requirements contained in the ESMA Guidelines on ETFs and Other UCITS (ESMA/2014/294). ISLA does not support the CBI's more restrictive proposals and argues that the requirements of the ESMA Guidelines provide sufficient protection for UCITS that engage in efficient portfolio management techniques. A copy of ISLA's letter can be found here.
ISLA has responded to ESMA’s consultation on various aspects of MiFID II concerning two key areas that relate to the securities lending market. The first covers some proposed restrictions on the use of Title Transfer Financial Collateral Arrangements (TTCA) and the second, some requirements for MiFID regulated firms to report securities lending activity to clients. ESMA is considering the extent to which TTCA should be restricted for retail and potentially other clients, to ensure that firms do not use TTCA to avoid client safekeeping of assets responsibilities. ISLA argues that securities lending undertaken by banks and investment firms for investors should fall outside of the proposed restrictions, as a) these arrangements do not result in avoidance of client asset safekeeping rules, and b) the restrictions would be damaging to markets and investors. Regarding reporting to clients, ISLA requests that MiFID II requirements should defer to the new rules that will be established under the Securities Finance Regulation. The response can be found here.
ISLA Feedback to the International Corporate Governance Network (ICGN) on its draft Global Governance Principles.
ISLA has provided feedback to the ICGN on its draft Global Governance Principles. The draft principles include a section on stock lending which deals with the issue of shareholders recalling shares if they wish to vote. We have suggested a number of changes to the ICGN draft language and a copy of our response letter can be found here.
Given the issues to do with the interaction of securities lending and corporate governance that occasionally get raised, ISLA decided to join the ICGN last year with the objective of developing stronger ties and an open dialogue with the corporate governance community.