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ISLA issues update ALD best practice

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 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 response to MiFID II/MiFIR Consultation


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.



Feedback from ISLA on ICGN Global Governance Principles


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.


Financial Stability Board’s Data Experts Group – joint letter from ISLA and RMA


The Data Experts Group was established by the FSB’s Workstream 5 committee to establish standards for the collection and aggregation of data on SFTs from regional and local regulators. Following a roundtable meeting organised by the DEG in London in March, ISLA and the RMA have sent a joint comment letter aimed at providing guidance. The letter proposes that regulators and the FSB should consider collecting data at the Agent Lender Disclosure level. This approach would have the advantage of building on existing reporting capabilities and provide detailed reporting that could be aggregated by the FSB. A copy of which can be found here


ISLA response to Central Bank of Ireland’s consultation CP77


ISLA response to Central Bank of Ireland’s
consultation CP77: Consultation on publication of UCITS rulebook.


Please find attached here ISLA's response to the Central Bank of Ireland's consultation paper concerning amendments to the UCITS Rulebook for you information.

The response was prepared following discussions with the UCITS working group and I would like to thank them for their help in this matter.


ESMA - UCITS Guidelines Consultation update

 ESMA has now published it’s revision to the Guidelines following consultation. We will produce a fuller analysis but ESMA has listened to arguments from us and other market associations and extended the new collateral diversification requirements to all UCITS and not just money market funds as proposed. Under the new guidelines, UCITS that receive collateral from any one issuer of more than 20% of its NAV are required to make additional disclosures, and ESMA further requires that collateral must be diversified across at least 6 different issues.

The new Guidelines can be found here.


ISLA responds to ESMA’s consultation document


ISLA responds to ESMA’s consultation document “Revision of the provisions on diversification of collateral in ESMA’s guidelines on ETFs and other UCITS”.


ISLA has submitted a response to ESMA’s consultation on proposals to amend the collateral diversification rules contained in its guidelines for ETFs and other UCITS. The current guidelines require that no more than 20% of the NAV of a UCITS may be held in collateral from any one issuer. In the consultation ESMA consider allowing a derogation from this provision for government issued collateral in certain circumstances. The proposal is that this derogation should be limited to money market fund UCITS only to allow them to use higher volumes of reverse repo against a single government issuer.

ISLA argues that whilst it supports the proposal, the derogation should be available to all UCITS (not just MMFs). A copy of ISLA’s response can be found here.



Draft EU regulation on reporting and transparency of SFTs


Draft EU regulation on reporting and transparency of SFTs – Clifford Chance Briefing

Further to our announcement last month you may be interested to read a briefing note from Clifford Chance on this development. The briefing note can be accessed here.


Bye- Election Results


We are pleased to announce that following the recent bye-election Arne Theia from Unicredit Bank has been elected to the ISLA Board.