03 February 2017
It’s a new dawn in the U.S., with a new president, opportunities and challenges. How can beneficial owners navigate the new landscape?
The securities lending industry faces a new dawn of geopolitical change. Amidst this backdrop, Joseph Santaro, head of product sales for the Americas – Agency Securities Lending at Deutsche Bank, joined a panel of senior industry experts to discuss the challenges and opportunities.
A key theme to emerge from the discussion was that volatility can be good for lenders. The erosion of European yield enhancement and lower demand for general collateral should encourage beneficial owners to rethink current approaches, be it to markets, collateral, structures or general parameters. They should also monitor the evolving requirements of the Securities Financing Transactions Regulation (SFTR) in Europe and the U.S. Securities and Exchange Commission’s Investment Company Reporting Modernization Act, for example.
In short, beneficial owners should be aware of five themes in order to navigate the challenges and opportunities from an evolving landscape:
#1 Engagement should be at the top of the to-do list
#2 Higher interest rates should not have a profound effect on trade choices
#3 The current low-yield bond environment will impact lenders differently depending on the region
#4 The securities lending market should wait and see how it will be affected by President Trump’s likely regulatory approaches.
#5 SFTR will clearly mean a technology spend for service providers to comply, but a global reach, robust platform and solid expertise should help
In October 2016, the SEC adopted rules which will enhance data reporting for mutual funds, exchange-traded funds and other registered investment companies. The rules, to be adopted by the industry in October 2018, call for new monthly and annual reporting forms, enhanced standardised disclosures and new disclosures in fund registration statements relating to a fund’s securities lending activities. A provider that operates on a real-time platform with a dedicated technology team, that services global investors across multiple jurisdictions and is very active in analysing new regulation, should be best placed to help beneficial owners navigate the new landscape.
To read the full panel discussion in Securities Lending Times, click here.
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