International Securities Lending Association
ISLA
The International Securities Lending Association (ISLA) is a leading non-profit industry association, representing the common interests of securities lending and financing market participants across Europe, Middle East and Africa.
ID: 575888466-70
Lobbying Activity
Meeting with Jennifer Robertson (Head of Unit Financial Stability, Financial Services and Capital Markets Union)
6 Nov 2025 · Simplification of financial transaction reporting
Meeting with Gerassimos Thomas (Director-General Taxation and Customs Union)
18 Sept 2025 · - Introduction to the International Securities Lending Association (ISLA). - Discussion around the concept of Beneficial Ownership in the context of securities lending (ownership and legal title transferring from lender to borrower)
Meeting with Ugo Bassi (Director Financial Stability, Financial Services and Capital Markets Union) and
3 Jun 2025 · Financial services policies
Response to Savings and Investments Union
7 Mar 2025
ISLA is a non-profit industry association (EU Transparency No. 575 888 466 70) representing the common interests of securities lending and financing market participants across Europe, the Middle East and Africa. Its geographically diverse membership of over 200 firms includes a broad range of institutional investors, asset managers, custodial banks, prime brokers, and service providers. Working closely with the industry, as well as national, regional, and global regulators and policy makers, ISLA advocates for, amongst other things, the importance of securities lending to the broader financial services industry.
Read full responseResponse to Single Market Strategy 2025
31 Jan 2025
The International Securities Lending Association (ISLA) is a leading non-profit industry association, representing the common interests of securities financing market participants across Europe, Middle East, and Africa (focusing primarily on securities lending and borrowing (SLB) activity). Its geographically diverse membership of over 200 firms includes institutional investors, asset managers, custodial banks, prime brokers and service providers. Working closely with the industry, as well as national, regional, and global regulators and policy makers, ISLA advocates for, amongst other things, the importance of securities lending to the broader financial services industry.
Read full response14 Dec 2023
(i) Criticality Criteria The proposed assessment is unclear and potentially over-inclusive, as the criteria do not sufficiently differentiate between the types, sizes and functions of ICT providers (TPPs). Accordingly, smaller TPPs that do not pose significant risks to the financial system or the operational resilience of financial entities (FEs) even providers that arguably reduce operational risks may be subject to DORA, despite the intention to target only larger TPPs such as cloud providers. The regulations propose a two-step assessment to determine whether a TPP is critical. Whilst we concur with the ESAs that a holistic assessment is necessary (i.e. that criticality must be evaluated in a comprehensive and interconnected manner, taking into account multiple factors rather than individual components in isolation), we note that the number of thresholds that must be exceeded is not specified, nor is there any explanation of how the qualitative criteria will be weighted. By way of illustration, as the quantitative criteria includes consideration of e.g. the number of FEs served and the volume of transactions processed, a smaller TPP that is not in fact systemically important could theoretically be captured. Similarly, the qualitative criteria can be broadly interpreted and result in an overly inclusive approach being adopted. More clarity and guidance on how the criteria will be applied and weighted is therefore required. Additionally, wider exemptions should be included e.g. for TPPs whose services are not integral to FE financial transactions being effected or to FE operations (because the services merely allow the trading FEs to communicate on a post trade basis or automate tasks that could otherwise be done manually inhouse). Further, the proposed 10% threshold of FEs serviced in step 1 should be increased or a minimum turnover threshold should be introduced to ensure that the proportionality principle is respected and that smaller TPPs are not unreasonably captured. Moreover, the degree of substitutability in step 2 should be revised such that this considers only the presence of a similar TPP, so as to ensure that TPPs are not brought in scope where an FE is merely unable to port services due to its own deficiencies (such as underinvestment in technology). (ii) Fees The annual oversight fees are disproportionate and unfair, in particular as the 500K flat fee imposed on all CTPPs in the first year fails to consider their turnover, size and nature of their services. Such fee could only be considered reasonable if only very large CTPPs were to be designated, noting that this amount would be disproportionately high (arguably even punitive) for smaller providers that happen to be in scope by virtue of servicing a large number of FEs (absent other factors). As a result, such fee could stifle competition by disincentivising new entrants to the market and pushing more business towards larger existing providers. If so, this would go directly against the stated aim of addressing systemic and concentration risk posed by the financial sectors reliance on a small number of CTPPs. For these reasons this fee fails to take into account the guiding proportionality principle recognised in DORA 43(1). Consequently, the proposal should be revised to factor in the CTPP's expected turnover in the year of designation, or otherwise by structuring the fee arrangement such that a larger amount is paid in year 2 to cover any actual shortfall based on actual turnover. Finally, with respect to ongoing fees payable by CTPPs, we consider the ESAs proposal of yearly fees that are fully proportionate to the applicable turnover appropriate in principle, noting however that the requirement for a minimum annual fee of 50K is likely to be material for smaller TPPs and should be lower to ensure proportionality.
Read full responseResponse to Long Term Investment Funds – Review of EU rules
25 Mar 2022
The International Securities Lending Association (ISLA) welcomes the opportunity to respond to this proposal. More information on ISLA and its members can be found here.
ISLA would like to raise concern pertaining to the rules around eligible assets. Under the current regulation, an ELTIF must not enter into a securities lending or borrowing transaction if thereby more than 10 % of the assets of the ELTIF are affected.
ISLA believe that to effectively promote the attractiveness of investing in ELTIFs, the use of these investment tools must be permitted in order to increase liquidity in long-term investments, such as social and transport infrastructure projects, real estate and SMEs.
ISLA supports the Commission’s adjustment to Article 13, regarding the portfolio composition, reducing the percentage of investment in eligible assets from 70-60% and ISLA concur, that this lower threshold is a step towards improving the liquidity profile of ELTIFs.
ISLA welcomes the view of the Commission, that the advantages provided by the framework are somewhat diminished by the restrictive nature of the requirements for investments to qualify as eligible. This is further limited by the restrictions that continue to be placed on securities lending activity.
ISLA also supports the introduction of an optional liquidity window redemption mechanism, which may help to ensure greater participation from retail investors, where historically the intrinsic illiquid nature of the ELTIFs limited their appeal.
ISLA is also in favour of the proposal to make the ELTIF structure more attractive by easing selected fund rules for ELTIFs distributed solely to professional investors. The current regulation does not effectively distinguish between the risk profile of retail investors and professional investors, who do not necessarily require the same levels of investor protection. ISLA consequently support the proposed modifications to certain fund rules, including the scope of eligible asses to increase the flexibility and attractiveness to professional investors with advanced trading strategies.
ISLA understands that the nature of securities lending activity is often misconceived as a short-term transaction and hence against the spirt and objective of a long-term investment fund however, ISLA wishes to highlight that in an ESMA report issued in 20191 on undue short termism in the real economy, the regulator states ‘ESMA has considered the general arguments in relation to the impact of short-selling and securities lending practices and their potential link with short-termism. ESMA points out that short-selling and securities lending are key for price discovery and market liquidity.’
ISLA strongly believes that increasing the levels of securities lending that an ELTIF can engage in, can directly address the challenges associated with the low take-up of ELTIFs and engagement in this activity, should not be seen as a contradiction of an ELTIFs overall objectives, as securities lending can generate additional income for long-term holders of securities. In the aforementioned report, ‘the SMSG acknowledges that securities lending, if done in a controlled way, is an opportunity to add value for fund investors and compatible with long-term investment strategies.’
It is important to note that asset managers of alternative collective investment vehicles such as UCITs and AIFs also utilise securities lending as part of their efficient portfolio management techniques.
ISLA advocate that securities lending can play an important role in the Commission’s endeavours to improve the scalability of ELTIFs and maintain that limiting this activity, is a barrier to improving the efficiency and development of these fund types.
1 https://www.esma.europa.eu/sites/default/files/library/esma30-22-762_report_on_undue_short-term_pressure_on_corporations_from_the_financial_sector.pdf
Read full response23 Feb 2022
The International Securities Lending Association (ISLA) welcomes the finalisation of the Basel III reforms in the European Union to further contribute to future financial stability and assist in the steady crisis recovery, post COVID-19.
The International Securities Lending Association (ISLA) is a leading non-profit industry association, representing the common interests of securities lending and financing market participants across Europe, Middle East and Africa. Its geographically diverse membership of over 170 firms includes institutional investors, asset managers, custodial banks, prime brokers and service providers.
Working closely with the industry, as well as national, regional, and global regulators and policy makers, ISLA advocates for, amongst other things, the importance of securities lending to the broader financial services industry. It supports both the Global Master Securities Lending Agreement (GMSLA) legal framework, including the Title Transfer and Securities Interest over Collateral variants, as well as the periodical enforceability and security enforcement across global jurisdictions.
ISLA supports the Commission’s overall objectives to strengthen the risk-based capital framework and has provided general feedback to the proposal for a Regulation of the European Parliament and of the Council, amending Regulation (EU) No. 575/2013 as regards to requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor.
Please note that ISLA has responded to amendments of various articles of the Capital Requirements Regulation proposal from the perspective of member firms actively engaged in securities financing transactions, in particular, securities lending, borrowing and subsequent collateral management.
Article 519c, Minimum Haircut Floors framework on SFTs:
ISLA advocates the crucial role that securities financing transactions play in the smooth functioning of EU Capital Markets, supporting price discovery and secondary market liquidity and would like to take this opportunity to raise our memberships’ broader concerns on the implications of the minimum haircut framework, related to non-centrally cleared securities finance transactions (STFs), with respect to securities lending and borrowing.
Members of the Association are supportive of the Basel Committee on Banking Supervision’s (BCBS) and the Commission’s overall policy goals and acknowledge that some SFTs may be used to take on leverage, as well as maturity and liquidity mismatched exposures, which may pose risks to financial stability.
However, we note that under the scope of the BCBS’s rules as is currently drafted, a significant number of SFT transactions would be captured that are not entered into for the purpose of generating leveraged returns, such as securities lending and borrowing transactions. In an additional paper from the FSB other than the one referenced in the proposal, they state in a report1 titled ‘Transforming Shadow Banking into Resilient Market-based Finance’ in 2015 (and updated in 2020), that the framework looks to ‘limit the build-up of excessive leverage outside the banking system, reduce the procyclicality of such leverage, guard against the risk of regulatory arbitrage, and maintain a level-playing field’ however, there is no distinction between specific transactions that are for the purpose of financing and therefore do increase leverage, and for transactions such as securities lending and borrowing, that are mostly used to source a particular security, rather than solely for financing. ISLA fear that this could unintentionally result in an increase in activity and intermediation, transferring these SFTs from banks to less regulated entities, thus not meeting the core purpose of the framework.
Full response can be found in the attached file
Read full responseResponse to Central securities depositories – review of EU rules
5 Apr 2021
ISLA and its members would like to take this opportunity to highlight the significance of incorporating a review of the Settlement Discipline Regime (SDR), as highlighted in the Roadmap, in particular Mandatory Buy-ins, (that apply from February 2022, and hence not yet live), as part of the wider CSDR Refit, however we would also stress the importance of a review of this particular element, prior to implementation of the rules.
As outlined in ISLA’s response to the Commissions targeted review of regulation on improving securities settlement in the European Union and on Central Securities Depositories in February 2021, and in the Joint Trade Association letter (including 15 signatories, representing a broad range of market participants) in March 2021, our membership fully supports the policy aims of the framework, to improve settlement efficiency in European capital markets. ISLA encourage the introduction of cash penalties on failed transactions and consider this to be a key driver in improving settlement rates across all markets however, the consensus view held by several market participants including ISLA, is that the Mandatory Buy-in regime should not be implemented in its current form and requires considerable revisions to limit any negative market impacts.
ISLA promotes the use of an optional approach to buy-ins, that offer parties discretion to measure and assess impacts and act according to economic benefit. This mechanism should be exercisable in the event of a settlement fail and not limited to a timeframe outlined in regulation, increasing flexibility regarding settlement & market exposure. ISLA recognises the benefit of bilaterally agreed contractual buy-in type mechanisms, included in the Global Master Securities Lending Agreement (GMSLA) for example and given the existence of this established contractual remedy, ISLA believe that legislation should only request trading parties to have contractual provisions to deal with settlement failures, dependent on instrument type.
Our response also provides data to demonstrate the link between total assets on loan and market liquidity, and strongly advocate for SFTs such as securities lending transactions to be out of scope, on the grounds that SFTs contribute to a reduction in settlement failures across the wider market through increased supply, and that imposing buy-ins on this particular instrument type, would adversely impact overall market efficiency.
There are still several outstanding issues requiring further clarity, before a buy-in regime can be enforced for example, use of a pass-on mechanism, scope of the regime, asymmetry of price differentials and cash compensation and the obligation to appoint a buy-in agent.
ISLA would like to express concern around the timing of implementation of the SDR as highlighted in our recent letter, given the outstanding lack of clarity and legal uncertainty on several key issues, and so believe it is imperative that if there are targeted changes to be made, the market be given adequate time to amend their operational and legal procedures. We therefore strongly recommend that the Commission advise of any changes, as soon as possible. The requirement to establish contractual arrangements is a sizeable exercise for global participants, particularly when current undertakings may become redundant as a result of the review. ISLA supports a decoupling of the buy-in regime from the remaining elements of the SDR such as penalties, with a subsequent change in go-live date for this element.
Finally, with regards to technological innovation, ISLA strongly advocate for an increased use of Distributed Ledger Technology (DLT) across the EU regulatory framework, including CSDR. Without such an evolution, financial markets will continue to chase the weakest link in asset settlement, which are agnostic to individual regulations or specific financial markets.
Read full responseResponse to Action Plan on the Capital Markets Union
31 Jul 2020
The International Securities Lending Association (ISLA) is a strong supporter of the Capital Markets Union & its objective to create an integrated single market. ISLA is a leading industry association, representing the common interests of securities lending and financing market participants across Europe, Middle East and Africa. Its geographically diverse membership of over 165 firms includes institutional investors, asset managers, custodial banks, prime brokers and service providers. With over 80% (as of 2020) of its membership based in the EU27, and its other members committed to the development of a vibrant EU (European Union) capital market, the Association is delighted to share its views and recommendations on the design of an EU financial services framework that enables securities lending to play an integral part in supporting the development of stronger, more autonomous capital markets in Europe. ISLA have also recently provided feedback on the CMU high level forum recommendations on a number of items notably, CSDR & SRD II and we particularly welcome in the Roadmap; section C – Better Regulation - advising that any legislative action set out in the action plan, will where appropriate, be subject to an impact assessment and public consultation which gives our member firms the opportunity to engage, and help progress the development of harmonisation across the EU capital market.
In December 2019, ISLA published a manifesto ‘Securities Lending to support more Autonomous Markets; Priorities for the next 5 years.’ For the new legislative term – (2019-2024) ISLA propose 9 recommendations for our industry and the priorities outlined, take into account the role EU citizens expect financial services to play in our economy and communities – Please see attached document for your reference.
Read full responseMeeting with Marlene Madsen (Cabinet of Vice-President Jyrki Katainen)
1 Jun 2017 · Securities and the CMU