ISLA conference: ESMA on securities lending
19 June 2013 Prague
Image: Shutterstock
鈥楽hadow banking鈥� was one of the worst terms that could have been coined to describe activities such as securities lending, according to Steven Maijoor of the European 麻豆传媒 and Markets Authority (ESMA).
Maijoor was addressing attendees of the International 麻豆传媒 Lending Association鈥檚 (ISLA鈥檚) annual conference in Prague.
He gave an overview of ESMA鈥檚 objectives鈥攖o protect investors, ensure the stability of European financial markets, and create a single rulebook for the EU鈥檚 27 member states鈥攂efore focusing on securities lending and the effects of related regulation.
Of shadow banking, he said it is 鈥渙ne of the worst terms that could have been invented for these activities鈥�, as most are already adequately regulated and supervised.
But concerns do remain, including the opacity of activities, interconnectedness with more mainstream sectors, the size of business鈥擬aijoor said that shadow banking covers some 9 trillion assets鈥攁nd how best to regulate it, with more transparency needed.
On transparency, Maijoor said that he spoke to ISLA representatives during the conference about the need for more securities lending data, which regulators cannot access.
He said: 鈥淸The] industry is willing to be helpful and give [regulators] a better picture of the market.鈥�
Moving on to ESMA鈥檚 own regulatory initiatives, Maijoor said that the authority鈥檚 consolidated guidelines on exchange-traded funds and other UCITS issues and repo and reverse repo agreements were not the result of negative feeling, but a necessity.
Among the more controversial guidelines was a requirement that all fees arising from securities lending, net of costs, 鈥渟hould be returned to investors鈥�.
Maijoor said that this 鈥渉igh-level principle鈥� is in the interests of the market, and that any attempt to circumvent it may need to be addressed through regulation.
Maijoor was addressing attendees of the International 麻豆传媒 Lending Association鈥檚 (ISLA鈥檚) annual conference in Prague.
He gave an overview of ESMA鈥檚 objectives鈥攖o protect investors, ensure the stability of European financial markets, and create a single rulebook for the EU鈥檚 27 member states鈥攂efore focusing on securities lending and the effects of related regulation.
Of shadow banking, he said it is 鈥渙ne of the worst terms that could have been invented for these activities鈥�, as most are already adequately regulated and supervised.
But concerns do remain, including the opacity of activities, interconnectedness with more mainstream sectors, the size of business鈥擬aijoor said that shadow banking covers some 9 trillion assets鈥攁nd how best to regulate it, with more transparency needed.
On transparency, Maijoor said that he spoke to ISLA representatives during the conference about the need for more securities lending data, which regulators cannot access.
He said: 鈥淸The] industry is willing to be helpful and give [regulators] a better picture of the market.鈥�
Moving on to ESMA鈥檚 own regulatory initiatives, Maijoor said that the authority鈥檚 consolidated guidelines on exchange-traded funds and other UCITS issues and repo and reverse repo agreements were not the result of negative feeling, but a necessity.
Among the more controversial guidelines was a requirement that all fees arising from securities lending, net of costs, 鈥渟hould be returned to investors鈥�.
Maijoor said that this 鈥渉igh-level principle鈥� is in the interests of the market, and that any attempt to circumvent it may need to be addressed through regulation.
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