Ruminations on the 30th ISLA Annual Securities Finance & Collateral Management Conference

Simon Davies
Head of Strategy and Partnerships

5 July 2023

Much has changed over the last 30 years within the securities lending industry and there was much reminisced at this year’s conference. Despite my youthful appearance (be kind), I remember the days long ago of physical certificates and capturing trades and collateral on spreadsheets and using new fancy tools like MS Access to help with managing it all, how times have changed, and whilst there was a backwards glance, the industry is very much looking at the future.

With the current economic challenges and market turmoil there was a lot of focus on how this is impacting trading and collateral management, and how that change continues to drive regulatory oversight and the need for technological advances within the industry and beyond. A central theme was around how emerging technologies such as blockchain, generative artificial intelligence and LLMs are transforming various aspects of the industry. Participants emphasised the need for firms to adopt and leverage these advancements to enhance operational efficiency, improve risk management, and reduce costs (more to come on how Likezero are leveraging these!).

ISLA also gave an update on their contracting advocacy, a subject particularly relevant to the work we do here at Likezero – with news that the common clause library will be added to the CDM, and how they are aligning this across products – with coordinated effort between them, ISDA and ICMA.

Talking to participants, many see the advantages of this in improving data quality, supporting crisis management, and managing their businesses better – from on-boarding though to risk management, but recognise they need to digitise their legacy agreements and adopt new working practises to support full digitisation.  Of course, this is not isolated to the Securities Finance industry – and there is a cross/product enterprise-wide need for support in this area, although breaking it down into manageable/product aligned deliverables will accelerate achieving the benefits available much faster.

Many firms we spoke to are now looking at their contracting processes to improve data quality, manage credit and market events more efficiently and feed enhanced data into their risk and business management, and are keen to take advantage of some of those emerging technologies to support that.

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