From Africa to Asia: An update on the market
04 March 2025
After attending headline conferences held by the South African 麻豆传媒 Lending Association, and the Pan Asia 麻豆传媒 Lending Association, Carmella Haswell breaks down the key findings and lessons learnt from participant discussions
Image: stock.adobe.com/SatoruArt
Conference season is in full swing as market participants fly around the globe to discuss the core topics on the minds of banks, beneficial owners, technology providers, and regulators alike.
In Cape Town, South Africa, industry experts explored the regulatory issues impacting the securities financing transactions market, the ever-changing collateral environment, as well as the current trends being seen across the world.
While in Macau, China, speakers analysed how recent geopolitical events are shaping the financial landscape, the trending topic of retail lending, and the structural changes in Asia's capital markets.
麻豆传媒 Finance Times reveals the core lessons from both the South African 麻豆传媒 Lending Association (SASLA), and the Pan Asia 麻豆传媒 Lending Association (PASLA) events.
Reg IM brings questions to South Africa鈥檚 SFT market
Industry participants reviewed the upcoming initial margin (IM) regulation set to face South Africa in September, and how it will impact the securities financing market.
Nicolette van der Merwe, business manager of collateral at Standard Bank, asked: 鈥淎re clients going to move away from derivatives and channel that to repo to get away from some of the collateral costs?鈥�
Attendees of the South African 麻豆传媒 Lending and Collateral Management conference gathered in Cape Town where the 鈥楥ollateral and Tech鈥� panel explored the ever-changing collateral landscape and the upcoming Uncleared Margin Regulation (UMR).
According to van der Merwe, the collateral space locally has 鈥渟o much going on at the moment鈥�. She listed cost, sustainability, and opportunity as main themes in this area.
鈥淚f we can get the agility right and education in the market, then we will be in a very good space to execute liquidity opportunities with confidence and excellence,鈥� she added.
The South African market is still grappling with regulatory changes and the introduction of triparty. On the panel, van der Merwe noted that 鈥渨e have the regulators keeping us on our toes, who will likely make us wait until the 11th hour before giving the ODP's clear guidance on our model approval required for the September 2025 regulatory IM exchange鈥�.
The regulation in question focuses on OTC derivatives and was brought about by the Basel Committee to ensure that banks and ODP providers reviewed their liquidity, risk, and capital management.
In a global market sense, this means, operationally, that firms need to look at their collaboration with treasury and trading more efficiently. Van der Merwe explains: 鈥淭hose two businesses haven't historically had too much interaction except for funding.
鈥淭hat becomes much more pertinent now because firms have to balance which part of their collateral pool is going to HQLA and which part is going to regulatory IM.鈥�
In 鈥渁 nutshell鈥�, van der Merwe summarises that the regulation is a way for the regulators to ensure counterparty credit risk is better managed and to ensure sustainability of the market.
Following the conversation, Farzana Khan, head of Collateral Services at Strate, added: 鈥淭he focus on IM is definitely growing. In 2024, we did expect some impact, which was limited, and now we鈥檙e gearing up for that impact in 2025 where we鈥檙e expecting five, six or seven entities to be in scope.鈥�
Khan highlighted that triparty can play a strong supporting role in the readiness for the regulation. In addition, it is important to leverage global experience. 鈥淪omeone has walked this path before you, you don鈥檛 have to reinvent the wheel, and you can almost short-circuit in some instances by leveraging their lessons learned.鈥�
Steve Lethaby, senior vice president, Global Financing and Funding sales and relationship management at Clearstream Banking, explained that triparty 鈥渕akes life so much easier for both counterparties鈥� in terms of regulation IM compared to bilateral agreements.
He noted that triparty agents add value such as mark to market, substitutions of collateral, corporate actions, changing collateral schedules and managing the eligibility of these also.
Currently, one of the challenges facing the South African market in relation to regulation IM is that regulators have yet to approve a standard initial margin model (SIMM).
Failing approval, van der Merwe indicated that the region will be forced to 鈥渇all back鈥� on a standardised method, otherwise known as 鈥渢he grid鈥�, which is 鈥渕uch more punitive鈥�.
The clock is ticking for those yet to fall in scope of the regulation, panellists urged clients to onboard sooner rather than later.
Trends hitting the global market
Industry participants face a global pressure on cost, the opening of African securities lending markets, and uncertainty around the US 10c-1 regulation in 2025.
The South African event in Cape Town saw panellists explore the trends coming from Europe, the UK, US, and Asian markets.
For Igor Salzgeber, global head of FIS鈥檚 麻豆传媒 Finance and Collateral product group, the most common theme seen globally is the 鈥渕assive pressure on cost鈥� as 鈥渂udgets are super tight鈥�. Nowadays, there appears to be much more scrutiny in terms of projects and a greater awareness of what has to be achieved with any technology spend or movement.
He also noted numerous 鈥渋nefficiencies that apparently are unavoidable鈥� and attempts to eliminate inefficiencies in the post-trade space as a current trend.
鈥淲e are focusing more on the front office to better understand how traders plan to spend their time at the desk, and what steps and processes should actually be automated? Like the example that was quoted earlier on, which was: what do I want to get out of the warm bodies that will still survive at the desk? That is a strong trend that we're seeing towards the tech providers to make this a more profitable contribution for them,鈥� he added.
Across the globe, especially in terms of Europe and Asia, there is a shift from the traditional lender, borrower distinction, as well as an increase in the use of products like total return swaps (TRS). Raj Karan Singh, co-head of securities finance and delta one at Mirae Asset UK, indicated that a 鈥渕assive rise鈥� in swaps has been seen in Taiwan.
During the 鈥楪lobal update on SecFin鈥� panel, Singh also highlighted an interest in new markets such as India, which led Mirae Asset UK to buy a broker-dealer in this location.
鈥淜orea and India have a double taxation treaty that allows for capital gains as exceptions within certain scenarios, which basically puts us in a unique circumstance to actually provide this to the client,鈥� he added.
Singh believes India to be an interesting market, but one that is quite tough to access given the requirement for a local presence and regional licencing requirements.
In relation to new interesting markets, the panel鈥檚 moderator Hitesh Harduth, head of securities lending at Standard Bank, added that there are three core African markets currently looking to implement securities lending. These are Nigeria, Kenya, and Botswana.
He continued: 鈥溌槎勾� lending is there to provide liquidity into the market, and they are crying for that liquidity. There are a number of regulations that are hindering the process. For instance, in Nigeria, we are waiting for a decision to allow pension funds to do lending.鈥�
Rounding off his exploration of the three regions, Harduth said: 鈥淭here is a lot of work being done, there鈥檚 a lot of education and market advocacy that goes into getting these new markets going, but it's nice to see them evolving in Africa and to see growth.鈥�
Moving the conversation along, EquiLend鈥檚 Emily Hollyoake, head of account management and client success EMEA, stated that the top themes impacting market participants are in many cases directly or indirectly driven by regulation.
The need for better risk management, capital efficiency and increased transparency is resulting in an increased need for more standardisation and optimisation, particularly as firms grapple with antiquated systems.
鈥淚nteroperability has often been spoken about, significant advances have been made in standardising the exchange of data, our ability to accommodate the receipt of data in most formats, ie other vendors formats is an example of this,鈥� she explained.
From an optimisation perspective, Hollyoake said there is much more pressure on collateral management, increased capital requirements is driving the need for better transparency and collateral mobility, firms are scrutinising the true end-to-end cost of doing business, understanding the most cost effective way to trade and with whom.
Firms are seeking new ways to generate revenue, shifting from 鈥榲anilla securities lending鈥� toward securities finance, bringing more optionality. Retail lending too is an area of focus. Hollyoake added: 鈥淲e have retail inventory being brought to the market. There鈥檚 an increase in the number of firms looking for platforms to solve for the aggregation and subsequent allocation of assets.鈥�
Joining in from a regulatory perspective, Dean Bruyns, executive director, global head of pre-sales, S&P Global Market Intelligence Cappitech, highlighted the upcoming, and potentially compromised US 麻豆传媒 and Exchange Commission (SEC) 10c-1 regulation facing market participants this year.
10c-1 is essentially securities lending regulation in the US, an initiative which shares similarities with the 麻豆传媒 Financing Transactions Regulation (SFTR) with 71 per cent of the fields in 10c-1 already covered in SFTR.
Discussing the regulation鈥檚 compromised position, Bruyns explained: 鈥淭here鈥檚 been a change since Donald Trump came into power, a change in administration has essentially paused some upcoming regulations, including 10c-1. At the moment it is due to go live on 2 January 2026, and everyone has to keep the pressure on and keep building despite the potential for delay or cancellation.鈥�
With uncertainty facing this regulation, Bruyns indicated that a potential extension to a September go-live date seems to be the most likely outcome. But there remains even more uncertainty.
鈥淚f anybody lends a security which is either CAT, TRACE, or MSRB eligible, then it's reportable under 10c-1 鈥� the unknown eligibility factor at the moment is that it鈥檚 not entirely clear whether one of the counterparties to the trade need to be a US entity for the transaction to be in scope. Most firms we speak to in Europe think they're going to be in scope regardless of where they or their counterparty are based. If they lend in those securities, they鈥檙e caught,鈥� he clarified.
As the panel came to an end, Bruyns provided a piece of advice for in-scope firms. He suggested participants not 鈥渂ury your heads in the sand鈥�, and encouraged those potentially affected to complete security and gap analysis to 鈥済et ahead of the curve鈥�.
Geopolitics drives change in the global regulatory agenda
More than ever, financial services legislation is being heavily influenced by geopolitics across the globe, according to Farrah Mahmood, director of regulatory affairs at the International 麻豆传媒 Lending Association (ISLA).
2024 was a significant year in which several countries held elections, resulting in a shift in political sentiment across all regions.
Speaking at the 2025 Annual Conference on Asian 麻豆传媒 Finance, held by PASLA in Macau, panellists discussed the core themes for the year, as well as significant market movements in South Korea and China.
Opening up the panel, Mahmood noted that the shift in political sentiment has caused an increase in fragmentation within the regulatory landscape 鈥� this has led to a rise in cost and complexity for international firms.
鈥淲ith the outcome of the US elections meaning a second Trump term, there's heightened risk that key jurisdictions are going to start to move towards more national, protectionist type measures, and to an extent, we're already seeing that play out in trade disputes,鈥� Mahmood warned.
For trade associations, Mahmood indicated that both PASLA and ISLA will need to play a larger role in advocating on behalf of the securities finance market.
In terms of global themes, competitiveness, operational resilience, and the retail space were named as the three largest focuses for the market.
The EU and the UK have extensive competitiveness agendas, Mahmood explained, both with fairly new governments which look to simplify and consolidate rules that are already in place as part of their new mandate, rather than expanding the current rule book.
While the Middle East has significant growth agendas such as the Saudi Vision 2030 鈥� focused on foreign investment and deepening liquidity 鈥� in the US, President Trump is looking to deregulate across multiple industries such as with digital assets, crypto and sustainability.
Following a cyber attack last year on one of the market鈥檚 trading platforms, Mahmood noted an increase in similar incidents across multiple different industries, including financial services. As a result, there is a 鈥渉uge focus鈥� from regulators on the reliance of critical third parties, particularly where several firms are dependent on a small group of providers.
Moving forward to the third theme of the year, Mahmood said that the UK鈥檚 move to introduce consumer duty rules in 2023 鈥渟et the stage鈥� for other global regulators focusing on increasing investor protection rules.
She advised: 鈥淲e need to make sure that those underlying retail clients are well educated about the product and are aware of the associated risks involved with that.鈥�
Attendees of the conference also heard from Jisuk Kim, senior foreign attorney at Kim & Chang, who discussed movements in South Korea with the upcoming lift in its short sell ban, which is expected to come into effect on 31 March.
The short sell issue started back in 2021 from the amendment of the law strengthening the penalties for breaches in the short selling requirements and the government鈥檚 investigation over short selling practices of foreign institutions, amid vocal retail challenges against short selling by institutions, she explained.
Following investigations into short sale and stock borrowing and lending practices of foreign investors investing in Korea, Kim explained that penalties for short selling breaches have become stricter. 鈥淚n fact, the supervisory authority imposed a quite significant unprecedented amount of penalties. Also, intentional breaches in the short sale requirements can be subject to criminal liability.鈥�
On the retail side, there have been complaints about not gaining equal opportunity with institutions, and the regulations have been amended in an effort to level the playing field, she noted.
Kim added: 鈥淚nternal control requirements have become very prescriptive on the part of all players in the market. The implementation of the internal control at the institutional level will be a prerequisite to engaging in short selling upon lifting of the short sale ban, and this is going to be a key factor going forward for anybody that wants to enter the short sale market.鈥�
To help monitor short selling operations, Kim mentioned the development of a naked short sell detection system by the country鈥檚 stock exchange, which 鈥渋s the first of its kind in the world鈥�.
Kim believes there will be plenty of time spent this year in preparing to comply with the new requirements in order to engage in short selling in the market.
It was also recently announced that Korea would release the RFI regime, which allows financial institutions to access the Korean foreign exchange market from offshore by registry.
Kim said: 鈥淢ore players are now going to be able to participate. It was only banks and securities markets, but now insurance companies can do that also. Foreign RFIs will now be able to trade directly between each other.
鈥淐ustodians will be able to open up FX trading accounts to cater to their foreign clients interests. That's an area that is going to be pretty big for foreign investors to watch.鈥�
Adding to the opportunities in APAC, China saw the recent introduction of Bond Connect offshore repo, which allows offshore participants to repo onshore bonds held by them via Bond Connect.
China has the second largest bond market globally. With the introduction of Bond Connect repo, there is a possibility to use onshore bonds for financial transactions.
While there are opportunities globally for the securities lending market, participants will be keeping a close watch on the changing regulatory landscape.
Retail lending on a global scale
A discussion on retail lending in Macau left one panellist asking: 鈥淲hy should institutional asset owners have an exclusive right to this income stream that should be democratised across everyone that owns an asset?鈥�
The participation of retail investors in the financial markets is highly regulated according to Stuart Jarvis, head of strategic partnerships at Sharegain, who explained that extending SBL to retail can prove challenging due to the need to ensure that regulatory compliance is aligned with standard securities lending transaction practices.
鈥淚 love the expression of Wall Street to Main Street. That's exactly what it is 鈥� we're bringing practices that have been around for a long time and have benefitted institutions, to retail, to Main Street,鈥� Jarvis highlighted.
The 鈥楻etail and Private Wealth: Unlocking value through 麻豆传媒 Finance鈥� panel was moderated by Darren Measures, head of securities finance at Maybank 麻豆传媒. It discussed the retail lending landscape in the US, Europe, and APAC.
In Europe, retail ownership has grown massively as it has globally, according to Jarvis. For example, Germany has seen a 50 per cent growth in the number of retail brokerage accounts over the last three years.
He explored: 鈥淚f we look at Europe holistically, we鈥檙e probably doing it a disservice because the knowledge level, the participation level, is actually very nuanced. If you look to the Nordic markets 鈥� Sweden for example 鈥� 35 per cent of households are designated retail investors, they have retail investing accounts. Whereas in the UK, for example, that figure is under six per cent.鈥�
Reviewing this, Jarvis suggested that it reflects both the financial literacy and knowledge levels within respective countries and feeds the willingness to adopt new products. He continued: 鈥淚t's no surprise that the Nordic region was the vanguard of bringing the retail lending product to Europe, but we are starting to see that spread across the 27 markets.鈥�
While the UK has introduced a framework for retail lending, there remain challenges. Jarvis noted that, currently in Europe, retail lending is only active in 12 jurisdictions. Europe has 鈥渢aken a lot of steps to follow the US鈥�, but there are still significant steps ahead.
Moving forward in the discussion, Measures asked panellists why now was the time for retail and private wealth lending. The most important aspect seemed to be the shift in demographic in retail participation in financial markets.
Gen Z are investing a lot earlier than previous generations and follow different sources for investment advice compared to previous generations, with the use of social media affecting their asset ownership.
鈥淭he Gen Z generation is due to inherit US$83 trillion worth of wealth over the next 20 years, with 18 trillion of that coming in the next five years. So the importance of that segment, satisfying it, and bringing product to that segment is massive,鈥� Jarvis confirmed.
The panel also heard that the broadening of asset demand has played a significant role in the growth of retail lending. For instance, Jarvis noted quantitative strategies within the hedge fund world as a key driver on the demand side. He also sees a 鈥渕assive growth鈥� in the demand for access.
Institutional asset owners and investors are constrained by many aspects that retail is not, such as investment committees, tracking targets, and liquidity constraints. The impact of that, according to Jarvis, is that the breadth of assets owned by these institutional investors is often far narrower than that owned by retail investors.
鈥淧rime brokerage mandates from hedge funds are being rewarded on the breadth of the availability being shown. Changing the supply dynamic to match this demand is crucial,鈥� he concluded.
In Cape Town, South Africa, industry experts explored the regulatory issues impacting the securities financing transactions market, the ever-changing collateral environment, as well as the current trends being seen across the world.
While in Macau, China, speakers analysed how recent geopolitical events are shaping the financial landscape, the trending topic of retail lending, and the structural changes in Asia's capital markets.
麻豆传媒 Finance Times reveals the core lessons from both the South African 麻豆传媒 Lending Association (SASLA), and the Pan Asia 麻豆传媒 Lending Association (PASLA) events.
Reg IM brings questions to South Africa鈥檚 SFT market
Industry participants reviewed the upcoming initial margin (IM) regulation set to face South Africa in September, and how it will impact the securities financing market.
Nicolette van der Merwe, business manager of collateral at Standard Bank, asked: 鈥淎re clients going to move away from derivatives and channel that to repo to get away from some of the collateral costs?鈥�
Attendees of the South African 麻豆传媒 Lending and Collateral Management conference gathered in Cape Town where the 鈥楥ollateral and Tech鈥� panel explored the ever-changing collateral landscape and the upcoming Uncleared Margin Regulation (UMR).
According to van der Merwe, the collateral space locally has 鈥渟o much going on at the moment鈥�. She listed cost, sustainability, and opportunity as main themes in this area.
鈥淚f we can get the agility right and education in the market, then we will be in a very good space to execute liquidity opportunities with confidence and excellence,鈥� she added.
The South African market is still grappling with regulatory changes and the introduction of triparty. On the panel, van der Merwe noted that 鈥渨e have the regulators keeping us on our toes, who will likely make us wait until the 11th hour before giving the ODP's clear guidance on our model approval required for the September 2025 regulatory IM exchange鈥�.
The regulation in question focuses on OTC derivatives and was brought about by the Basel Committee to ensure that banks and ODP providers reviewed their liquidity, risk, and capital management.
In a global market sense, this means, operationally, that firms need to look at their collaboration with treasury and trading more efficiently. Van der Merwe explains: 鈥淭hose two businesses haven't historically had too much interaction except for funding.
鈥淭hat becomes much more pertinent now because firms have to balance which part of their collateral pool is going to HQLA and which part is going to regulatory IM.鈥�
In 鈥渁 nutshell鈥�, van der Merwe summarises that the regulation is a way for the regulators to ensure counterparty credit risk is better managed and to ensure sustainability of the market.
Following the conversation, Farzana Khan, head of Collateral Services at Strate, added: 鈥淭he focus on IM is definitely growing. In 2024, we did expect some impact, which was limited, and now we鈥檙e gearing up for that impact in 2025 where we鈥檙e expecting five, six or seven entities to be in scope.鈥�
Khan highlighted that triparty can play a strong supporting role in the readiness for the regulation. In addition, it is important to leverage global experience. 鈥淪omeone has walked this path before you, you don鈥檛 have to reinvent the wheel, and you can almost short-circuit in some instances by leveraging their lessons learned.鈥�
Steve Lethaby, senior vice president, Global Financing and Funding sales and relationship management at Clearstream Banking, explained that triparty 鈥渕akes life so much easier for both counterparties鈥� in terms of regulation IM compared to bilateral agreements.
He noted that triparty agents add value such as mark to market, substitutions of collateral, corporate actions, changing collateral schedules and managing the eligibility of these also.
Currently, one of the challenges facing the South African market in relation to regulation IM is that regulators have yet to approve a standard initial margin model (SIMM).
Failing approval, van der Merwe indicated that the region will be forced to 鈥渇all back鈥� on a standardised method, otherwise known as 鈥渢he grid鈥�, which is 鈥渕uch more punitive鈥�.
The clock is ticking for those yet to fall in scope of the regulation, panellists urged clients to onboard sooner rather than later.
Trends hitting the global market
Industry participants face a global pressure on cost, the opening of African securities lending markets, and uncertainty around the US 10c-1 regulation in 2025.
The South African event in Cape Town saw panellists explore the trends coming from Europe, the UK, US, and Asian markets.
For Igor Salzgeber, global head of FIS鈥檚 麻豆传媒 Finance and Collateral product group, the most common theme seen globally is the 鈥渕assive pressure on cost鈥� as 鈥渂udgets are super tight鈥�. Nowadays, there appears to be much more scrutiny in terms of projects and a greater awareness of what has to be achieved with any technology spend or movement.
He also noted numerous 鈥渋nefficiencies that apparently are unavoidable鈥� and attempts to eliminate inefficiencies in the post-trade space as a current trend.
鈥淲e are focusing more on the front office to better understand how traders plan to spend their time at the desk, and what steps and processes should actually be automated? Like the example that was quoted earlier on, which was: what do I want to get out of the warm bodies that will still survive at the desk? That is a strong trend that we're seeing towards the tech providers to make this a more profitable contribution for them,鈥� he added.
Across the globe, especially in terms of Europe and Asia, there is a shift from the traditional lender, borrower distinction, as well as an increase in the use of products like total return swaps (TRS). Raj Karan Singh, co-head of securities finance and delta one at Mirae Asset UK, indicated that a 鈥渕assive rise鈥� in swaps has been seen in Taiwan.
During the 鈥楪lobal update on SecFin鈥� panel, Singh also highlighted an interest in new markets such as India, which led Mirae Asset UK to buy a broker-dealer in this location.
鈥淜orea and India have a double taxation treaty that allows for capital gains as exceptions within certain scenarios, which basically puts us in a unique circumstance to actually provide this to the client,鈥� he added.
Singh believes India to be an interesting market, but one that is quite tough to access given the requirement for a local presence and regional licencing requirements.
In relation to new interesting markets, the panel鈥檚 moderator Hitesh Harduth, head of securities lending at Standard Bank, added that there are three core African markets currently looking to implement securities lending. These are Nigeria, Kenya, and Botswana.
He continued: 鈥溌槎勾� lending is there to provide liquidity into the market, and they are crying for that liquidity. There are a number of regulations that are hindering the process. For instance, in Nigeria, we are waiting for a decision to allow pension funds to do lending.鈥�
Rounding off his exploration of the three regions, Harduth said: 鈥淭here is a lot of work being done, there鈥檚 a lot of education and market advocacy that goes into getting these new markets going, but it's nice to see them evolving in Africa and to see growth.鈥�
Moving the conversation along, EquiLend鈥檚 Emily Hollyoake, head of account management and client success EMEA, stated that the top themes impacting market participants are in many cases directly or indirectly driven by regulation.
The need for better risk management, capital efficiency and increased transparency is resulting in an increased need for more standardisation and optimisation, particularly as firms grapple with antiquated systems.
鈥淚nteroperability has often been spoken about, significant advances have been made in standardising the exchange of data, our ability to accommodate the receipt of data in most formats, ie other vendors formats is an example of this,鈥� she explained.
From an optimisation perspective, Hollyoake said there is much more pressure on collateral management, increased capital requirements is driving the need for better transparency and collateral mobility, firms are scrutinising the true end-to-end cost of doing business, understanding the most cost effective way to trade and with whom.
Firms are seeking new ways to generate revenue, shifting from 鈥榲anilla securities lending鈥� toward securities finance, bringing more optionality. Retail lending too is an area of focus. Hollyoake added: 鈥淲e have retail inventory being brought to the market. There鈥檚 an increase in the number of firms looking for platforms to solve for the aggregation and subsequent allocation of assets.鈥�
Joining in from a regulatory perspective, Dean Bruyns, executive director, global head of pre-sales, S&P Global Market Intelligence Cappitech, highlighted the upcoming, and potentially compromised US 麻豆传媒 and Exchange Commission (SEC) 10c-1 regulation facing market participants this year.
10c-1 is essentially securities lending regulation in the US, an initiative which shares similarities with the 麻豆传媒 Financing Transactions Regulation (SFTR) with 71 per cent of the fields in 10c-1 already covered in SFTR.
Discussing the regulation鈥檚 compromised position, Bruyns explained: 鈥淭here鈥檚 been a change since Donald Trump came into power, a change in administration has essentially paused some upcoming regulations, including 10c-1. At the moment it is due to go live on 2 January 2026, and everyone has to keep the pressure on and keep building despite the potential for delay or cancellation.鈥�
With uncertainty facing this regulation, Bruyns indicated that a potential extension to a September go-live date seems to be the most likely outcome. But there remains even more uncertainty.
鈥淚f anybody lends a security which is either CAT, TRACE, or MSRB eligible, then it's reportable under 10c-1 鈥� the unknown eligibility factor at the moment is that it鈥檚 not entirely clear whether one of the counterparties to the trade need to be a US entity for the transaction to be in scope. Most firms we speak to in Europe think they're going to be in scope regardless of where they or their counterparty are based. If they lend in those securities, they鈥檙e caught,鈥� he clarified.
As the panel came to an end, Bruyns provided a piece of advice for in-scope firms. He suggested participants not 鈥渂ury your heads in the sand鈥�, and encouraged those potentially affected to complete security and gap analysis to 鈥済et ahead of the curve鈥�.
Geopolitics drives change in the global regulatory agenda
More than ever, financial services legislation is being heavily influenced by geopolitics across the globe, according to Farrah Mahmood, director of regulatory affairs at the International 麻豆传媒 Lending Association (ISLA).
2024 was a significant year in which several countries held elections, resulting in a shift in political sentiment across all regions.
Speaking at the 2025 Annual Conference on Asian 麻豆传媒 Finance, held by PASLA in Macau, panellists discussed the core themes for the year, as well as significant market movements in South Korea and China.
Opening up the panel, Mahmood noted that the shift in political sentiment has caused an increase in fragmentation within the regulatory landscape 鈥� this has led to a rise in cost and complexity for international firms.
鈥淲ith the outcome of the US elections meaning a second Trump term, there's heightened risk that key jurisdictions are going to start to move towards more national, protectionist type measures, and to an extent, we're already seeing that play out in trade disputes,鈥� Mahmood warned.
For trade associations, Mahmood indicated that both PASLA and ISLA will need to play a larger role in advocating on behalf of the securities finance market.
In terms of global themes, competitiveness, operational resilience, and the retail space were named as the three largest focuses for the market.
The EU and the UK have extensive competitiveness agendas, Mahmood explained, both with fairly new governments which look to simplify and consolidate rules that are already in place as part of their new mandate, rather than expanding the current rule book.
While the Middle East has significant growth agendas such as the Saudi Vision 2030 鈥� focused on foreign investment and deepening liquidity 鈥� in the US, President Trump is looking to deregulate across multiple industries such as with digital assets, crypto and sustainability.
Following a cyber attack last year on one of the market鈥檚 trading platforms, Mahmood noted an increase in similar incidents across multiple different industries, including financial services. As a result, there is a 鈥渉uge focus鈥� from regulators on the reliance of critical third parties, particularly where several firms are dependent on a small group of providers.
Moving forward to the third theme of the year, Mahmood said that the UK鈥檚 move to introduce consumer duty rules in 2023 鈥渟et the stage鈥� for other global regulators focusing on increasing investor protection rules.
She advised: 鈥淲e need to make sure that those underlying retail clients are well educated about the product and are aware of the associated risks involved with that.鈥�
Attendees of the conference also heard from Jisuk Kim, senior foreign attorney at Kim & Chang, who discussed movements in South Korea with the upcoming lift in its short sell ban, which is expected to come into effect on 31 March.
The short sell issue started back in 2021 from the amendment of the law strengthening the penalties for breaches in the short selling requirements and the government鈥檚 investigation over short selling practices of foreign institutions, amid vocal retail challenges against short selling by institutions, she explained.
Following investigations into short sale and stock borrowing and lending practices of foreign investors investing in Korea, Kim explained that penalties for short selling breaches have become stricter. 鈥淚n fact, the supervisory authority imposed a quite significant unprecedented amount of penalties. Also, intentional breaches in the short sale requirements can be subject to criminal liability.鈥�
On the retail side, there have been complaints about not gaining equal opportunity with institutions, and the regulations have been amended in an effort to level the playing field, she noted.
Kim added: 鈥淚nternal control requirements have become very prescriptive on the part of all players in the market. The implementation of the internal control at the institutional level will be a prerequisite to engaging in short selling upon lifting of the short sale ban, and this is going to be a key factor going forward for anybody that wants to enter the short sale market.鈥�
To help monitor short selling operations, Kim mentioned the development of a naked short sell detection system by the country鈥檚 stock exchange, which 鈥渋s the first of its kind in the world鈥�.
Kim believes there will be plenty of time spent this year in preparing to comply with the new requirements in order to engage in short selling in the market.
It was also recently announced that Korea would release the RFI regime, which allows financial institutions to access the Korean foreign exchange market from offshore by registry.
Kim said: 鈥淢ore players are now going to be able to participate. It was only banks and securities markets, but now insurance companies can do that also. Foreign RFIs will now be able to trade directly between each other.
鈥淐ustodians will be able to open up FX trading accounts to cater to their foreign clients interests. That's an area that is going to be pretty big for foreign investors to watch.鈥�
Adding to the opportunities in APAC, China saw the recent introduction of Bond Connect offshore repo, which allows offshore participants to repo onshore bonds held by them via Bond Connect.
China has the second largest bond market globally. With the introduction of Bond Connect repo, there is a possibility to use onshore bonds for financial transactions.
While there are opportunities globally for the securities lending market, participants will be keeping a close watch on the changing regulatory landscape.
Retail lending on a global scale
A discussion on retail lending in Macau left one panellist asking: 鈥淲hy should institutional asset owners have an exclusive right to this income stream that should be democratised across everyone that owns an asset?鈥�
The participation of retail investors in the financial markets is highly regulated according to Stuart Jarvis, head of strategic partnerships at Sharegain, who explained that extending SBL to retail can prove challenging due to the need to ensure that regulatory compliance is aligned with standard securities lending transaction practices.
鈥淚 love the expression of Wall Street to Main Street. That's exactly what it is 鈥� we're bringing practices that have been around for a long time and have benefitted institutions, to retail, to Main Street,鈥� Jarvis highlighted.
The 鈥楻etail and Private Wealth: Unlocking value through 麻豆传媒 Finance鈥� panel was moderated by Darren Measures, head of securities finance at Maybank 麻豆传媒. It discussed the retail lending landscape in the US, Europe, and APAC.
In Europe, retail ownership has grown massively as it has globally, according to Jarvis. For example, Germany has seen a 50 per cent growth in the number of retail brokerage accounts over the last three years.
He explored: 鈥淚f we look at Europe holistically, we鈥檙e probably doing it a disservice because the knowledge level, the participation level, is actually very nuanced. If you look to the Nordic markets 鈥� Sweden for example 鈥� 35 per cent of households are designated retail investors, they have retail investing accounts. Whereas in the UK, for example, that figure is under six per cent.鈥�
Reviewing this, Jarvis suggested that it reflects both the financial literacy and knowledge levels within respective countries and feeds the willingness to adopt new products. He continued: 鈥淚t's no surprise that the Nordic region was the vanguard of bringing the retail lending product to Europe, but we are starting to see that spread across the 27 markets.鈥�
While the UK has introduced a framework for retail lending, there remain challenges. Jarvis noted that, currently in Europe, retail lending is only active in 12 jurisdictions. Europe has 鈥渢aken a lot of steps to follow the US鈥�, but there are still significant steps ahead.
Moving forward in the discussion, Measures asked panellists why now was the time for retail and private wealth lending. The most important aspect seemed to be the shift in demographic in retail participation in financial markets.
Gen Z are investing a lot earlier than previous generations and follow different sources for investment advice compared to previous generations, with the use of social media affecting their asset ownership.
鈥淭he Gen Z generation is due to inherit US$83 trillion worth of wealth over the next 20 years, with 18 trillion of that coming in the next five years. So the importance of that segment, satisfying it, and bringing product to that segment is massive,鈥� Jarvis confirmed.
The panel also heard that the broadening of asset demand has played a significant role in the growth of retail lending. For instance, Jarvis noted quantitative strategies within the hedge fund world as a key driver on the demand side. He also sees a 鈥渕assive growth鈥� in the demand for access.
Institutional asset owners and investors are constrained by many aspects that retail is not, such as investment committees, tracking targets, and liquidity constraints. The impact of that, according to Jarvis, is that the breadth of assets owned by these institutional investors is often far narrower than that owned by retail investors.
鈥淧rime brokerage mandates from hedge funds are being rewarded on the breadth of the availability being shown. Changing the supply dynamic to match this demand is crucial,鈥� he concluded.
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