Minutes of the Securities Lending Committee meeting – November 2023

Minutes

The chair noted that the minutes of the previous meeting had been published on the Bank’s website. The Committee then gave thanks to Jon Pyzer for his long service on the Committee since its inception.

Item 1 – Diversity, Equity & Inclusion

An update to the Committee was provided on the recent consultation paper on DEI initiatives released by the PRA. It was outlined that the idea of the initiative was to increase data collection and disclosure requirements. The PRA is not providing fixed targets for firms to meet but the increased data collection should help firms identify their own areas of under-representation and find ways to improve. Firms are encouraged to set their own targets, but for these targets to be stretching, and set for multiple levels of seniority throughout the organisation.

There is little currently that affects securities lending specifically, but updates can be provided at future meetings if relevant. The Committee noted that the Money Markets Code already contains language related to DEI, which is under review as part of the current Code update.

Item 2 – External presentations

The Committee listened to presentations from industry participants and discussed some difficult issues and potential solutions within the securities lending industry. These included:

• Risk Weighted Assets - Capital Credit Ratings
• Settlement Efficiency Trends & Tools - Equilend
• Settlement Efficiency Trends & Tools – Pirum

Item 3 – T+1 and short selling update

The FCA updated that HMT had published a draft Statutory Instrument for the new UK short-selling regime. HMT have asked for technical comments from the market by 10 January. HMT plans to publish the final Statutory Instrument in 2024. HMT had also separately published a final Statutory Instrument which increases the position reporting threshold from 0.1% to 0.2% net short positions of issued share capital on 5 February 2024.

The FCA noted that the Accelerated Settlement Task Force was due to publish its report on whether and how the UK market should migrate to T+1 settlement. The FCA said that there was a discussion in the market on whether the report should recommend a concrete or conditional migration date taking into account further work and lessons learned from the migration of other countries especially those in North America.

Item 4 - AOB

The Chair noted the potential to set up a tax and regulation sub-Committee, to focus on the consequences of wider regulation on securities lending. There was general agreement that this should be established, and members were asked to suggest individuals who might be appropriate candidates to join.

Attendees

Adam Jacobs-Dean, AIMA
Ina Budh-Raja, Bank of New York Mellon
Tom Baines, Bank of England
Simon Dolan, Bank of England
Kirstine McMillan, Bank of England
Jon Pyzer, Bank of England
Tim McLeod, Blackrock
Andy Krangel, Citi
Caroline Dawson, Clifford Chance
Habib Motani, Clifford Chance
Alan Barnes, FCA
Johanne Armita, Goldman Sachs
Shikha Kalra, HSBC
Jamie Anderson, HSBC
Godfried de Vidts, ICMA
Andrew Dyson, ISLA
Harpreet Bains, JP Morgan
Tim Smollen, MUFG
Simon Dunderdale, M&G Plc
Matthew Neville, State Street Agendy Lending EMEA
Cassie Jones, State Street Global Markets

Apologies

Devi Aujeet, Barclays
Krishan Chada, Morgan Stanley
Morten Gevoll, Norges Bank IM