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Natixis TradeEx Solutions participated in the G20 World Pensions Paris ESG Forum
Securities lending is an important element in the proper functioning of financial markets.
Securities lending transactions are used to meet settlement/delivery and collateral requirements, as well as to provide liquidity and fluidity, which are essential for secondary markets. This activity also enables price formation and market making. Therefore, in order to promote the stability of the financial system, it is crucial to encourage efforts to improve the functioning and efficiency of the securities lending market and to ensure the continuity of these transactions, including in the context of the green finance approach.
It was against this background that the G20 World Pensions Paris ESG Forum was held on 28 October 2021 in Paris.
Natixis TradeEx Solutions is proud to have participated in this partnership with the International Securities Lending Association (ISLA) and the World Pension Council (The International Association of Pension & Social Security Funds).
It should be recalled that Natixis Tradex Solutions is a major player in the securities lending market. The objective is to optimise the securities (bonds and equities) held in its clients' portfolios and to generate outperformance through the income generated by securities lending transactions, while taking into account the associated risks.
Marion Lepoivre, Securities Lending Trader and repo, represented Natixis Tradex Solutions in a panel discussion on the interaction between securities lending and ESG.
Exchanges highlighted the accounting for the securities lending/borrowing activity and sustainable finance: ISLA and Allen & Overy published a white paper last March on ‘Positioning securities lending for the sustainable economy’
(https://www.islaemea.org/thought-leadership/framing-securities-lending-for-the-sustainability-era-french-version/).
NTEX had also republished on its website the Deloitte survey of September 2021 showing ‘Accounting for Securities Lending and Responsible Investment Strategies’ (https://www.tradex-solutions.natixis.com/en/news/deloitte-study-securities-lending-business-and-responsible-investment-strategies).
Indirect negative impacts of a possible ban on securities lending on sustainable finance products themselves were highlighted by panel speakers: Notably the impact on market liquidity and the formation of price ranges. It would also create tensions on equities during general meeting periods as well as on securities eligible as collateral.
Speakers called for greater transparency and the establishment of good practices: ISLA is also working on a guide to best practices with various players in the market.
Natixis Tradex Solutions has been innovative in this area since good CSR practices for the securities lending activity are already in place (see CSR Compatibility and CTT news: https://www.tradex-solutions.natixis.com/en/news/securities-lending-activity-compatible-csr-policy).
