Securities lending and borrowing market participants gathered to discuss the annual Global Investor/ISF equity lending survey on Wednesday March 12 2014.

The aim of the discussion was to make sure the survey is aligned with changing business models and reduce the considerable burden participating in the survey places on respondents.

Most people were positive about the incremental changes to the survey in recent years but said a more fundamental overall was more appropriate this year. Participants noted that the securities lending business has been transformed over the past few years and suggested the survey needs to change to keep up with these developments.

There was debate over whether fixed income lending should be included in the survey, which has to-date focused solely on equities. The fixed income and equity financing desks within many borrowers are growing closer together – but there are still several firms where the desks remain completely separate.

In light of this, most participants agreed that it would be a good idea to introduce fixed income – but it should be a self contained section in the survey rather than added into the existing structure.

The consensus was that repo respondents should not be included in the survey but some participants pointed out that it would be difficult to completely separate this activity as fixed income desks lend bonds to repo desks. In any case, the separation of such desks from lending desks means that it is unlikely they would rank firms in significant numbers.

One individual pointed out that fixed income activity is very different to equity activity, which could make it problematic to compile overall tables. In addition, lending corporate bonds is very different to lending government bonds.

Some participants suggested changing the name of the survey to securities lending or securities finance to reflect the inclusion of bond lending.

There was discussion over whether the survey should also include a quantitative approach. This would involve using hard market data to complement the current qualitative approach, further reducing the burden on respondents.

Some individuals said that while this would be useful, the data would need to represent the market universe to be meaningful and no agreement was made on which sources should be used.

Some participants said they were concerned about grade inflation – where scores rise in each survey – and called for ways to tackle this issue.

There were also calls for clarity over the scoring across regions, where one individual said that firms tend to get higher scores in certain regions without a meaningful difference in their offering. More could be done to provide clarity for survey respondents, to achieve consistency across the regions.

All participants agreed that work needs to be done to reduce the amount of time required to participate in the survey. One prime broker said that being involved in the survey is a more burdensome task now compared to previous years as most firms no longer had dedicated marketing teams to take on the work.

One suggestion was to simplify the survey forms, with fewer questions. But a more significant change would be for respondents to name their top five firms for each service category – rather than rating all of their counterparties out of 7 for every category. This would hugely reduce the workload and is under very serious consideration by Global Investor/ISF. Such a move may also reduce attempts to ‘game’ or manipulate the survey’s results.

However some participants were concerned about making too many radical changes to the survey and one said he was happy with the changes made over the previous years.

The group also discussed ways in which the survey could deliver more back to the industry. In addition to allowing firms to rate each other it was suggested that the process could be used to capture industry trends.

14 senior figures from the industry, and three people from the Global Investor/ISF team, attended the meeting.

The proposals resulting from the discussion will be circulated with all other entities that participate in the survey, which will also be given the opportunity to be involved in the survey rejuvenation project.

All feedback will be considered before Global Investor/ISF decides how to proceed with the survey in 2014, which is scheduled to be launched at the start of June, ahead of Isla’s annual conference.

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