Kevin McNulty, CEO of the International Securities Lending Association (Isla) called on beneficial owners to become more involved in shaping the development of the securities lending business at the start of the IMN conference, September 16 and 17.

Roelof van der Struik, investment manager of Dutch pension fund PGGM Investments, joined the Isla board earlier this year, becoming the first beneficial owner to join the market participant-dominated board in its 25 year history.

Reflecting on this achievement in his opening speech, McNulty stressed the importance of the supply side of securities lending and encouraged more beneficial owners to join Isla. “Beneficial owners are critical to the future development of this business, without your investments there’s no supply,” he said. “I think it is important that play a role in helping and others to shape the market and the regulation that supports it. I hope we can also find more of you to provide Roelof with some moral support going forward.”

Roelof van der Struik, first beneficial owner on the Isla board, told Global Investor that beneficial owners need to speak out and demand more from their securities lending programmes.

McNulty said that it would be advantageous for beneficial owners to embrace regulatory developments and change their strategies. However, he added it was anyway a worthwhile activity: “ if you don’t change you have to get out, I don’t entirely agree with. But I think that those of you that are able to change can benefit,” he said.

Despite regulatory issues, McNulty said that there are still plenty of opportunities to be found including in the use of central counterparties, collateral management options, term lending and within new markets. Regulation might even be a source of opportunity with minimal risk.

“If you think about traditional investment theory, additional return involves an opportunity arising from taking on incremental risk. But some of the opportunities facing securities lending programmes arise from changes to regulation and therefore may come with little or no additional risk because of the fact they’re not driven by traditional investment theory,” he said.

He concluded by expressing his hope that the beneficial owners at the conference would be inspired to begin a process of putting changes in place.