ISLA Americas: APAC and Saudi markets target next era of securities lending development
14 October 2026 US
Image: Podsawat/stock.adobe.com
Íø±¬³Ô¹Ï lending markets across Asia Pacific and the Middle East are attracting increasing attention from global participants, but panellists at the ISLA Americas annual conference warned that continued growth will depend on addressing structural and regulatory barriers that constrain liquidity and market participation.
The discussion focused on Korea, Taiwan, and Saudi Arabia — three markets that have seen significant growth in recent years, albeit from different starting points and with differing priorities.
Korea and Taiwan have both benefited from a sharp increase in the value of lendable assets over the past few years. Panellists noted that rising valuations among semiconductor companies and the concentration of market capitalisation within a small number of index constituents have significantly increased the size of securities lending opportunities in both markets.
At the same time, borrow demand has grown, with activity in Korea receiving a further boost following the lifting of the country’s short selling ban, reopening opportunities for international market participants and increasing demand for borrowed inventory.
Despite this strong momentum, speakers suggested that both markets continue to face important regulatory hurdles.
In Korea, legislative complexity remains a key concern for market participants, with panellists pointing to uncertainty around certain regulatory obligations, as well as the potential consequences of compliance failures, which can create a cautious operating environment for firms seeking to expand activity. Operational considerations, including short recall notice periods and limitations within domestic settlement infrastructure, were also identified as constraints on broader market development.
Taiwan faces a different set of challenges. While demand for securities lending remains strong, panellists highlighted the impact of the market's T+0 settlement framework and a longstanding lending rate cap. Participants also noted that access to additional lendable inventory remains limited, particularly among retail investors and holders of hard-to-borrow securities, restricting the market's ability to meet growing demand.
Alongside developments in Asia Pacific, Saudi Arabia was highlighted as one of the industry's most closely watched emerging securities finance markets.
Speakers noted that the kingdom has made significant progress in a relatively short period of time, growing from a small base to establish an increasingly active securities lending ecosystem. Strong borrow demand, the development of principal lending models, improvements to post-trade infrastructure, and advances in legal and netting frameworks have all contributed to market expansion.
Panellists also pointed to the emergence of derivatives activity as a positive indicator of broader market sophistication and growing investor participation.
However, speakers agreed that further development is required if Saudi Arabia is to realise its full potential as a regional securities finance hub.
A number of priorities were identified, including expanding eligibility for clean netting arrangements, increasing participation from retail investors and family offices, and continuing work on Shariah-compliant legal documentation. Greater levels of automation was also highlighted as important to improve efficiency and support larger transaction volumes.
In addition, some participants suggested that the removal of certain market restrictions, including the uptick rule, could support additional liquidity and trading activity over time.
A recurring theme throughout the discussion was the need to balance reform with local market realities.
Panellists emphasised that successful market development cannot rely on the wholesale adoption of international frameworks. Instead, regulators and industry participants should focus on practical reforms that reflect local market structures, investor bases, and regulatory objectives, while still supporting greater alignment with global standards.
Education was identified as another critical component of growth. The panel heard that increasing awareness among market participants, investors, and policymakers can help broaden participation and improve understanding of the role securities lending plays in supporting liquidity and market efficiency.
Ultimately, speakers agreed that Korea, Taiwan, and Saudi Arabia have all demonstrated strong growth potential, but that the next phase of development will depend on targeted reforms, enhanced infrastructure, and continued collaboration between regulators and market participants.
As global firms increasingly look beyond traditional lending centres for opportunities, the ability of these markets to address operational bottlenecks and expand sources of liquidity is likely to determine how quickly they develop into mature, scalable securities finance ecosystems.
The discussion focused on Korea, Taiwan, and Saudi Arabia — three markets that have seen significant growth in recent years, albeit from different starting points and with differing priorities.
Korea and Taiwan have both benefited from a sharp increase in the value of lendable assets over the past few years. Panellists noted that rising valuations among semiconductor companies and the concentration of market capitalisation within a small number of index constituents have significantly increased the size of securities lending opportunities in both markets.
At the same time, borrow demand has grown, with activity in Korea receiving a further boost following the lifting of the country’s short selling ban, reopening opportunities for international market participants and increasing demand for borrowed inventory.
Despite this strong momentum, speakers suggested that both markets continue to face important regulatory hurdles.
In Korea, legislative complexity remains a key concern for market participants, with panellists pointing to uncertainty around certain regulatory obligations, as well as the potential consequences of compliance failures, which can create a cautious operating environment for firms seeking to expand activity. Operational considerations, including short recall notice periods and limitations within domestic settlement infrastructure, were also identified as constraints on broader market development.
Taiwan faces a different set of challenges. While demand for securities lending remains strong, panellists highlighted the impact of the market's T+0 settlement framework and a longstanding lending rate cap. Participants also noted that access to additional lendable inventory remains limited, particularly among retail investors and holders of hard-to-borrow securities, restricting the market's ability to meet growing demand.
Alongside developments in Asia Pacific, Saudi Arabia was highlighted as one of the industry's most closely watched emerging securities finance markets.
Speakers noted that the kingdom has made significant progress in a relatively short period of time, growing from a small base to establish an increasingly active securities lending ecosystem. Strong borrow demand, the development of principal lending models, improvements to post-trade infrastructure, and advances in legal and netting frameworks have all contributed to market expansion.
Panellists also pointed to the emergence of derivatives activity as a positive indicator of broader market sophistication and growing investor participation.
However, speakers agreed that further development is required if Saudi Arabia is to realise its full potential as a regional securities finance hub.
A number of priorities were identified, including expanding eligibility for clean netting arrangements, increasing participation from retail investors and family offices, and continuing work on Shariah-compliant legal documentation. Greater levels of automation was also highlighted as important to improve efficiency and support larger transaction volumes.
In addition, some participants suggested that the removal of certain market restrictions, including the uptick rule, could support additional liquidity and trading activity over time.
A recurring theme throughout the discussion was the need to balance reform with local market realities.
Panellists emphasised that successful market development cannot rely on the wholesale adoption of international frameworks. Instead, regulators and industry participants should focus on practical reforms that reflect local market structures, investor bases, and regulatory objectives, while still supporting greater alignment with global standards.
Education was identified as another critical component of growth. The panel heard that increasing awareness among market participants, investors, and policymakers can help broaden participation and improve understanding of the role securities lending plays in supporting liquidity and market efficiency.
Ultimately, speakers agreed that Korea, Taiwan, and Saudi Arabia have all demonstrated strong growth potential, but that the next phase of development will depend on targeted reforms, enhanced infrastructure, and continued collaboration between regulators and market participants.
As global firms increasingly look beyond traditional lending centres for opportunities, the ability of these markets to address operational bottlenecks and expand sources of liquidity is likely to determine how quickly they develop into mature, scalable securities finance ecosystems.
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ISLA Americas: Industry collaboration key as securities finance enters next phase of growth
ISLA Americas: Industry collaboration key as securities finance enters next phase of growth
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