Reading between the lines
09 June 2026
A new paper, co-authored by Dr Radek Stech and Roy Zimmerhansl, explores how securities lending can reveal governance and risk signals across financial markets, and argues for a more interconnected and action-oriented approach to transparency and accountability
Image: stock.adobe.com/NeoLeo
Dr Radek Stech, founder and CEO of Global Principles for Sustainable 网爆吃瓜 Lending (Global PSSL) and founder of ABC Score, has, with Roy Zimmerhansl, head of Capital Markets, WTS Hansuke, co-authored a new paper entitled 鈥楻ethinking Boundaries in Market Governance: Signals from 网爆吃瓜 Lending Practice鈥�.
The paper began in earnest in 2020, when the co-authors joined forces with a shared focus on action and an objective to improve securities lending 鈥� a market they believed had multiple entry points for reform.
While conducting research, the scale of interconnectedness within securities lending became apparent, being described as a 鈥渢rillion-dollar pathway that connects thousands of stakeholders鈥�, linking cash, equities, ETFs, fixed income, derivatives, and tokenised instruments.
The research suggests a more holistic approach to market governance is required, and that attention should shift to how different components of the system interact, and how signals identified in one area are then interpreted in another.
As such, a performance metric 鈥� ABC Score (Assess, Balance, Calibrate) 鈥� is being developed.
ABC Score provides a measure of a company鈥檚 performance and offers recommendations for improvements with the objective of tracing progress towards greater transparency, accountability, and sustainability among organisations that engage with securities finance.
The paper highlights that ABC Score does not have the intention of introducing another layer of complexity, but to assist users with the help of 鈥渃utting-edge鈥� technology.
Following the publication of the paper, there will be further reviews, continued liaison with stakeholders, and testing of initial metrics in practical settings, including in the context of global development.
The focus on action remained from the conception of the paper, which recognised that the intention is not to add layers of siloed frameworks, but instead to establish approaches that can be applied, tested, and refined with practice.
Creating connections
The paper describes securities lending as a 鈥渢ransactional building block鈥�, operating across multiple areas of the financial system rather than as an isolated market activity.
鈥溚怨� lending connects cash equities, ETFs, fixed income, derivatives, and, increasingly, digital and tokenised structures across jurisdictions and infrastructures,鈥� they elaborated.
The authors highlight that the interconnectedness of the industry can provide insights into how transparency, governance, and market behaviour operate more broadly across post-issuance financial markets, noting that, in this sense, the paper uses securities lending not as an end in itself, but as a practical lens through which wider market dynamics and governance challenges can be better understood.
The paper is guided by the principle of 鈥渇rom insight to action鈥�, something that reflects the view that market governance discussions should increasingly lead to practical outcomes rather than remain purely conceptual.
According to Stech and Zimmerhansl, one of the objectives of the paper was to assist in establishing a constructive and forward-looking tone for the next phase of the work, including broader 鈥渂eyond issuance鈥� discussions and the implementation of elements of the 2026 plan centred around the ABC Score initiative.
Regarding the practical outcomes of the work, it is hoped that it will contribute to a more effective interpretation of governance signals across markets, stronger engagement between stakeholders, and the testing of practical metrics that can support transparency, accountability, and more informed decision-making.
The broader aim of the paper is not to add further layers of complexity, but to help develop approaches that can be tested, refined, and applied in practice across different parts of the financial ecosystem.
Scandal signals
Scandal and market events often lead to innovation, with the paper鈥檚 broader conclusions being supported by the Wirecard scandal.
The Wirecard scandal refers to a corporate fraud case, centred around a German fintech company that claimed to hold large amounts of cash while running a highly-profitable payments business. In 2020, it came to light that almost 鈧�2 billion did not exist, and that the firm had lied.
According to the authors, this scandal supports one of the paper鈥檚 central observations: that important governance and risk signals can remain visible within the broader financial system for extended periods, without being effectively recognised or acted upon.
They underscore that the issue is not the complete absence of information, but the difficulty of interpreting and connecting signals across different parts of the market.
鈥淭he paper also highlights that investigative journalism, short selling, and securities lending can contribute to surfacing mispriced risk and governance concerns,鈥� the authors add.
The fact that the scandal鈥檚 signals did not translate into timely, coordinated action across the market reinforces one of the core arguments: 鈥渋nformation can exist, and even be visible to some actors, without being effectively shared, trusted, or acted upon at the system level.鈥�
The co-authors underscore that the episode also highlights the constructive role that securities lending and short selling can play in surfacing potential fraud or governance failures, provided that markets are set up to interpret and respond to those signals rather than suppress them.
Lessons to learn
The key takeaway the authors want readers and industry participants to take from the paper is that market governance should increasingly be approached in a more holistic and interconnected way.
鈥溚怨� finance, ESG, stewardship, market infrastructure, and broader post-issuance activity are often discussed separately, yet in practice they are closely linked through the wider financial system,鈥� they highlight.
The paper argues that better outcomes are likely to emerge when market participants focus not only on individual transactions or silos, but also on how signals are interpreted, shared, and acted upon across markets.
鈥淯ltimately, the intention is to encourage more practical, testable, and action-oriented approaches to governance,鈥� they conclude.
The paper began in earnest in 2020, when the co-authors joined forces with a shared focus on action and an objective to improve securities lending 鈥� a market they believed had multiple entry points for reform.
While conducting research, the scale of interconnectedness within securities lending became apparent, being described as a 鈥渢rillion-dollar pathway that connects thousands of stakeholders鈥�, linking cash, equities, ETFs, fixed income, derivatives, and tokenised instruments.
The research suggests a more holistic approach to market governance is required, and that attention should shift to how different components of the system interact, and how signals identified in one area are then interpreted in another.
As such, a performance metric 鈥� ABC Score (Assess, Balance, Calibrate) 鈥� is being developed.
ABC Score provides a measure of a company鈥檚 performance and offers recommendations for improvements with the objective of tracing progress towards greater transparency, accountability, and sustainability among organisations that engage with securities finance.
The paper highlights that ABC Score does not have the intention of introducing another layer of complexity, but to assist users with the help of 鈥渃utting-edge鈥� technology.
Following the publication of the paper, there will be further reviews, continued liaison with stakeholders, and testing of initial metrics in practical settings, including in the context of global development.
The focus on action remained from the conception of the paper, which recognised that the intention is not to add layers of siloed frameworks, but instead to establish approaches that can be applied, tested, and refined with practice.
Creating connections
The paper describes securities lending as a 鈥渢ransactional building block鈥�, operating across multiple areas of the financial system rather than as an isolated market activity.
鈥溚怨� lending connects cash equities, ETFs, fixed income, derivatives, and, increasingly, digital and tokenised structures across jurisdictions and infrastructures,鈥� they elaborated.
The authors highlight that the interconnectedness of the industry can provide insights into how transparency, governance, and market behaviour operate more broadly across post-issuance financial markets, noting that, in this sense, the paper uses securities lending not as an end in itself, but as a practical lens through which wider market dynamics and governance challenges can be better understood.
The paper is guided by the principle of 鈥渇rom insight to action鈥�, something that reflects the view that market governance discussions should increasingly lead to practical outcomes rather than remain purely conceptual.
According to Stech and Zimmerhansl, one of the objectives of the paper was to assist in establishing a constructive and forward-looking tone for the next phase of the work, including broader 鈥渂eyond issuance鈥� discussions and the implementation of elements of the 2026 plan centred around the ABC Score initiative.
Regarding the practical outcomes of the work, it is hoped that it will contribute to a more effective interpretation of governance signals across markets, stronger engagement between stakeholders, and the testing of practical metrics that can support transparency, accountability, and more informed decision-making.
The broader aim of the paper is not to add further layers of complexity, but to help develop approaches that can be tested, refined, and applied in practice across different parts of the financial ecosystem.
Scandal signals
Scandal and market events often lead to innovation, with the paper鈥檚 broader conclusions being supported by the Wirecard scandal.
The Wirecard scandal refers to a corporate fraud case, centred around a German fintech company that claimed to hold large amounts of cash while running a highly-profitable payments business. In 2020, it came to light that almost 鈧�2 billion did not exist, and that the firm had lied.
According to the authors, this scandal supports one of the paper鈥檚 central observations: that important governance and risk signals can remain visible within the broader financial system for extended periods, without being effectively recognised or acted upon.
They underscore that the issue is not the complete absence of information, but the difficulty of interpreting and connecting signals across different parts of the market.
鈥淭he paper also highlights that investigative journalism, short selling, and securities lending can contribute to surfacing mispriced risk and governance concerns,鈥� the authors add.
The fact that the scandal鈥檚 signals did not translate into timely, coordinated action across the market reinforces one of the core arguments: 鈥渋nformation can exist, and even be visible to some actors, without being effectively shared, trusted, or acted upon at the system level.鈥�
The co-authors underscore that the episode also highlights the constructive role that securities lending and short selling can play in surfacing potential fraud or governance failures, provided that markets are set up to interpret and respond to those signals rather than suppress them.
Lessons to learn
The key takeaway the authors want readers and industry participants to take from the paper is that market governance should increasingly be approached in a more holistic and interconnected way.
鈥溚怨� finance, ESG, stewardship, market infrastructure, and broader post-issuance activity are often discussed separately, yet in practice they are closely linked through the wider financial system,鈥� they highlight.
The paper argues that better outcomes are likely to emerge when market participants focus not only on individual transactions or silos, but also on how signals are interpreted, shared, and acted upon across markets.
鈥淯ltimately, the intention is to encourage more practical, testable, and action-oriented approaches to governance,鈥� they conclude.
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