ISLA Americas: An opportunity of long term growth and integration in Latin America
14 October 2026 US
Image: f11photo/stock.adobe.com
Latin America has been an increasing focus point for the International Securities Lending Association (ISLA) Americas, as the region undergoes significant transformation with participants, regulators, and market infrastructures at work to accommodate a growing interest from the securities finance space.
A discussion on the region took place in Key Biscayne, Florida at the ISLA Americas 3rd Annual Securities 91ԭƬ & Collateral Management Conference.
Nuam — the formal integration of Chile, Peru, and Colombia — is building an integrated market for trading securities, increasing derivatives, and standardising securities lending. This is where ISLA has stepped in to assist with education; introducing nuam to using swaps as a form of stock loan and borrow; as well as having discussions around settlement cycles, buy-ins, and developing regulation.
ISLA has had a large influx of demand in Mexico from a number of local players such as clearing agents. The association has been working with the central bank to change the securities clearing rules towards a more over-the-counter (OTC)-oriented approach, as opposed to its current central counterparty (CCP)-focused path.
While the central bank has made its proclamation on this, there remain tax challenges to explore. The process is currently on hold in Mexico, but one panellist seemed optimistic about a “fairly easy” implementation once the tax issues are addressed.
Referred to as a “labour of love”, the panel moved focus to Brazil. The CCP, the local players, and the offshore players are driven to achieve the transition to T+1 in February 2028. The market is trying to maintain some of the CCP structure, which allows for transparency, consolidation of reporting, and tax collections.
FX market, settlement, and a healthy securities lending market are required to reach T+1. One panellist highlighted that it is not just a settlement cycle project; it is a market-efficient project. They believed that hard-to-borrow names will feel more pressure moving from T+2 to T+1, due to the removal of that one-day buffer.
Players in Brazil agree that the securities lending market requires improvement. In addition, it is important not only to unlock inventory that is being held by international investors — which are holding 45 per cent of the free flow through Brazil and are lending less than one per cent — but the system requires more liquidity, which the panel deemed crucial to accommodate the transition to T+1 and for the betterment of the market.
The panel again highlighted the conversations being had on the regulatory changes needed in Brazil to allow models to go beyond the traditional CCP-only structure. Regulators, the central bank, and market participants recognise that the long-term path is being aligned with global practices. However, alignment does not simply mean replication, one panellist noted. In Brazil, there are beneficial owner rules, taxation rules, and operational aspects that the market needs to accommodate.
Working alongside ISLA Americas, Brazil is “getting there” in terms of designing this new bilateral model, where collateral is handled directly between borrowers and lenders. While the current model is “thriving”, the use of a CCP is mandatory by law, which creates barriers for other investors to enter the market.
Providing an example of the gap in opportunity here, one panellist said that local individuals, asset under customers (AUC), are one third of the foreign investors, but those local individuals are lending twice as much as the foreign investors. They believed that the whole lending market could double just by allowing them to flow.
Agent lenders and beneficial owners are already using the existing model, and do not need to adopt the new model. However, certain legal entity types such as US 40 Act funds, ERISA funds, and European UCITS cannot use the model as it exists today, due to specific regulatory requirements.
It seems that this move forward will only open opportunities in Latin America, but time will tell how this will provide for the greater securities finance market.
A discussion on the region took place in Key Biscayne, Florida at the ISLA Americas 3rd Annual Securities 91ԭƬ & Collateral Management Conference.
Nuam — the formal integration of Chile, Peru, and Colombia — is building an integrated market for trading securities, increasing derivatives, and standardising securities lending. This is where ISLA has stepped in to assist with education; introducing nuam to using swaps as a form of stock loan and borrow; as well as having discussions around settlement cycles, buy-ins, and developing regulation.
ISLA has had a large influx of demand in Mexico from a number of local players such as clearing agents. The association has been working with the central bank to change the securities clearing rules towards a more over-the-counter (OTC)-oriented approach, as opposed to its current central counterparty (CCP)-focused path.
While the central bank has made its proclamation on this, there remain tax challenges to explore. The process is currently on hold in Mexico, but one panellist seemed optimistic about a “fairly easy” implementation once the tax issues are addressed.
Referred to as a “labour of love”, the panel moved focus to Brazil. The CCP, the local players, and the offshore players are driven to achieve the transition to T+1 in February 2028. The market is trying to maintain some of the CCP structure, which allows for transparency, consolidation of reporting, and tax collections.
FX market, settlement, and a healthy securities lending market are required to reach T+1. One panellist highlighted that it is not just a settlement cycle project; it is a market-efficient project. They believed that hard-to-borrow names will feel more pressure moving from T+2 to T+1, due to the removal of that one-day buffer.
Players in Brazil agree that the securities lending market requires improvement. In addition, it is important not only to unlock inventory that is being held by international investors — which are holding 45 per cent of the free flow through Brazil and are lending less than one per cent — but the system requires more liquidity, which the panel deemed crucial to accommodate the transition to T+1 and for the betterment of the market.
The panel again highlighted the conversations being had on the regulatory changes needed in Brazil to allow models to go beyond the traditional CCP-only structure. Regulators, the central bank, and market participants recognise that the long-term path is being aligned with global practices. However, alignment does not simply mean replication, one panellist noted. In Brazil, there are beneficial owner rules, taxation rules, and operational aspects that the market needs to accommodate.
Working alongside ISLA Americas, Brazil is “getting there” in terms of designing this new bilateral model, where collateral is handled directly between borrowers and lenders. While the current model is “thriving”, the use of a CCP is mandatory by law, which creates barriers for other investors to enter the market.
Providing an example of the gap in opportunity here, one panellist said that local individuals, asset under customers (AUC), are one third of the foreign investors, but those local individuals are lending twice as much as the foreign investors. They believed that the whole lending market could double just by allowing them to flow.
Agent lenders and beneficial owners are already using the existing model, and do not need to adopt the new model. However, certain legal entity types such as US 40 Act funds, ERISA funds, and European UCITS cannot use the model as it exists today, due to specific regulatory requirements.
It seems that this move forward will only open opportunities in Latin America, but time will tell how this will provide for the greater securities finance market.
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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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