A Unified Voice for the Global Loan Market

Author: Scott McMunn. Chief Executive Officer

A Global Loan Market Association

Not quite but at the 17th Loan Market Association (LMA) Annual Conference in September,?the respective chief executives of the three associations shared a stage, moderated by Bryan Pascoe, the CEO of International Capital Market Association (ICMA).

With Sean Griffin of Loan Syndications and Trading Association (LSTA) and James Hogan of Asian Pacific Loan Market Association (APLMA) joining the LMA’s platform, this panel marked a milestone in cross-association collaboration - the first time 4 associations were able to join up and share views. All 4 of the heads are relatively new to their roles, with the three loan associations seeing new leadership over the last year.

This fresh wave of leadership has prompted the ability to reassess the overall goals and strategy and to repoint and reprioritise where necessary. With the pace of the change in the loan markets this was certainly welcomed by the members.

Overlaps

The attendees at the annual conference were polled on membership overlap with the numbers surprisingly low and perhaps reflecting the need to ensure membership is socialised within member firms. This would ensure a clearer approach and be represented on that global scale where needed. A number of firms were also members of ICMA, again showing that while its “loans first” at the LMA conference, it is imperative that the broader church of other trade associations are involved where needed.

Already in 2024, the associations, including ICMA, have been involved in key publications covering sustainable finance, sustainable linked loans, and transition finance – all obviously within the banner of ESG. ICMA, LMA, LSTA, and the APLMA have all worked together in smaller initiatives – ?yielded not only economies of scale but also broader outreach and impact. And let’s not forget the collective effort to ensure a smooth LIBOR transition.

All of us speak regularly formally and informally and drive the culture of collaboration through our teams. And all of us strive to represent and meet the needs of our members.

Not always an overlap but consistency

However, there are sometimes different priorities and different focus points reflecting the membership base of our associations and also the markets we operate in. For example, the LSTA is further ahead on the journey operational efficiency and secondary trading infrastructure, reflecting the needs of a leveraged finance-heavy market. Their efforts centre on digitisation, documentation, and optimising trading practices. The LMA is trying to catch up but reflects a broader array of participants, agents, behaviours and of course technology. In EMEA, LMA caters to a broader base, from banks to non-bank lenders and private credit funds. Its focus spans diverse segments like Funds Finance, Structured Risk Transfer (SRT), and ESG, bridging gaps across various market participants. The APLMA, which covers a very large and diverse number of geographies, is fostering innovation, supported by local regulators to explore the use of blockchain, Web3, and tokenisation. This makes it a regional leader in integrating technology into loan markets. At the LMA there has been a repointing to look at Funds Finance, SRT and CRI, and the broader private markets.

And of course while there is strong connectivity around discussing requirements on ESG the political and regulatory drive is markedly different. Each association currently has a unique ESG focus: the LSTA on disclosure, the APLMA on transition finance and regional compliance, and the LMA on structured finance. ICMA provides a global framework, ensuring cohesion while allowing for local adaptation. Sometimes we will just deliver on different things for regional members.

Refined activity and focus and the LMA role

The immediate focus of the LMA has been to repoint the activities to reflect the rapidly evolving loan markets and ensure we remain current, timely, and representative. This has focused the challenge to private markets and the increasing financing provided by non bank financial intermediaries, addressing less than effective and efficient primary and secondary market settlement practices, and to embrace new technology building on clean and common data. All of these lend themselves to the enablement of increased efficiency, liquidity, and transparency in the loan markets.

Specifically the outcomes will lead to ongoing regulatory advocacy, design and strive for standardisation where possible (whether language, taxonomy, behaviour), and setting out best practices in documentation or data or analytics – all with the full involvement and representation of our key stakeholders.

As the industry continues to evolve, with new capital sources and regulatory changes, the LMA will remain at the forefront, setting guardrails to support the flow of capital and safeguarding the interests of its members.