Buy-side reading packet for the Finadium Investors in Securities Lending conference, May 8-9, NYC

We’ve unlocked a number of recent Finadium articles for the buy-side to get ready for FISL, the Finadium Investors in Securities Lending conference, coming up May 8-9 in NYC. Both beneficial owners and hedge fund attendees are invited to check out these recent articles to think about what matters to them, what they want to hear about from their peers, and the questions they want to ask services providers. Access is free through May 9 and does not require a login.

Why borrowers should post margin for lenders on the NSCC SFT CCP. Across multiple calculators and analyses, we find the same conclusion that banks and brokers should post margin for beneficial owners lending securities on the DTCC NSCC Securities Finance Transaction (SFT) central counterparty (CCP) through an agent lender. The math works across RWA, Leverage Ratio, operations and daily accrual accounting. While this may be an unpopular opinion and we’ve already heard doubts, we make the argument that for the benefit of the entire industry, borrowers posting margin should be standard practice.

Takeaways from PASLA|RMA conference on Asian securities lending. The Pan Asia Securities Lending Association (PASLA) and Risk Management Association (RMA) held the 18th annual conference on Asian securities lending in Singapore last week, bringing together over 380 participants and delegates from across the entire industry doing business in the APAC region. We highlight some of the key observations and speaking points.

ISLA is expanding to the US with short-term opportunities to improve the market. It’s great news that the International Securities Lending Association (ISLA) is expanding to the US by assuming the responsibilities of RMA and creating one trade association, as confirmed in an email issued today. RMA has led US industry efforts for regulatory engagement and education but ISLA will now add its own spin on things.

Agent lenders are setting up swaps desks – how will this work?. We’ve heard now from five different agent lenders that they have set up or are setting up swaps desks to transact with dealers instead of lending securities. This raises a number of questions about how the set up works operationally and who needs to approve. For agent lenders, the ability to lend their own clients’ securities to a proprietary trading desk is a first step in making the swap trade happen. Most beneficial owners have now approved their agent lenders to lend to an internal affiliate, typically a prime broker (think Goldman Sachs Agency Lending lending to Goldman Sachs Prime Brokerage). There are some limits – we’ve heard 40% of volume as one metric – and pricing needs to be at market with no benefits to the affiliate. We’ve done reviews of several of these programs and have never found a problem.

Securities finance results round-up for March 2024. We’ve created a round-up of February 2024 monthly results from across repo, securities lending and securities finance-related markets published throughout March. This month we feature figures from BrokerTec, Clearstream, DTCC, Eurex Repo, Hazeltree, London Reporting House, MTS Repo, Options Clearing Corporation, S&P Global Market Intelligence, and Tradeweb.

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