June 2024

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This survey of agent lenders conducted in Q1 2024 shows the thinking of business leaders across technology, client segments, borrower balance sheet constraints and the outlook through 2025. While regulatory and technology trends are moving fast, securities lending agents report that they are optimistic about the future of their global franchises.

Horizontal, not vertical, is a motto of agency lending today including for business users and client services. This applies to both custodian and third-party agent lending programs, where investments in data, pre-trade analytics and straight-through processing in post-trade are seen as competitive differentiators.

The business of lending securities to facilitate short sale and operational fail coverage remains steady, while agents with a diverse client base report that their newer development efforts are focused on cross-collateral product optimization. This can present opportunities for agent lenders in broadening out their business lines.

There are fewer differences now than in 2022 between bank and non-bank agent lenders, and between custodian and third-party programs. Necessity mandates invention and the industry is primed for innovation, even if that means moving past decades-old business practices to evolve.

This report has been written for the broad securities lending community. Agent lenders may benefit from a peer review. Clients, counterparties, service providers and regulators may find insights to assist their own planning and oversight roles.

Table of Contents

  • Executive Summary
  • Market Conditions: Weaker than Last Year but Robust by Historical Standards
    • – Methodology
  • Technology Priorities and Directions
    • – The Acronyms: AI, DLT and CDM
  • Addressing Balance Sheet Constraints
    • – Current Thinking on CCPs
    • – Agency Swaps
  • The Outlook Through 2025
  • About Finadium LLC

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