SFT: funding market stresses drive demand for alternative financing solutions

Changes in the monetary policy environment are driving far-reaching shifts in how securities finance markets operate, the International Securities Lending Association’s (ISLA’s) chief executive Andrew Dyson told attendees at the Association’s 30th Annual Conference in Lisbon.

For State Street’s global head of agency lending Patricia Hostin, the sharp tightening in monetary conditions over the past 12 months has fuelled a surge in demand for alternative financing solutions, driving strong flows through the bank’s peer-to-peer repo platform and sponsored clearing solutions connecting to the DTCC’s Fixed Income Clearing Corporation (FICC).

For Société Générale head of financing solutions and client profitability Geraldine Trippner, banks have been progressively adjusting over a number of years to managing securities finance trading efficiently in line with Basel capital rules. While continuing to push for greater balance sheet efficiency, this borrower community has strengthened its ability to monitor capital consumption and the cost of RWA.

For BNY Mellon’s Badger, securities financing and collateral markets are currently at an inflection point with the future likely to be defined by how traditional ways of working will coexist with, and benefit from, advances in technology — for example those offered by distributed ledger technology — and the drive for sustainable lending and borrowing.

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