Snail race: the slow growth of securities lending CCPs

There’s underlying appetite to clear, but a structure to suit all participants is proving elusive

Securities lending is subject to the same forces that have altered market structure in other trading activities. In particular, the implementation of the final Basel III prudential rules for banks, and the switch to T+1 settlement in the US, are expected to increase the appeal of central clearing.

But there’s a catch. When they work through banks acting as agent or principal lenders, beneficial owners put up the securities and receive cash. Central counterparties (CCPs) tend to require cash