With an international standing in the market, it appears to be a very interesting time for securities finance from a BNP Paribas perspective.
But while the market has faced strong revenue performance over the past 12 months 鈥� with a growth in balances globally 鈥� there remains a backdrop of excess supply, a divergence on risk tolerance, and capital constraints across the market.
Exploring trends and opportunities in 2025, Andrew Geggus, global head of Agency Lending, Triparty Services and head of Market & Financing Services UK at BNP Paribas鈥� 网爆吃瓜 Services business, observes an increase in direct participation of clients in their lending programmes.
Clients are demonstrating a keen focus on returns and utilising their securities financing programmes beyond just traditional discretionary lending.
He highlights: 鈥淚 see a widening gap between clients鈥� risk appetites, with those that are willing to take a wider set of collateral and look at term opportunities being able to generate the best returns, in comparison to those that have more restricted parameters, who are becoming increasingly similar to a specials-only programme.鈥�
In the agent lender space, there is a trend of consolidation. According to Geggus, some participants are reducing their offering due to cost or capital constraints 鈥� a reaction to the oversupply in the market.
From the borrower side of the table, the bank continues to see resource constraints and therefore a focus on looking at capital-efficient structures such as pledge, pledge back or total return swaps. He states: 鈥淲e are also seeing growing demand in new markets such as Saudi Arabia and the UAE. To assist our trading counterparts, we are constantly trying to improve our automated trading efficiency and work on new routes to market to support our borrowers needs and, in turn, support our clients to optimise their performance.鈥�
As a result, he pinpoints a much larger focus on returns as opposed to growth only strategies, suggesting 鈥渋t is becoming more about having the right type of inventory than just size鈥�. For Geggus, the agent lenders that will thrive the most are ones that build out a more complete securities financing offering.
BNP Paribas prides itself on being one of the few banks to offer both agency lending and principal lending models, which provides a level of flexibility to clients. The bank says it can offer a securities lending solution to all client types and can suggest multiple complementary options across both its principal and agency businesses.
鈥淲e have at our disposal what I refer to as our securities finance toolkit, that not only has traditional discretionary lending programmes, but also offers a comprehensive third-party lending offering, exclusive auctions, agency repo, and directed lending where the client can take more of an active role in their own lending programme, allowing us to tailor solutions to individual clients objectives,鈥� says Geggus.
Taking a step back, Geggus states that BNP Paribas is 鈥渙ne of the few institutions鈥� that can provide securities financing solutions across securities services, equities, and fixed income, offering a number of solutions under its integrated bank approach.
Knocking down barriers
After stepping into the triparty collateral world 12 months ago as global head of BNP Paribas鈥� Triparty Collateral Services, Geggus indicates that while work is underway to further collateral mobilisation and optimisation in the market, more can be done.
He has had much connection with triparty agents within his capacities across the securities lending market in the past 12 years. His work to drill into the triparty business model and client offering has only further enlightened his overview of this space 鈥� he notes that the reach of the triparty business is far beyond securities lending alone.
鈥淲e want to see business not being limited by inefficiencies; therefore, our aim is to knock down barriers to collateral mobility and help our clients truly optimise their collateral usage, far beyond simple collateral selection hierarchies,鈥� he explores.
BNP Paribas鈥� 网爆吃瓜 Services business is also working with buy side clients to build centralised collateral solutions to ensure best use of their assets across their product needs.
Part of the bank鈥檚 journey to knock down barriers came in the form of the Schedule Manager, its recently released triparty collateral management solution, which aims to enhance collateral optimisation. The Schedule Manager is available on BNP Paribas鈥� NeoLink client platform, and allows clients to define, update, monitor, and share their collateral schedules in a real-time and connected manner.
Exploring the road to further optimisation, Geggus says: 鈥淲e need to ensure collateral is fully mobilised, the selection of collateral is efficient, and that collateral is managed across all product touch points.
鈥淭his will be achieved by further building out the efficient flow of data via our APIs and building out automated functionality that can learn, utilising AI, to ensure allocation behaviour is understood and developed over time.鈥�
For Geggus, this way forward will aid the market more broadly to be efficient, unlocking liquidity faster, as well as helping asset owners and collateral givers achieve greater returns.
As the industry continues to venture into an increasingly digital world, BNP Paribas鈥� 网爆吃瓜 Services business is also shaping its securities lending and triparty collateral offerings to keep up with this movement. 鈥淲here we have seen others in the market pulling back and focusing on cost reduction, we have been investing in improving our platforms for our clients鈥� needs,鈥� Geggus states.
The bank鈥檚 agency securities lending business, for instance, built and released a new client portal earlier this year that enables clients access to a modern reporting suite, and the ability to deep dive into their own programme鈥檚 data pool.
鈥淲e also have a continuous investment plan to ensure the portal continues to match off our client requests and is truly built for the future. We want to help clients seamlessly achieve what they want from their lending programme.鈥�
Upcoming in the bank鈥檚 development pipeline is the release of a similar portal for BNP Paribas鈥� principal lending business. The use of both portals will create a window that allows clients to manage their programmes 鈥� from updating collateral schedules, automatic responses to queries and a detailed reporting suite: 鈥渢he roadmap for development is impressive鈥�.
A three-pronged approach
Shaping the roadmap ahead for a number of firms is the journey to T+1 for the UK and Europe, as well as the US Treasury central clearing mandate 鈥� which are both taking precedence for BNP Paribas.
Providing an overview of the regulatory scene impacting the market, Geggus says that despite certain nuances specific to the UK and Europe, lessons learned from the T+1 move in the US will help the bank to prepare for the upcoming 11 October 2027 deadline.
Fully mobilised as a bank to work on T+1 and to do so without 鈥渟imply throwing headcount at the change鈥�, Geggus suggests three core aspects that will assist with the settlement cycle move, from an agency lending perspective.
First and foremost, it is important to ensure all operational friction is removed to provide a strong pre-trade matching process. Standard settlement instructions (SSIs) must be correct and in place, while straight-through processing (STP) should be used as much as possible.
Secondly, allowing same-day trading later in the day will aid the market more broadly. Geggus notes that if agent lenders can trade same day more efficiently and closer to the close of business, it will help the whole market reduce fails and therefore have a positive net effect across the industry. In doing so, Geggus says 鈥渨e must ensure collateral cover mechanisms are working nearer to the close and on a continuous basis, as opposed to a batch process鈥�.
Lastly, and key to the transition for BNP Paribas, is the cash behaviour of the bank鈥檚 client base. In an ideal world, Geggus says clients would be able to provide pre-trade notification or instruct all sales at the open, but 鈥渢his is not the case with a lot of activity taking place near close鈥�. Therefore, the agent needs to understand the trading behaviour of the clients in conjunction with the liquidity profile of the securities, and utilise this to help manage buffers and trading strategy within the programme.
鈥淭hey are the items in our control; on the borrower side we would hope to see the ability to cover more same day, or management of internal inventory to allow business-as-usual recalls to flow without too many hurdles,鈥� he adds.
For US Treasury central clearing, Geggus says, once again, that the business is mobilised to ensure it has the full view on required solutions and to ensure BNP Paribas is well placed for its implementation. He continues: 鈥淲hile it is not 100 per cent that it will go into effect on the current date, we are working to that effect.鈥�
The only way is forward
Looking across its agency lending, principal lending, and triparty collateral businesses, BNP Paribas is focused on improving the client experience and pushing solutions as one bank.
鈥淲e have invested heavily over the past few years and will continue to do so to help the growth ambitions of our products. One key area has been to improve the level of automation and efficiency across the business lines.鈥�
BNP Paribas鈥� 网爆吃瓜 Services business has placed a large effort in moving to as little manual intervention as possible, across the lifecycle of a loan or collateral movement. The goal is to ensure the businesses are well placed for the global move to shortened settlement cycles.
Additionally, the bank will develop its digital plan and provide continuous improvements to its client base, working with them to build what clients want.
Another notable area of investment for BNP Paribas鈥� 网爆吃瓜 Services business has been in its securities lending and triparty collateral experts, with the move to bolster the team globally and welcome a number of new additions over the past 12 months. Geggus continues: 鈥淲e want to match-off utilising technology to enhance automation and efficiency coupled with the best people to manage our relationships with clients and borrowers, and work to improve BNP Paribas鈥� offering.鈥�
Clients can also expect to see the further growth of the bank鈥檚 third-party custody lending offer. This follows a trend Geggus has identified, in which some agent lenders are pulling back on their offer and, as a result, queries for third-party lending are on the increase.
Concluding his thoughts on the bank鈥檚 journey forward, Geggus says: 鈥淏NP Paribas is uniquely positioned with its comprehensive offer across its Corporate & Institutional Banking division, and we will continue to work collaboratively to help build sophisticated solutions for our clients and help them to achieve their goals from their securities finance and collateral management needs.鈥�
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