While the first quarter of 2026 has faced much geopolitical turmoil, it has also seen strong global securities lending activity. From an NBC perspective, how do you review the performance of your securities lending programme in 2026?
Mathilda Yared:听It听is fair to say that periods of volatility tend to create opportunity, and in 2026 that has certainly been the case. At National Bank of Canada, our ability to capture that opportunity is听largely driven听by our integrated platform, robust risk management framework, and agility in responding to changing market conditions.
Our Global 网爆吃瓜 Finance (GSF) business brings together repo, securities borrowing and lending, delta one, and funding activities under one umbrella. This integrated model allows us to dynamically allocate balance sheet and trading resources across products, depending on where we see the most compelling opportunities from both a market and client perspective.
From a performance standpoint, we have seen increased activity across both general collateral and hard-to-borrow segments, including equities, corporate bonds, and ETFs. One notable trend has been a shortening in trade duration, which is consistent with the higher volatility environment and more tactical positioning by market participants. In Canada specifically, we have also been more active in supporting transactions such as bought deals and Dutch auctions, reflecting strong primary market activity.
The听continued rise of the retail investor听remains听an important structural theme.听NBC听led听the听effort听for听domestic regulatory听approval听and听was听the first听major bank听to听offer听fully paid lending in听Canada.听We are seeing听fully听paid lending programmes expanding across both the US and Canada,听as clients increasingly look to听enhance听returns on their long portfolios,听as听an area of continued growth.
Steven Scholl: Building on a record-breaking 2025 for our securities lending programme, 2026 is shaping up to be even stronger, which we view as a fantastic outcome given the evolving macro and market backdrop.听Our听agility听allows听us to听respond quickly to changing 鈥� and often challenging 鈥� market conditions, including major geopolitical events.听
Our model allows us to allocate resources across products as market conditions evolve, ensuring we can both mitigate downside risks and lean into dislocations where compelling client and market opportunities emerge. For example, recent dislocations in the ETF market 鈥� driven in part by the ongoing conflict in Iran 鈥� have created meaningful supply-demand imbalances.
Last year, NBC went live on听EquiLend鈥檚听1Source and Trading Apps鈥櫶齌A.Link. How are these developments shaping your focus on technology-driven solutions?听听听
Yared: Our goal is to be the number one in our use of technology in securities finance. Within the GSF group, the GSFWeb team focuses on technology-driven solutions that support听front to back听processes and strategy.听The team was recognised as the Technology-enhanced Trading Desk of the Year by the 网爆吃瓜 Finance Times Industry Excellence Awards in 2025.听
James Bryce: NBC has always been heavily invested in technology-driven solutions, so going live on听EquiLend鈥檚听1Source and Trading Apps鈥櫶齌A.Link听did not change our direction as much as reinforce it. Our view is that we need to be present wherever there is liquidity,听efficiency,听or a differentiated market offering that can help us generate value.听
A big part of that is听maintaining听a flexible, platform-agnostic architecture that allows us to connect across venues and workflows as the market evolves. Platforms like 1Source can support greater productivity,听automation,听and operational efficiency, while broader connectivity helps us access opportunities across the market without being locked into a single workflow or venue.听
More broadly, technology is central to how we continue to drive the business forward. The pace of change is accelerating, and we see AI as both an accelerant for developing new capabilities and a transformational tool for improving workflows across the desk.听
The use of digital assets is at the forefront of conversation in the financial world, but how are you seeing this听impact听securities lending?听
Bryce: Digital assets are clearly an important conversation across financial markets, but in traditional securities lending, I would say the impact is still early. We are not yet at a point where digital assets are materially changing day-to-day securities lending activity in Canada.听
Where it becomes relevant is around the infrastructure questions it raises: tokenisation, collateral mobility, settlement speed, transparency, and interoperability between platforms. Those themes are directly connected to securities finance, even if the adoption curve is still developing. If tokenised assets or digital forms of collateral become more widely accepted, they could eventually change how collateral is mobilised, how quickly transactions settle, and how efficiently firms manage balance sheet resources.听
So听for us, the focus is not on forcing digital assets into the securities lending model today. It is about watching the space carefully, understanding where the market structure is heading, and making sure our technology and operating model are flexible enough to adapt when there is real liquidity, clear regulation, and practical institutional use cases.听
Scholl: We see听significant progress听in听US听government policies around digital assets and more specifically on stablecoin regulations.听We also see significant investments in tokenisation of securities by听TradFi听institutions. The hot topic is听the ability to allow 23/5听real-time movement of collateral and collateral听mobilisation. Interoperability and听TradFi听adoption of tokenised securities will听likely be听key to听a widespread听adoption and to avoid 鈥榠solated鈥櫶齝ollateral听that听cannot听be moved just because someone else is on a chain.
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With upcoming regulation, such as the SEC鈥檚 10c-1a, on the horizon, how are you navigating the regulatory landscape within both the US and Canada?
Scholl: With a significant amount of regulatory change underway across both the US and Canada, we are taking a proactive and coordinated approach to navigating the evolving regulatory landscape听to ensure readiness听while also thoughtfully assessing the strategic implications for our securities lending business.听
In the US,听the 网爆吃瓜 and Exchange Commission鈥檚 (SEC鈥檚) 10c-1a represents a shift toward greater transparency in securities lending by requiring the reporting of transaction听level data to the Financial Industry Regulatory Authority (FINRA). Although听the compliance date for 10c-1a reporting has been extended to 28 September 2028, with public dissemination requirements following on 29 March 2029,听the National Bank of Canada 鈥� like many industry participants 鈥� has already begun the foundational build to ensure we are well-positioned to meet the eventual reporting requirements.听听
The SEC鈥檚 exemptive relief under Rule 15c3-3,听allowing highly liquid US equities such as S&P 500 and Russell 1000 constituents to be used as collateral, is also a significant regulatory change. Once US institutions complete their听required internal builds听to be able to听leverage听this change,听additional听balance sheet relief should be achieved.听As a Canadian institution, we are well positioned to support US counterparties as they expand in the equity for equity听space.听
Yared:听On the Canadian side, the Canadian Investment Regulatory Organization (CIRO) has taken a more principles-based approach following industry consultation, stepping back from its proposed mandatory close-out requirements due to concerns around operational complexity and cost.听Rather than prescribing the same regulatory consequence to every scenario, the proposed amendments permit investment dealers to take measures that would be听appropriate for听their business.
These measures听would听consider听the circumstances of the client and听the failure.听CIRO is听also听proposing听a conduct-based framework听that focuses on the investment dealer鈥檚 policies and procedures听governing听client delivery failures, with ongoing consultation around key elements such as timelines and responsibilities.听The comment period for these proposed amendments ends 3 July.听
Across both jurisdictions, GSF鈥檚 strategy is anchored in early engagement and strong cross-functional coordination. We work closely across our business, operations, risk, compliance, and legal teams, while also听maintaining听active involvement with cross-border industry associations, to ensure regulatory impacts are well understood and implementation is thoughtful and robust.听
In addition to these regulatory developments, we are closely monitoring broader market structure themes such as 23/5 trading and tokenisation. In Canada specifically, industry initiatives like the Canadian Collateral Management Service (CCMS) for repo transactions and ongoing discussions around fixed income repo clearing are key areas of focus. We are also interested in TMX鈥檚 initiative to introduce clearing for equity swaps, which has the potential to drive balance听sheet听and risk-weighted assets (RWA) optimisation.听
A core part of all firms is the client. Can you explore how client demand is evolving and what this means for the future of securities lending in Canada?听
Scholl:听A听core part of this business is understanding the client, and client demand today is becoming more tactical and headline听driven. In Canada,听we have听seen clients react quickly to news around rates, inflation, geopolitics, regulation, corporate听actions,听and sector-specific developments.听That听has made both long and short positioning more volatile,听increasing the need for lenders to respond quickly as听borrow demand听shifts.听
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The Canadian securities lending market听remains听resilient, but success is increasingly about agility, collateral flexibility, data, and owning the right inventory. Looking ahead, the future of securities lending in Canada will be shaped less by broad market exposure and more by how well firms can respond to fast-moving client demand and monetise volatility when it appears.听
Over the next 12 months, what will be top of mind for the National Bank of Canada?听
Scholl: Geopolitical uncertainty will likely persist over the next 12 months, so my focus is on finding ways to lean into dislocations while remaining prudent about liquidity amid fast-moving events. Our GSF group听effectively integrates activities across securities lending, repo, delta one, and funding. This setup allows for better balance sheet agility, capital efficiency, and event-driven lending.
Bryce: Over the next 12 months, technology and AI will remain top of mind. The focus is not simply on adopting new tools, but on using them to drive productivity, improve听efficiency,听and transform workflows across the business.
AI is becoming an accelerant for building new capabilities and rethinking how work gets done. As it becomes more embedded in day-to-day processes, the key will be balancing innovation with the right human oversight,听expertise,听and control framework. The opportunity is to move faster and听operate听more efficiently, while making sure the operating model听remains听scalable,听controlled,听and aligned with how the business creates value.听
Yared:听From a听business听perspective,听our听internal听structure allows听us to听remain focused on working closely with counterparties to navigate听various听constraints, including听balance听sheet听usage, RWA optimisation, and Comprehensive Capital Analysis and Review (CCAR) considerations.听
We are also actively exploring opportunities in emerging securities lending markets.听These markets offer attractive return profiles but come with their own structural nuances, regulatory considerations, and operational complexities.听听
Leveraging technological听transformation,听navigating听evolving听capital, liquidity, and听balance听sheet dynamics, and听targeted听geographic expansion will be central to how we position the business听in the coming听year.听Our focus听remains听on staying adaptable 鈥� leveraging听innovation where it adds value听and听ensures听we have the right people, technology, and partnerships in place to support sustainable听growth.听
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