US securities finance panel
30 September 2025
Industry participants provide a deep-dive into the US securities finance market, examining the evolving regulatory landscape that is top of mind for many, the key growth opportunities that lie within the region, and how technology is leading the way for firms’ development efforts
Image: stock.adobe.com/Frédéric Prochasson
Panellists
John Fox, US Head of Market and Financing Services, Íø±¬³Ô¹Ï Services, BNP Paribas
Simon Tomlinson, Global Head of Agency Lending Trading, BNY
Rebecca Goldenberg, Head of Americas Agency Íø±¬³Ô¹Ï Finance Product, J.P. Morgan
William McStravick, Executive Director, Agency Íø±¬³Ô¹Ï Finance Central Product Development, J.P. Morgan
Matthew Stakofsky, Vice President, Head of WHEM Fixed Income Trading, J.P. Morgan
Patricia Hostin, Global head of Agency Lending, State Street
Reviewing securities lending activity in the US over the past 12 months, can you explore notable trends and how these have impacted your firm’s strategy?
Patricia Hostin: Over the past 12 months, US securities lending activity has been defined by a surge in thematic demand and corporate action activity. While 2024 saw strong specials revenue from Sirius XM and Atmus Filtration, 2025 has been dominated by high-velocity demand in artificial intelligence, crypto, and clean energy sectors. Coreweave emerged as the most sought-after name, with borrow spreads reaching 20,000 basis points, while firms like Trump Media & Technology Group and GameStop adopted Bitcoin treasury strategies, fueling convertible issuance and lending activity. Merger arbitrage remained a consistent revenue source, particularly around Rocket and Paramount Global; the Russell Reconstitution amplified demand across biotech and small-cap names.
These trends prompted our team to prioritise specials sourcing, pre-trade analytics and client collaboration, allowing us to stay ahead of index events and corporate catalysts in an increasingly thematic and fast-moving market. Looking ahead, our strategy remains nimble, focused on capturing value through specials, managing regulatory exposures, and maintaining operational excellence in a rapidly evolving landscape.
Simon Tomlinson: US securities lending revenues have shown a clear rebound in the first half of 2025 across both equities and fixed income. In 2024, US equity lending revenues fell by around 17 per cent year-on-year (YoY) as fees declined approximately 22 per cent despite higher balances, while fixed income markets provided a steadier offset, with corporate bond balances finishing the year materially higher. In the first half of 2025, overall revenues improved meaningfully versus the first half of 2024, reflecting firmer equity borrow demand, healthier fee levels, and sustained strength in fixed income lending, particularly in corporates and Treasuries. The result has been a more balanced revenue mix and greater resilience across asset classes.
The US IPO market has also shown a marked rebound in 2025 compared with 2024. Roughly 150 IPOs priced in the first half of 2025, up from around 99 in the same period of 2024. Proceeds raised were also higher, at around US$22.8 billion versus US$18.2 billion a year earlier. While average deal sizes remain below prior cycle peaks, the surge in issuance has added fresh supply to lending programmes. Newly listed companies often trade with elevated borrow demand in their first quarters post-listing, due to their 90-to-180-day lock-up period, making IPO flow an important driver of securities finance revenues. Technology, AI infrastructure, and industrials have led issuance, with CoreWeave the standout both in capital markets and in lending.
Beyond equities, fixed income markets — particularly US corporates and Treasuries — have been a steady and increasingly important contributor to securities finance revenues. Corporate bond balances ended 2024 materially higher YoY and have remained firm through H1 2025. Demand has been fueled by portfolio hedging, event-driven positioning, and index rebalancing, all of which create consistent borrow needs. Programmes with deep corporate bond inventories are well-placed to capture this recurring flow, which has provided reliable revenue alongside more volatile equity specials.
US government securities remain central to repo and collateral transformation activity. Elevated financing needs and a regulatory push toward central clearing (albeit delayed) have sustained strong Treasury borrow demand in 2025. With higher-for-longer interest rates and continued dealer balance sheet constraints, Treasuries continue to trade with tight supply/demand dynamics, making them a crucial driver of lending revenues and a stabiliser of overall programme returns.
Taken together, the fixed income segment has acted as a ballast for US securities lending revenues, smoothing volatility from equity-driven swings while providing stable, scalable opportunities across both corporates and Treasuries.
In terms of BNY strategy, having a programme that offers a diverse revenue stream is paramount to navigating the swings that are part and part of how this industry works. Collateral diversification, central clearing, and access to liquidity when needed, all form part of our strategy with our clients alongside our commitment to continue to invest heavily in technology, developing predictive models, and building out our AI based infrastructure.
What securities, sectors, or asset classes have been particularly vibrant in terms of securities lending activity? What have been the primary drivers of this?
Tomlinson: In US equities, securities lending activity has been most vibrant in technology, consumer discretionary, media, and biotech. Technology and AI infrastructure stocks such as CoreWeave have stood out, with CoreWeave generating more than US$300 million in lending revenue in H1 2025 alone. Other high-fee names include Sirius XM, Lucid, and biotech companies like Cassava Sciences, all of which have been heavily shorted at various points due to volatile earnings, regulatory catalysts, or sector sentiment shifts. Large-cap media names tied to consolidation, such as Paramount Global amid its merger with Skydance, have also seen meaningful borrow demand.
Exchange traded fund (ETF) borrowing demand has also surged in 2025 as a result of widespread macrohedging strategies — driven primarily by geopolitical volatility, significant tariff-related market swings, and uncertainty surrounding forward-looking Federal Reserve policy. Although fees have declined slightly, both on-loan volumes and utilisation levels have increased significantly compared to 2024. S&P-tracking ETFs, bond ETFs, and most China-related ETFs have attracted the highest demand at various points throughout the year. The iShares iBoxx High Yield and Investment Grade ETFs continue to be two of the top performers in this asset class year-to-date.
On the fixed income side, US corporate bonds have been a major source of stability and growth. Strong demand has persisted across both investment grade and high yield names, including large issuers such as Apple, Microsoft, and Ford, alongside financials and energy companies active in refinancing. Structured credit markets — particularly asset-backed securities (ABS) and mortgage-backed securities (MBS) — have also been active, with lending opportunities supported by robust issuance and investor appetite for yield. This breadth has allowed fixed income lending to deliver reliable revenues that complement the episodic spikes in equity specials.
Treasuries continue to underpin US securities lending from a financing and collateral perspective rather than from specials. Persistent demand for high-quality collateral, combined with elevated Treasury issuance and ongoing dealer balance sheet constraints, has supported strong on-loan volumes across the curve. Regulatory developments, including delayed but eventual moves toward central clearing, have also reinforced steady Treasury borrowing activity.
Matthew Stakofsky: In recent periods, securities lending activity has been particularly vibrant across several key markets and asset classes. The US Treasury market has seen heightened activity, driven by heavy issuance of Treasury bills to fund ongoing fiscal deficits and the Federal Reserve’s balance-sheet runoff, which has kept on-the-run bills and short coupons in high demand. This environment, coupled with a focus on capital efficiency, has sustained demand for collateral transformation and high-quality liquid assets. Additionally, uncertainty around the timing of the Federal Reserve’s mid-cycle rate cuts and the pace of reserve rebuilding has further increased demand for front-end hedges and relative-value shorts.
In US equities, given ongoing trade disputes and valuation concerns, borrow demand has been concentrated in sectors such as artificial intelligence, semiconductors, regional banks, alternative energy, and select consumer names. This demand is further supported by an active M&A pipeline, convertible bond issuance, and ongoing share buyback programmes, all of which continue to fuel arbitrage and hedging trades.
Meanwhile, the credit and ETF space has also been active, with strong new issuance in both investment-grade and high-yield bonds, as well as robust creation and redemption flows in credit ETFs, creating additional lending opportunities in corporate bonds and ETF constituents. These dynamics collectively highlight the diverse and evolving drivers of securities lending activity across markets.
Hostin: Over the past year, the most significant lending activity has been concentrated in thematic sectors such as AI, clean energy, crypto treasury, and biotechnology. AI names like Coreweave consistently led the specials board, due to limited liquidity. Clean energy and nuclear names, including Nano Nuclear Energy and Lucid, experienced elevated demand driven by executive orders and policy support. Crypto treasury adoption by firms like Trump Media & Technology Group and GameStop sparked a wave of convertible issuance and short interest.
Biotech names surged around ETF rebalances and index events, with Crispr Therapeutics, Recursion Pharmaceuticals and Quantum Computing featuring among the top earners. Corporate actions also played a key role, with merger arbitrage in Rocket, Redfin, and Paramount Global driving sustained borrow demand. These trends were primarily fueled by speculative retail interest, policy tailwinds, and structural market events like IPOs lockup expirations and the Russell Reconstitution.
The US is facing regulatory uncertainty when it comes to Basel III Endgame. What is the current status of this regulation, and what impact is it having on the securities lending market?
Hostin: The implementation of the Basel III Endgame has met with several challenges and delays, ranging from Covid-19 and industry pushback to a lack of consensus among regulators. The original proposal was heavily contested by industry participants because it required much higher levels of capital than proposals and final rules in other jurisdictions. The proposal would have resulted in approximately 20 per cent higher capital requirements for US global systemically important banks (G-SIBs), as well as higher capital for the next two tiers of banks. This was primarily due to gold plating of the rule and a knee jerk reaction to the Silicon Valley Bank (SVB) collapse in March 2023, and successive demise of other banks including First Republic Bank and Signature Bank.
After some reflection, the regulators realised that they appeared to have overestimated the impact of the SVB situation regarding their proposal, as capital levels were not the primary issue facing these banks. Such a substantial change in capital requirements would increase the safety of large banks, but the impact on the economy would create an excessive cost.
In the fall of 2024, former Federal Reserve Bank Vice Chair of Supervision Barr outlined a proposal that would increase G-SIB capital requirements by approximately nine per cent and have minimal impact on other banks. However, the potential proposal lacked buy-in from all the necessary regulators and never proceeded. Fed Vice Chair of Supervision Michelle Bowman has now taken responsibility for authoring a new proposal in coordination with all other relevant regulators.
The expectation is that a new proposal will be forthcoming potentially as soon as the first quarter of 2026. Fed Chairman Jerome Powell has indicated that it will be capital neutral relative to current rules (although some banks may require more capital, while others would see a lower capital requirement). At a recent Fed conference on the capital framework for big banks, Randal Quarles, the Vice Chair of Supervision during the first Trump administration, highlighted that it is important that the US implement Basel III Endgame or else lose the ability to shape future global bank regulatory frameworks. Additionally, he noted that the US regulators must abandon the practice of gold plating such frameworks when implementing such regulations in the US.
Tomlinson: US regulators — the Fed, Options Clearing Corporation (OCC), and the Federal Deposit Insurance Corporation (FDIC) — issued a proposal in July 2023 to implement the Basel III Endgame reforms, with an initial compliance date of July 2025 and full phase-in by 2028. The industry has pushed back strongly, arguing that the proposed capital requirements are too high and could hurt competitiveness and lending capacity. Regulators are now reviewing the proposal, with public remarks suggesting a shift toward a more ‘capital-neutral’ framework. As a result, finalisation is likely delayed, and implementation may not begin until around 2027.
The uncertainty is already shaping behaviour. Banks are cautious about expanding balance sheet–intensive activities such as repo, collateral transformation, and securities financing transactions. If the original proposal were implemented, higher risk weights, stricter capital charges, and minimum haircut rules would raise the cost of intermediation, reduce available balance sheet capacity, and push up borrow fees — especially for less liquid or high-demand securities. While many banks are in ‘wait-and-see’ mode until final rules are set, the current capital cost and uncertainty is creating more conservative pricing in certain segments.
What does a successful Basel III Endgame final rule look like?
John Fox: Basel III endgame will impact all our industry. The rules will be substantively different between the EU, UK, and US, and some will face greater challenges than others. Industry associations, like the International Íø±¬³Ô¹Ï Lending Association (ISLA), will continue to be advocates, and other regulatory efforts will come into the spotlight as potential other options for industry participants. Dynamics such as industry demand and pricing adjustments combined with changes in capital requirements will impact banks more than others.
Tomlinson: A successful Basel III Endgame final rule balances resilience with market efficiency. It should strengthen capital standards in line with global commitments, ensuring banks remain well capitalised against credit, market, and operational risks, while avoiding excessive capital requirements that constrain lending or market-making. Importantly, the rule should allow proportionate use of internal models alongside standardised approaches, set haircut, and collateral requirements that bolster stability without penalising low-risk transactions, and phase in changes gradually to give banks and clients time to adapt.
From a securities lending perspective, success means preserving banks’ ability to provide balance sheet capacity for repo, securities financing, and collateral transformation — activities critical to market liquidity. A well-calibrated rule would maintain depth in lending markets, keep borrowing costs manageable, and minimise incentives for activity to migrate to less regulated entities.
If we go a little deeper. Under current US capital rules, large banks offering agent lending services must calculate capital under both the advanced and standardised approaches, with the lower ratio becoming the binding one. The standardised approach is particularly punitive for securities finance because it applies blunt haircut methodologies that inflate risk by reducing collateral value and increasing loan value, without recognising netting, diversification or correlation benefits.
As banks often find the standardised approach to be controlling, they are forced to make lending decisions on a ‘worst-case’ basis, which overstates credit risk and hinders market growth. The Basel Committee addressed this flaw through the revised comprehensive (or revised haircut) approach, which incorporates netting, diversification, and correlation to produce a more risk-sensitive outcome. While the US Basel III Endgame proposal includes this methodology under the new ‘expanded risk-based approach’, it has not been extended to the standardised approach. As a result, industry participants, including BNY, continue to engage with regulators to push for earlier adoption. Making the revised haircut approach available under standardised rules is essential to support growth in securities finance, reduce distortions in repo-style transactions, and avoid a shift toward less transparent synthetic structures.
In short, the rule should raise confidence in the financial system while safeguarding the efficiency and competitiveness of US securities finance markets.
Hostin: From an overall perspective, a successful Basel III Endgame would result in a US rule that is consistent with implementation in other jurisdictions, maintaining capital levels that promote the safety and soundness of the banking system without incurring additional costs to the overall economy. In terms of the securities finance industry, a successful final rule would result in a more level playing field across jurisdictions, across standardised and enhanced risk-based regimes, and against other financial products that create a similar economic exposure.
Under the current rules, most US banks are bound by the standardised approach that results in risk-weighted assets (RWA) associated with securities finance transactions, which are many multiples higher than non-US banks, as well as US banks that are bound by the advanced approach. Additionally, the capital requirements can be significantly different than swap transactions that created similar credit exposures. This creates competitive distortions across both banks and products. Many banks have been working on various means to manage their RWA; however, such methods introduce inefficiencies and costs into the market and would not be as necessary under a consistent regulatory approach.
In 2025, regulatory initiatives have faced delays including for 10c-1a and the US Treasury clearing mandate. What does the future look like for these rules? How are you adapting your securities lending business to keep up with developments?
Rebecca Goldenberg: The 10c-1 compliance date has been delayed until 28 September 2026. However, considering the recent US Fifth Circuit Court decision regarding 10c-1 and 13f-2, which upheld the Íø±¬³Ô¹Ï and Exchange Commission’s (SEC’s) authority to implement these rules but called for additional analysis on the economic impacts, Chair Paul Atkins has asked the Commission staff to further evaluate the rules and make recommendations for appropriate Commission actions, including potential changes and adjustments to the compliance dates. ISLA Americas (of which J.P. Morgan is a contributor) will likely continue its advocacy with the SEC and the Financial Industry Regulatory Authority (FINRA), while also coordinating with other industry associations, to push for changes to the 10c-1 final rule that was issued in October 2023.
Earlier in 2025, the US Treasury clearing repo compliance date had been extended to 30 June 2027. There are currently open advocacy questions with the SEC, including the requirement to clear trades where US Treasuries are listed as back-up collateral; and, in the instance, where a trade fails to novate to the Fixed Income Clearing Corporation (FICC), can the trade be booked bilaterally overnight.
The SEC has acknowledged that the industry needs answers — however, waiting for SEC guidance should not pause the work needed for the 30 June 2027 compliance date. J.P. Morgan is currently working on readiness with the existing FICC Sponsored Done-With trade model, and we are anxiously awaiting the operational trade flows and documentation for the Sponsored Done-Away and the Collateral-in-Lieu models — both of which the industry (in coordination with the Íø±¬³Ô¹Ï Industry and Financial Markets Association (SIFMA)) has been diligently progressing forward.
Tomlinson: In 2025, US regulators have delayed multiple initiatives, including SEC Rule 10c-1a (securities loan reporting) and the Treasury market central clearing mandate. With a recent extension, 10c-1a, loan reporting was expected in late 2026, with public dissemination pushed to 2027. However, at the end of August, the US Fifth Circuit Court of Appeals issued an opinion in National Association of Private Fund Managers v. SEC remanding (without vacating) SEC Rules 10c-1a and 13f-2 to the SEC instructing that they consider the cumulative economic impact of these rules. Following the decision, SEC Chair Paul Atkins issued a statement indicating that Commission staff have been directed to evaluate the rules in light of the opinion and make recommendations for appropriate Commission action, including potential changes to the rules and adjustments to the related compliance dates. While the content of any final rule remains uncertain, a further extension of the compliance dates is expected in the near term.
Similarly, Treasury clearing requirements have been extended by roughly a year, easing immediate operational pressure on dealers, banks, and lending desks. These delays reflect both industry feedback about implementation complexity and regulators’ recognition that abrupt changes could disrupt market functioning and clients should be using this extra time to prepare. With BNY safeguarding over a third of outstanding treasuries, we hold a unique position in this space having first financed the US Government back in 1789 and stand ready to help clients navigate the coming changes.
Looking ahead, the direction of travel remains unchanged — transparency in securities lending and greater central clearing in Treasuries are still coming, even if later than initially planned. Firms should view the extra time as an opportunity to invest in data, reporting, and operational infrastructure to meet the new requirements. By the late 2020s, the US market will likely feature greater transparency, higher operational costs, and more centralised clearing mechanics, reshaping how securities loans are reported and how Treasury financing is intermediated. The delay reduces near-term friction but does not remove the structural shifts on the horizon.
Hostin: The US Treasury clearing mandate has been delayed by one year (margin segregation rules have been delayed six months) to allow market participants to address operational, legal, and structural challenges, especially regarding done-away transactions. The delay in implementation has opened the door for other clearing houses to develop and gain approval for models that would compete with the FICC model.
Two major names, CME and ICE, both are aiming to be ready in alignment with the current mandate timelines for cash and repo trading with submissions formally with the SEC. The two proposals offer their own flavours of models, which aim to create margin and execution flexibility for market participants in both direct and indirect roles. The FICC still looks to be committed to enhancing its own models to promote efficiency and broader access with a number of inflight SEC proposals of their own. With the amount of activity that remains uncleared and the shifting landscape at the clearing houses, State Street continues to be focused on partnering with its clients to drive toward services that offer the best of liquidity, flexibility, and margin efficiency. There remains work to do across all facets of clearing from clearing houses to market infrastructure, buy side to sell side, but the result of these efforts will be a more secure and modernised US Treasury market.
Rule 10c-1 relates to transparency in the securities lending market and will require lenders (or an agent on their behalf) to report transactions on a T+1 basis to FINRA. This is a one-sided reporting structure whereby only the lender reports transactions (unlike the Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR)). The requirement for enhanced transparency in the securities lending market was mandated under the Dodd-Frank Act; however, implementation of the requirement is well past due. Some market participants believe other SEC rules such as changes to N-PORT have placed the burden on the SEC to meet the Dodd-Frank requirement. The original implementation date of the rule was to be 1 January 2026; however, this has been pushed back to 28 September 2026 based on industry and FINRA feedback on preparedness. Additionally, a lawsuit brought by the Managed Funds Association (MFA), the National Association of Private Fund Managers (NAPFM), and the Alternative Investment Management Association (AIMA) against the SEC regarding 10c-1 and 13f-2 (short sale reporting) has been ruled by the Fifth Circuit court.
The court sided with the SEC on most complaints; however, they found the SEC conducted insufficient cost-benefit analysis regarding the combined impact of these rules. As such, the court remanded without vacatur these two rules, requiring the SEC to conduct further cost-benefit analysis. The SEC’s next steps are unknown, but industry groups have and will continue to consult with the SEC on the rule. Potential actions include a cost-benefit analysis and further delays, a re-proposal or a complete repeal of the rule.
State Street continues to focus on operational and technological developments that facilitate compliance with the above rules should they be implemented in their current form on the required dates.
With new technology leading the way for further innovation, what new tech or processes will you be adopting or expanding on in the coming year?
Fox: Artificial Intelligence will continue its growing momentum to revolutionise the securities lending and financial markets at large. In our industry, this is particularly focused on predictive analytics which could lead to more accurate and quicker outcomes than we have ever seen. As it relates to trading, it is not just how we trade, but we also interpret demand. This will also accompany greater expansion to other areas of support within our business outside of trading, such as, the approach to revenue estimates, requests for proposals, and measuring overall business profitability.
Hostin: At State Street, our vision is to be the most connected, seamless and intelligent agent lender globally — delivering technology-led solutions to efficiently mobilise and monetise client assets. To achieve this, we have built a global team tasked with applying quantitative strategies across electronic routes to market — streamlining borrower workflows while optimising pricing, positioning and liquidity for the lending programme.
In the coming year, we are exploring a few key areas guided by a sharp vision for where we believe the industry is heading. First, we envision market microstructure in securities lending evolving along three complimentary dimensions: the proliferation of diverse multilateral venues, direct connectivity via lender APIs, and middleware hubs to aggregate liquidity across counterparties and venues. We are adapting to the shifting environment by broadening electronic access across each dimension.
Alongside liquidity provisioning on-venue, we also offer direct connectivity for counterparties via our Agency Lending Borrower Portal; a component of our broader Financing Hub platform allowing approved borrowers to request quotes and submit orders directly to State Street for electronic execution. The Agency Lending Borrower Portal is currently accessible via a modern user interface or via a REST API. Soon, the portal will be further enhanced to accommodate the FIX Protocol and will become accessible through middleware hubs to remain as agnostic as possible for end users.
Beyond connectivity solutions, the team will continue to evolve quantitative strategies to help drive alpha and manage risk within our agency lending programme. In 2026, our modernised pricing engine will be powered by our new algo trading intelligence platform for agency lending, which leverages Databricks on AWS to support research, data engineering, analytics, and AI workloads.
Tomlinson: For BNY’s Íø±¬³Ô¹Ï Finance business, technology is central to all we do and has been key to our growth and success. Our future adoption plans are centered on digitisation, data, and automation. BNY sees tokenisation playing an ever-increasing role in the future of securities finance, transforming how collateral and securities are mobilised, optimised, and settled. Having been the first agent lender to actively participate in tokenised securities finance transactions, BNY is committed to building on that leadership by continuing to invest in and embrace this technology. We view tokenisation not just as an innovation, but as a core enabler of greater efficiency, transparency, and liquidity for our clients.
We also believe that the industry needs to embrace new technology to bring more efficiency, getting ready for a world of shortened settlement cycles, and the possibility of longer trading days. In March 2025, BNY Mellon took a minority stake in EquiLend and is working with them as a pilot client in implementing 1Source, an industry-wide initiative to create a single golden source of data across the trade lifecycle. By standardising and centralising securities finance data, 1Source will improve transparency, reduce reconciliation breaks, and support both regulatory reporting (e.g. 10c-1a) and client analytics.
The ultimate aim is to be faster, more accurate, and to reduce risk in multiple ways, less fails, less ORE’s from breaks and thinking ahead the potential to rethink the way we mark-to-market the business, ideally moving away from COB prior day pricing to more real time/intraday.
As balances continue to grow and new markets open up, automation remains key to the business, from front to back-office, as we ensure we are well placed to meet the ever growing needs and demands of our clients.
William McStravick: As part of a multi-year Client Experience initiative, J.P. Morgan Agency Íø±¬³Ô¹Ï Finance has promoted lending performance metrics, as well as a digitised representation of Lenders’ Rules and Limits, through interactive web-based application supporting full programme transparency.
Looking ahead to future uses of this data for AI/ machine learning (ML) opportunities, we are going to be adding Rules and Limits metadata to a cloud-based data store in a fixed, normalised format enabling ‘training’ on the underlying data points.
Leveraging AI/ML, we are developing functionality to model rules supporting on-boarding and/or immediately identify outlier rules or limits in comparison with lender peer groups based on domicile or lender type.
Overlaying rules data with current and historic performance metrics will also offer insight into the materiality of iterative restrictions, aiding lenders making crucial risk reward decisions. Â
Insight into the rules or limits behind non-lendable inventory will also help identify iterative opportunities enabling timely communication of revenue opportunities to lenders, supporting one-off exemptions to otherwise static rules/limits.
Where do you identify the strongest opportunities for the growth of your US securities lending activities in 2026?
Hostin: The strongest opportunities for growth in 2026 will be driven by a combination of regulatory evolution, structural innovation, and thematic market momentum. As part of our broader capital efficiency strategy, initiatives such as enhanced margining frameworks, expanded clearing access, and insurance-backed structures will enable State Street to materially reduce our RWA footprint while simultaneously unlocking low-RWA supply for counterparties, creating a more scalable and cost-effective securities lending environment.
Thematically, we anticipate continued vibrancy in AI, crypto, and clean energy sectors, with IPO lockup expirations and merger activity fueling specials demand. By expanding borrower coverage, optimising collateral flexibility and deepening engagement with asset owners, we are well-positioned to capture these growth vectors and drive meaningful revenue expansion in 2026.
Tomlinson: With the US stock market potentially facing growing downside risks heading into 2026 due to a convergence of economic and policy headwinds. A weakening labour market, marked by rising unemployment and slowing job creation, is dampening consumer confidence and spending. At the same time, elevated tariffs are squeezing corporate margins and threatening global trade flows. The Federal Reserve’s cautious stance — signalling only one rate cut — limits monetary support, while political uncertainty and leadership transitions at the Fed could add to investor anxiety. These factors, combined with a surge in short selling and bearish positioning, suggest that market sentiment is shifting toward caution, increasing the likelihood of a broader market correction and increased borrowing demand.
For US corporates, with the recent change in monetary policy, companies may take advantage of lower borrowing costs which could result in an increase in new corporate bond issuance and refinancing opportunities, which could bode well for securities lending demand, as well as increased supply in the market. We foresee increased activity and growth via systematic credit, quant trading, and portfolio trading increasing overall loan activity continuing well into 2026.
On the US Treasury side, the interest rate uncertainty will continue to play its part and while additional cuts are expected, the timing is not clear and this will create opportunities for clients more specifically in the short dated space. Beyond this, and as we continue to prepare for the US Treasury repo mandate, we have already observed significant benefits for our underlying clients who have enrolled in our FICC sponsorship programme. This initiative has enhanced capacity for both our cash and collateral trading, without causing any disruptions on record dates. The durable funding outlet it creates allows us to extend our reinvestments further along the curve. While the onboarding process via FICC is known to be challenging, the positive outcomes for active participants serve as proof of concept. We will undoubtedly continue to leverage this market route in 2026 and beyond.
The market has always been hard to forecast even more so now in light of all the global uncertainty; however, having a robust programme with a wide set of securities finance solutions which enable clients to focus on high quality securities finance revenues, is key and will help smooth out any changes in demand as the market continues to adapt and evolve.
Fox: It is pragmatic to assume we will see an increase in securities lending provider searches, as different agents continue to draw different conclusions as to make a client profitable for their programme, given their specific provider constraints. We all agree upon the fact that securities lending agent activity is not a commodity and that different agents have different views on what types of clients and asset classes are most opportunistic and attractive to that agent. That means different providers could have material differences in their performance within specific client market segments and asset class types.
John Fox, US Head of Market and Financing Services, Íø±¬³Ô¹Ï Services, BNP Paribas
Simon Tomlinson, Global Head of Agency Lending Trading, BNY
Rebecca Goldenberg, Head of Americas Agency Íø±¬³Ô¹Ï Finance Product, J.P. Morgan
William McStravick, Executive Director, Agency Íø±¬³Ô¹Ï Finance Central Product Development, J.P. Morgan
Matthew Stakofsky, Vice President, Head of WHEM Fixed Income Trading, J.P. Morgan
Patricia Hostin, Global head of Agency Lending, State Street
Reviewing securities lending activity in the US over the past 12 months, can you explore notable trends and how these have impacted your firm’s strategy?
Patricia Hostin: Over the past 12 months, US securities lending activity has been defined by a surge in thematic demand and corporate action activity. While 2024 saw strong specials revenue from Sirius XM and Atmus Filtration, 2025 has been dominated by high-velocity demand in artificial intelligence, crypto, and clean energy sectors. Coreweave emerged as the most sought-after name, with borrow spreads reaching 20,000 basis points, while firms like Trump Media & Technology Group and GameStop adopted Bitcoin treasury strategies, fueling convertible issuance and lending activity. Merger arbitrage remained a consistent revenue source, particularly around Rocket and Paramount Global; the Russell Reconstitution amplified demand across biotech and small-cap names.
These trends prompted our team to prioritise specials sourcing, pre-trade analytics and client collaboration, allowing us to stay ahead of index events and corporate catalysts in an increasingly thematic and fast-moving market. Looking ahead, our strategy remains nimble, focused on capturing value through specials, managing regulatory exposures, and maintaining operational excellence in a rapidly evolving landscape.
Simon Tomlinson: US securities lending revenues have shown a clear rebound in the first half of 2025 across both equities and fixed income. In 2024, US equity lending revenues fell by around 17 per cent year-on-year (YoY) as fees declined approximately 22 per cent despite higher balances, while fixed income markets provided a steadier offset, with corporate bond balances finishing the year materially higher. In the first half of 2025, overall revenues improved meaningfully versus the first half of 2024, reflecting firmer equity borrow demand, healthier fee levels, and sustained strength in fixed income lending, particularly in corporates and Treasuries. The result has been a more balanced revenue mix and greater resilience across asset classes.
The US IPO market has also shown a marked rebound in 2025 compared with 2024. Roughly 150 IPOs priced in the first half of 2025, up from around 99 in the same period of 2024. Proceeds raised were also higher, at around US$22.8 billion versus US$18.2 billion a year earlier. While average deal sizes remain below prior cycle peaks, the surge in issuance has added fresh supply to lending programmes. Newly listed companies often trade with elevated borrow demand in their first quarters post-listing, due to their 90-to-180-day lock-up period, making IPO flow an important driver of securities finance revenues. Technology, AI infrastructure, and industrials have led issuance, with CoreWeave the standout both in capital markets and in lending.
Beyond equities, fixed income markets — particularly US corporates and Treasuries — have been a steady and increasingly important contributor to securities finance revenues. Corporate bond balances ended 2024 materially higher YoY and have remained firm through H1 2025. Demand has been fueled by portfolio hedging, event-driven positioning, and index rebalancing, all of which create consistent borrow needs. Programmes with deep corporate bond inventories are well-placed to capture this recurring flow, which has provided reliable revenue alongside more volatile equity specials.
US government securities remain central to repo and collateral transformation activity. Elevated financing needs and a regulatory push toward central clearing (albeit delayed) have sustained strong Treasury borrow demand in 2025. With higher-for-longer interest rates and continued dealer balance sheet constraints, Treasuries continue to trade with tight supply/demand dynamics, making them a crucial driver of lending revenues and a stabiliser of overall programme returns.
Taken together, the fixed income segment has acted as a ballast for US securities lending revenues, smoothing volatility from equity-driven swings while providing stable, scalable opportunities across both corporates and Treasuries.
In terms of BNY strategy, having a programme that offers a diverse revenue stream is paramount to navigating the swings that are part and part of how this industry works. Collateral diversification, central clearing, and access to liquidity when needed, all form part of our strategy with our clients alongside our commitment to continue to invest heavily in technology, developing predictive models, and building out our AI based infrastructure.
What securities, sectors, or asset classes have been particularly vibrant in terms of securities lending activity? What have been the primary drivers of this?
Tomlinson: In US equities, securities lending activity has been most vibrant in technology, consumer discretionary, media, and biotech. Technology and AI infrastructure stocks such as CoreWeave have stood out, with CoreWeave generating more than US$300 million in lending revenue in H1 2025 alone. Other high-fee names include Sirius XM, Lucid, and biotech companies like Cassava Sciences, all of which have been heavily shorted at various points due to volatile earnings, regulatory catalysts, or sector sentiment shifts. Large-cap media names tied to consolidation, such as Paramount Global amid its merger with Skydance, have also seen meaningful borrow demand.
Exchange traded fund (ETF) borrowing demand has also surged in 2025 as a result of widespread macrohedging strategies — driven primarily by geopolitical volatility, significant tariff-related market swings, and uncertainty surrounding forward-looking Federal Reserve policy. Although fees have declined slightly, both on-loan volumes and utilisation levels have increased significantly compared to 2024. S&P-tracking ETFs, bond ETFs, and most China-related ETFs have attracted the highest demand at various points throughout the year. The iShares iBoxx High Yield and Investment Grade ETFs continue to be two of the top performers in this asset class year-to-date.
On the fixed income side, US corporate bonds have been a major source of stability and growth. Strong demand has persisted across both investment grade and high yield names, including large issuers such as Apple, Microsoft, and Ford, alongside financials and energy companies active in refinancing. Structured credit markets — particularly asset-backed securities (ABS) and mortgage-backed securities (MBS) — have also been active, with lending opportunities supported by robust issuance and investor appetite for yield. This breadth has allowed fixed income lending to deliver reliable revenues that complement the episodic spikes in equity specials.
Treasuries continue to underpin US securities lending from a financing and collateral perspective rather than from specials. Persistent demand for high-quality collateral, combined with elevated Treasury issuance and ongoing dealer balance sheet constraints, has supported strong on-loan volumes across the curve. Regulatory developments, including delayed but eventual moves toward central clearing, have also reinforced steady Treasury borrowing activity.
Matthew Stakofsky: In recent periods, securities lending activity has been particularly vibrant across several key markets and asset classes. The US Treasury market has seen heightened activity, driven by heavy issuance of Treasury bills to fund ongoing fiscal deficits and the Federal Reserve’s balance-sheet runoff, which has kept on-the-run bills and short coupons in high demand. This environment, coupled with a focus on capital efficiency, has sustained demand for collateral transformation and high-quality liquid assets. Additionally, uncertainty around the timing of the Federal Reserve’s mid-cycle rate cuts and the pace of reserve rebuilding has further increased demand for front-end hedges and relative-value shorts.
In US equities, given ongoing trade disputes and valuation concerns, borrow demand has been concentrated in sectors such as artificial intelligence, semiconductors, regional banks, alternative energy, and select consumer names. This demand is further supported by an active M&A pipeline, convertible bond issuance, and ongoing share buyback programmes, all of which continue to fuel arbitrage and hedging trades.
Meanwhile, the credit and ETF space has also been active, with strong new issuance in both investment-grade and high-yield bonds, as well as robust creation and redemption flows in credit ETFs, creating additional lending opportunities in corporate bonds and ETF constituents. These dynamics collectively highlight the diverse and evolving drivers of securities lending activity across markets.
Hostin: Over the past year, the most significant lending activity has been concentrated in thematic sectors such as AI, clean energy, crypto treasury, and biotechnology. AI names like Coreweave consistently led the specials board, due to limited liquidity. Clean energy and nuclear names, including Nano Nuclear Energy and Lucid, experienced elevated demand driven by executive orders and policy support. Crypto treasury adoption by firms like Trump Media & Technology Group and GameStop sparked a wave of convertible issuance and short interest.
Biotech names surged around ETF rebalances and index events, with Crispr Therapeutics, Recursion Pharmaceuticals and Quantum Computing featuring among the top earners. Corporate actions also played a key role, with merger arbitrage in Rocket, Redfin, and Paramount Global driving sustained borrow demand. These trends were primarily fueled by speculative retail interest, policy tailwinds, and structural market events like IPOs lockup expirations and the Russell Reconstitution.
The US is facing regulatory uncertainty when it comes to Basel III Endgame. What is the current status of this regulation, and what impact is it having on the securities lending market?
Hostin: The implementation of the Basel III Endgame has met with several challenges and delays, ranging from Covid-19 and industry pushback to a lack of consensus among regulators. The original proposal was heavily contested by industry participants because it required much higher levels of capital than proposals and final rules in other jurisdictions. The proposal would have resulted in approximately 20 per cent higher capital requirements for US global systemically important banks (G-SIBs), as well as higher capital for the next two tiers of banks. This was primarily due to gold plating of the rule and a knee jerk reaction to the Silicon Valley Bank (SVB) collapse in March 2023, and successive demise of other banks including First Republic Bank and Signature Bank.
After some reflection, the regulators realised that they appeared to have overestimated the impact of the SVB situation regarding their proposal, as capital levels were not the primary issue facing these banks. Such a substantial change in capital requirements would increase the safety of large banks, but the impact on the economy would create an excessive cost.
In the fall of 2024, former Federal Reserve Bank Vice Chair of Supervision Barr outlined a proposal that would increase G-SIB capital requirements by approximately nine per cent and have minimal impact on other banks. However, the potential proposal lacked buy-in from all the necessary regulators and never proceeded. Fed Vice Chair of Supervision Michelle Bowman has now taken responsibility for authoring a new proposal in coordination with all other relevant regulators.
The expectation is that a new proposal will be forthcoming potentially as soon as the first quarter of 2026. Fed Chairman Jerome Powell has indicated that it will be capital neutral relative to current rules (although some banks may require more capital, while others would see a lower capital requirement). At a recent Fed conference on the capital framework for big banks, Randal Quarles, the Vice Chair of Supervision during the first Trump administration, highlighted that it is important that the US implement Basel III Endgame or else lose the ability to shape future global bank regulatory frameworks. Additionally, he noted that the US regulators must abandon the practice of gold plating such frameworks when implementing such regulations in the US.
Tomlinson: US regulators — the Fed, Options Clearing Corporation (OCC), and the Federal Deposit Insurance Corporation (FDIC) — issued a proposal in July 2023 to implement the Basel III Endgame reforms, with an initial compliance date of July 2025 and full phase-in by 2028. The industry has pushed back strongly, arguing that the proposed capital requirements are too high and could hurt competitiveness and lending capacity. Regulators are now reviewing the proposal, with public remarks suggesting a shift toward a more ‘capital-neutral’ framework. As a result, finalisation is likely delayed, and implementation may not begin until around 2027.
The uncertainty is already shaping behaviour. Banks are cautious about expanding balance sheet–intensive activities such as repo, collateral transformation, and securities financing transactions. If the original proposal were implemented, higher risk weights, stricter capital charges, and minimum haircut rules would raise the cost of intermediation, reduce available balance sheet capacity, and push up borrow fees — especially for less liquid or high-demand securities. While many banks are in ‘wait-and-see’ mode until final rules are set, the current capital cost and uncertainty is creating more conservative pricing in certain segments.
What does a successful Basel III Endgame final rule look like?
John Fox: Basel III endgame will impact all our industry. The rules will be substantively different between the EU, UK, and US, and some will face greater challenges than others. Industry associations, like the International Íø±¬³Ô¹Ï Lending Association (ISLA), will continue to be advocates, and other regulatory efforts will come into the spotlight as potential other options for industry participants. Dynamics such as industry demand and pricing adjustments combined with changes in capital requirements will impact banks more than others.
Tomlinson: A successful Basel III Endgame final rule balances resilience with market efficiency. It should strengthen capital standards in line with global commitments, ensuring banks remain well capitalised against credit, market, and operational risks, while avoiding excessive capital requirements that constrain lending or market-making. Importantly, the rule should allow proportionate use of internal models alongside standardised approaches, set haircut, and collateral requirements that bolster stability without penalising low-risk transactions, and phase in changes gradually to give banks and clients time to adapt.
From a securities lending perspective, success means preserving banks’ ability to provide balance sheet capacity for repo, securities financing, and collateral transformation — activities critical to market liquidity. A well-calibrated rule would maintain depth in lending markets, keep borrowing costs manageable, and minimise incentives for activity to migrate to less regulated entities.
If we go a little deeper. Under current US capital rules, large banks offering agent lending services must calculate capital under both the advanced and standardised approaches, with the lower ratio becoming the binding one. The standardised approach is particularly punitive for securities finance because it applies blunt haircut methodologies that inflate risk by reducing collateral value and increasing loan value, without recognising netting, diversification or correlation benefits.
As banks often find the standardised approach to be controlling, they are forced to make lending decisions on a ‘worst-case’ basis, which overstates credit risk and hinders market growth. The Basel Committee addressed this flaw through the revised comprehensive (or revised haircut) approach, which incorporates netting, diversification, and correlation to produce a more risk-sensitive outcome. While the US Basel III Endgame proposal includes this methodology under the new ‘expanded risk-based approach’, it has not been extended to the standardised approach. As a result, industry participants, including BNY, continue to engage with regulators to push for earlier adoption. Making the revised haircut approach available under standardised rules is essential to support growth in securities finance, reduce distortions in repo-style transactions, and avoid a shift toward less transparent synthetic structures.
In short, the rule should raise confidence in the financial system while safeguarding the efficiency and competitiveness of US securities finance markets.
Hostin: From an overall perspective, a successful Basel III Endgame would result in a US rule that is consistent with implementation in other jurisdictions, maintaining capital levels that promote the safety and soundness of the banking system without incurring additional costs to the overall economy. In terms of the securities finance industry, a successful final rule would result in a more level playing field across jurisdictions, across standardised and enhanced risk-based regimes, and against other financial products that create a similar economic exposure.
Under the current rules, most US banks are bound by the standardised approach that results in risk-weighted assets (RWA) associated with securities finance transactions, which are many multiples higher than non-US banks, as well as US banks that are bound by the advanced approach. Additionally, the capital requirements can be significantly different than swap transactions that created similar credit exposures. This creates competitive distortions across both banks and products. Many banks have been working on various means to manage their RWA; however, such methods introduce inefficiencies and costs into the market and would not be as necessary under a consistent regulatory approach.
In 2025, regulatory initiatives have faced delays including for 10c-1a and the US Treasury clearing mandate. What does the future look like for these rules? How are you adapting your securities lending business to keep up with developments?
Rebecca Goldenberg: The 10c-1 compliance date has been delayed until 28 September 2026. However, considering the recent US Fifth Circuit Court decision regarding 10c-1 and 13f-2, which upheld the Íø±¬³Ô¹Ï and Exchange Commission’s (SEC’s) authority to implement these rules but called for additional analysis on the economic impacts, Chair Paul Atkins has asked the Commission staff to further evaluate the rules and make recommendations for appropriate Commission actions, including potential changes and adjustments to the compliance dates. ISLA Americas (of which J.P. Morgan is a contributor) will likely continue its advocacy with the SEC and the Financial Industry Regulatory Authority (FINRA), while also coordinating with other industry associations, to push for changes to the 10c-1 final rule that was issued in October 2023.
Earlier in 2025, the US Treasury clearing repo compliance date had been extended to 30 June 2027. There are currently open advocacy questions with the SEC, including the requirement to clear trades where US Treasuries are listed as back-up collateral; and, in the instance, where a trade fails to novate to the Fixed Income Clearing Corporation (FICC), can the trade be booked bilaterally overnight.
The SEC has acknowledged that the industry needs answers — however, waiting for SEC guidance should not pause the work needed for the 30 June 2027 compliance date. J.P. Morgan is currently working on readiness with the existing FICC Sponsored Done-With trade model, and we are anxiously awaiting the operational trade flows and documentation for the Sponsored Done-Away and the Collateral-in-Lieu models — both of which the industry (in coordination with the Íø±¬³Ô¹Ï Industry and Financial Markets Association (SIFMA)) has been diligently progressing forward.
Tomlinson: In 2025, US regulators have delayed multiple initiatives, including SEC Rule 10c-1a (securities loan reporting) and the Treasury market central clearing mandate. With a recent extension, 10c-1a, loan reporting was expected in late 2026, with public dissemination pushed to 2027. However, at the end of August, the US Fifth Circuit Court of Appeals issued an opinion in National Association of Private Fund Managers v. SEC remanding (without vacating) SEC Rules 10c-1a and 13f-2 to the SEC instructing that they consider the cumulative economic impact of these rules. Following the decision, SEC Chair Paul Atkins issued a statement indicating that Commission staff have been directed to evaluate the rules in light of the opinion and make recommendations for appropriate Commission action, including potential changes to the rules and adjustments to the related compliance dates. While the content of any final rule remains uncertain, a further extension of the compliance dates is expected in the near term.
Similarly, Treasury clearing requirements have been extended by roughly a year, easing immediate operational pressure on dealers, banks, and lending desks. These delays reflect both industry feedback about implementation complexity and regulators’ recognition that abrupt changes could disrupt market functioning and clients should be using this extra time to prepare. With BNY safeguarding over a third of outstanding treasuries, we hold a unique position in this space having first financed the US Government back in 1789 and stand ready to help clients navigate the coming changes.
Looking ahead, the direction of travel remains unchanged — transparency in securities lending and greater central clearing in Treasuries are still coming, even if later than initially planned. Firms should view the extra time as an opportunity to invest in data, reporting, and operational infrastructure to meet the new requirements. By the late 2020s, the US market will likely feature greater transparency, higher operational costs, and more centralised clearing mechanics, reshaping how securities loans are reported and how Treasury financing is intermediated. The delay reduces near-term friction but does not remove the structural shifts on the horizon.
Hostin: The US Treasury clearing mandate has been delayed by one year (margin segregation rules have been delayed six months) to allow market participants to address operational, legal, and structural challenges, especially regarding done-away transactions. The delay in implementation has opened the door for other clearing houses to develop and gain approval for models that would compete with the FICC model.
Two major names, CME and ICE, both are aiming to be ready in alignment with the current mandate timelines for cash and repo trading with submissions formally with the SEC. The two proposals offer their own flavours of models, which aim to create margin and execution flexibility for market participants in both direct and indirect roles. The FICC still looks to be committed to enhancing its own models to promote efficiency and broader access with a number of inflight SEC proposals of their own. With the amount of activity that remains uncleared and the shifting landscape at the clearing houses, State Street continues to be focused on partnering with its clients to drive toward services that offer the best of liquidity, flexibility, and margin efficiency. There remains work to do across all facets of clearing from clearing houses to market infrastructure, buy side to sell side, but the result of these efforts will be a more secure and modernised US Treasury market.
Rule 10c-1 relates to transparency in the securities lending market and will require lenders (or an agent on their behalf) to report transactions on a T+1 basis to FINRA. This is a one-sided reporting structure whereby only the lender reports transactions (unlike the Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR)). The requirement for enhanced transparency in the securities lending market was mandated under the Dodd-Frank Act; however, implementation of the requirement is well past due. Some market participants believe other SEC rules such as changes to N-PORT have placed the burden on the SEC to meet the Dodd-Frank requirement. The original implementation date of the rule was to be 1 January 2026; however, this has been pushed back to 28 September 2026 based on industry and FINRA feedback on preparedness. Additionally, a lawsuit brought by the Managed Funds Association (MFA), the National Association of Private Fund Managers (NAPFM), and the Alternative Investment Management Association (AIMA) against the SEC regarding 10c-1 and 13f-2 (short sale reporting) has been ruled by the Fifth Circuit court.
The court sided with the SEC on most complaints; however, they found the SEC conducted insufficient cost-benefit analysis regarding the combined impact of these rules. As such, the court remanded without vacatur these two rules, requiring the SEC to conduct further cost-benefit analysis. The SEC’s next steps are unknown, but industry groups have and will continue to consult with the SEC on the rule. Potential actions include a cost-benefit analysis and further delays, a re-proposal or a complete repeal of the rule.
State Street continues to focus on operational and technological developments that facilitate compliance with the above rules should they be implemented in their current form on the required dates.
With new technology leading the way for further innovation, what new tech or processes will you be adopting or expanding on in the coming year?
Fox: Artificial Intelligence will continue its growing momentum to revolutionise the securities lending and financial markets at large. In our industry, this is particularly focused on predictive analytics which could lead to more accurate and quicker outcomes than we have ever seen. As it relates to trading, it is not just how we trade, but we also interpret demand. This will also accompany greater expansion to other areas of support within our business outside of trading, such as, the approach to revenue estimates, requests for proposals, and measuring overall business profitability.
Hostin: At State Street, our vision is to be the most connected, seamless and intelligent agent lender globally — delivering technology-led solutions to efficiently mobilise and monetise client assets. To achieve this, we have built a global team tasked with applying quantitative strategies across electronic routes to market — streamlining borrower workflows while optimising pricing, positioning and liquidity for the lending programme.
In the coming year, we are exploring a few key areas guided by a sharp vision for where we believe the industry is heading. First, we envision market microstructure in securities lending evolving along three complimentary dimensions: the proliferation of diverse multilateral venues, direct connectivity via lender APIs, and middleware hubs to aggregate liquidity across counterparties and venues. We are adapting to the shifting environment by broadening electronic access across each dimension.
Alongside liquidity provisioning on-venue, we also offer direct connectivity for counterparties via our Agency Lending Borrower Portal; a component of our broader Financing Hub platform allowing approved borrowers to request quotes and submit orders directly to State Street for electronic execution. The Agency Lending Borrower Portal is currently accessible via a modern user interface or via a REST API. Soon, the portal will be further enhanced to accommodate the FIX Protocol and will become accessible through middleware hubs to remain as agnostic as possible for end users.
Beyond connectivity solutions, the team will continue to evolve quantitative strategies to help drive alpha and manage risk within our agency lending programme. In 2026, our modernised pricing engine will be powered by our new algo trading intelligence platform for agency lending, which leverages Databricks on AWS to support research, data engineering, analytics, and AI workloads.
Tomlinson: For BNY’s Íø±¬³Ô¹Ï Finance business, technology is central to all we do and has been key to our growth and success. Our future adoption plans are centered on digitisation, data, and automation. BNY sees tokenisation playing an ever-increasing role in the future of securities finance, transforming how collateral and securities are mobilised, optimised, and settled. Having been the first agent lender to actively participate in tokenised securities finance transactions, BNY is committed to building on that leadership by continuing to invest in and embrace this technology. We view tokenisation not just as an innovation, but as a core enabler of greater efficiency, transparency, and liquidity for our clients.
We also believe that the industry needs to embrace new technology to bring more efficiency, getting ready for a world of shortened settlement cycles, and the possibility of longer trading days. In March 2025, BNY Mellon took a minority stake in EquiLend and is working with them as a pilot client in implementing 1Source, an industry-wide initiative to create a single golden source of data across the trade lifecycle. By standardising and centralising securities finance data, 1Source will improve transparency, reduce reconciliation breaks, and support both regulatory reporting (e.g. 10c-1a) and client analytics.
The ultimate aim is to be faster, more accurate, and to reduce risk in multiple ways, less fails, less ORE’s from breaks and thinking ahead the potential to rethink the way we mark-to-market the business, ideally moving away from COB prior day pricing to more real time/intraday.
As balances continue to grow and new markets open up, automation remains key to the business, from front to back-office, as we ensure we are well placed to meet the ever growing needs and demands of our clients.
William McStravick: As part of a multi-year Client Experience initiative, J.P. Morgan Agency Íø±¬³Ô¹Ï Finance has promoted lending performance metrics, as well as a digitised representation of Lenders’ Rules and Limits, through interactive web-based application supporting full programme transparency.
Looking ahead to future uses of this data for AI/ machine learning (ML) opportunities, we are going to be adding Rules and Limits metadata to a cloud-based data store in a fixed, normalised format enabling ‘training’ on the underlying data points.
Leveraging AI/ML, we are developing functionality to model rules supporting on-boarding and/or immediately identify outlier rules or limits in comparison with lender peer groups based on domicile or lender type.
Overlaying rules data with current and historic performance metrics will also offer insight into the materiality of iterative restrictions, aiding lenders making crucial risk reward decisions. Â
Insight into the rules or limits behind non-lendable inventory will also help identify iterative opportunities enabling timely communication of revenue opportunities to lenders, supporting one-off exemptions to otherwise static rules/limits.
Where do you identify the strongest opportunities for the growth of your US securities lending activities in 2026?
Hostin: The strongest opportunities for growth in 2026 will be driven by a combination of regulatory evolution, structural innovation, and thematic market momentum. As part of our broader capital efficiency strategy, initiatives such as enhanced margining frameworks, expanded clearing access, and insurance-backed structures will enable State Street to materially reduce our RWA footprint while simultaneously unlocking low-RWA supply for counterparties, creating a more scalable and cost-effective securities lending environment.
Thematically, we anticipate continued vibrancy in AI, crypto, and clean energy sectors, with IPO lockup expirations and merger activity fueling specials demand. By expanding borrower coverage, optimising collateral flexibility and deepening engagement with asset owners, we are well-positioned to capture these growth vectors and drive meaningful revenue expansion in 2026.
Tomlinson: With the US stock market potentially facing growing downside risks heading into 2026 due to a convergence of economic and policy headwinds. A weakening labour market, marked by rising unemployment and slowing job creation, is dampening consumer confidence and spending. At the same time, elevated tariffs are squeezing corporate margins and threatening global trade flows. The Federal Reserve’s cautious stance — signalling only one rate cut — limits monetary support, while political uncertainty and leadership transitions at the Fed could add to investor anxiety. These factors, combined with a surge in short selling and bearish positioning, suggest that market sentiment is shifting toward caution, increasing the likelihood of a broader market correction and increased borrowing demand.
For US corporates, with the recent change in monetary policy, companies may take advantage of lower borrowing costs which could result in an increase in new corporate bond issuance and refinancing opportunities, which could bode well for securities lending demand, as well as increased supply in the market. We foresee increased activity and growth via systematic credit, quant trading, and portfolio trading increasing overall loan activity continuing well into 2026.
On the US Treasury side, the interest rate uncertainty will continue to play its part and while additional cuts are expected, the timing is not clear and this will create opportunities for clients more specifically in the short dated space. Beyond this, and as we continue to prepare for the US Treasury repo mandate, we have already observed significant benefits for our underlying clients who have enrolled in our FICC sponsorship programme. This initiative has enhanced capacity for both our cash and collateral trading, without causing any disruptions on record dates. The durable funding outlet it creates allows us to extend our reinvestments further along the curve. While the onboarding process via FICC is known to be challenging, the positive outcomes for active participants serve as proof of concept. We will undoubtedly continue to leverage this market route in 2026 and beyond.
The market has always been hard to forecast even more so now in light of all the global uncertainty; however, having a robust programme with a wide set of securities finance solutions which enable clients to focus on high quality securities finance revenues, is key and will help smooth out any changes in demand as the market continues to adapt and evolve.
Fox: It is pragmatic to assume we will see an increase in securities lending provider searches, as different agents continue to draw different conclusions as to make a client profitable for their programme, given their specific provider constraints. We all agree upon the fact that securities lending agent activity is not a commodity and that different agents have different views on what types of clients and asset classes are most opportunistic and attractive to that agent. That means different providers could have material differences in their performance within specific client market segments and asset class types.
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