A transformative year: 2025 unpacked
09 December 2025
In a review of the last year, Hansa Tote invites industry experts to discuss the drivers that have shaped the securities finance industry over the past 12 months
Image: stock.adobe.com/Zofia
What have been the strongest drivers and greatest hindrances for the securities finance industry in 2025, and why?
In 2025, the strongest driver of the securities finance industry has been the significant market volatility and economic uncertainty. Our data indicates a marked increase in demand for hedging and short selling activities, with strong demand to borrow exchange-traded funds (ETFs), Asian equities, and government bonds. This heightened demand has led to a notable surge in revenues, with the first three quarters of the year generating some of the highest figures seen since 2008.
The introduction of new data metrics and enhancements to intraday datasets has been another significant driver of activity, as more granular information enables market participants to engage in more calculated risk taking opportunities. Furthermore, increased data transparency across financing markets, particularly in securities lending and repo markets, has created new opportunities for sophisticated trading strategies and improved risk management.
Conversely, the greatest hindrance to the securities finance industry has been the complex and divergent regulatory landscape, particularly regarding capital requirements inconsistencies. The ongoing and often divergent global implementation of Basel III Endgame rules has introduced uncertainty for multinational financial institutions.
A significant challenge remains in two of the world's largest markets for retail investors: China and India, which still do not permit international participation in securities lending markets. This limitation prevents global firms from accessing potentially lucrative opportunities in these rapidly growing economies and restricts the development of truly global securities finance strategies, creating artificial boundaries in what should ideally function as an integrated global market.
Matt Chessum, Executive Director, Equity Analytic Products, S&P Global Market Intelligence
In 2025, the strongest driver of securities finance has been the accelerating integration of technology — particularly artificial intelligence and blockchain-based securities finance. These innovations have already started to improve operational efficiency, enhance transparency, and enable more dynamic optimisation of assets across markets. There is much more to come in this space as additional services and clients move online. Increased automation has also supported a more data-driven approach to risk assessment and regulatory reporting, fostering trust, and attracting new participants.
Conversely, the greatest hindrance has been the tightening global regulatory environment, with fragmentation in rules and approaches, which continues to hold compliance costs at a static level. Divergent regional frameworks — especially regarding short selling disclosure, regulatory reporting, and capital adequacy — have created complexity and limited cross-border fluidity. As institutions devote significant resources to meeting evolving standards, both agility and profitability have suffered.
Darren Crowther, General Manager, Íø±¬³Ô¹Ï Finance & Collateral Management, Broadridge
2025 rewarded firms willing to move beyond vanilla securities finance. Elevated macro volatility, diverging central bank paths, and renewed equity dispersion pushed more sophisticated directional and hedging activity — particularly in equities, credit, and Asia following South Korea's short-selling ban lift. Hedge fund de-crowding from Magnificent Seven names into broader markets created fresh borrow demand, while deep specials like CoreWeave generated outsized returns. Íø±¬³Ô¹Ï lending revenues hit record highs, up nine per cent year-on-year in H1.
The industry is straining under regulatory and plumbing pressures. Preparing for coordinated UK-EU-Swiss T+1 settlement in October 2027 — while managing divergent Basel III Endgame timelines and capital asymmetries — has absorbed significant resources. Too many firms still run legacy workflows against compressed settlement deadlines that need transformation — across repo, collateral management, and equity finance. Operational friction and capital constraints are absorbing value that should flow through to clients.
Roy Zimmerhansl, Head of Capital Markets, WTS Hansuke
Sometimes the largest hindrance to our industry can also be one of the strongest drivers of change. In 2025, we experienced a massive awakening in the importance of technology supporting the total trade lifecycle and therefore the impact to the bottom line. The speed of digital automation from trading through to post-trade operations across securities finance is challenging market participants to prioritise efficient connectivity to counterparts and platforms.
Trading counterparts can no longer rely on fragmented legacy operations or manual processes, but deciding how to improve today's trade flows while also shifting to new digital technology solutions, requires a delicate balance of priorities, resources, and counterparty adoption.
And that is before we even start talking about the potential impact of AI.
Ben Challice, CEO, Pirum
In 2025, the strongest driver for the Japanese securities lending market was the progress in the normalisation of monetary policy by the Bank of Japan and the strong performance of the Japanese equity market. These factors contributed to increased market activity in the securities borrowing and lending (SBL) market, including the growing demand for Japanese yen funding and the rising demand for Japanese government bonds as high-quality liquid assets (HQLA). Furthermore, the depreciation of the yen, alongside reforms to Japan’s Corporate Governance Code, which improved transparency and strengthened shareholder returns, made the Japanese equity market more attractive to foreign investors. These changes boosted investor confidence, encouraged the expansion of international participation, and ultimately served as a driver for the growth of Japan’s securities finance industry.
On the other hand, the greatest hindrance to the market was the imbalance in supply and demand. Changes in the interest rate environment and quantitative tightening limited the growth of funding providers, resulting in a slowdown in the growth of Japan’s SBL market.
Yoshiaki Nemoto, Managing Director, Íø±¬³Ô¹Ï Finance Group, Japan Íø±¬³Ô¹Ï Finance Co.
From our perspective, both the strongest driver and greatest hindrance to the securities finance industry in 2025 has been the impact of risk and capital regulations. Reforms such as Basel III Endgame and Basel IV implementation and counterparty credit or default limitations are intensifying capital pressures in the sector, with bilateral securities financing transactions (SFTs) involving unrated counterparties — such as most UCITS funds and other beneficial owners — becoming subject to punitive 100 per cent risk-weighted assets (RWAs).
This makes capital efficiency essential, and we believe central clearing is one of the answers, with the mutualisation of risk through a central counterparty (CCP) helping to reduce counterparty exposure and easing capital constraints. Cboe Clear Europe’s new SFT clearing service, which completed its first trades in March 2025, enables participants to benefit from a far lower two per cent risk weighting on their SFT transactions.
Beyond capital relief, the service standardises and simplifies post-trade operations, including settlement, reporting, and onboarding. In addition, the service is part of Europe’s largest cash equities clearing house, and therefore also delivers cost savings on both asset classes due to cross-product margining efficiencies.
Jan Treuren, SFT Product Lead, Cboe Clear Europe
In 2025, we have seen clear evidence that the first wave of repo market electronification has taken hold, and the industry is now moving into a new stage of evolution. The strongest driver has been the continued shift toward automation, particularly in how prices are generated and trades are executed. A growing number of dealers are developing automated pricing engines to respond to client requests for quotes and expanding trading API connectivity, bringing price generation and execution closer together. This growing integration is setting the foundation for a more data and algorithm-driven market, creating greater transparency, efficiency, and responsiveness across the repo landscape. With these technologies becoming standard, repo markets are poised to unlock a more efficient and dynamic securities finance ecosystem.
Nicola Danese, Co-Head of International Developed Markets, Tradeweb
The strongest driver for securities finance in 2025 has been increased demand for high-volatility equities and ETFs, fueled by thematic trends such as AI and clean energy. A robust IPO market added momentum, creating significant specials activity and pushing revenues to record highs. APAC markets also delivered strong performance, becoming increasingly meaningful to global revenues, underscored by the lifting of South Korea’s short-selling ban, which reignited lending activity.
The primary challenge has been operational complexity from accelerated settlement cycles and borrower capital constraints. With the move to T+1 settlement, timelines for recalls and collateral movements have been compressed, requiring faster processing and tighter controls. This shift has driven firms to invest in automation and optimise workflow to minimise settlement risk. Meanwhile, borrower capital constraints have spurred innovation in balance sheet friendly trade structures, paving the way for greater capital efficiency and sustained demand in the years ahead.
Jill Rathgeber, Vice President, Product Strategy, Fidelity Agency Lending
2025 has been a significant year for the repo market, marked by consideration of transformative structural changes to the market. Discussions have ranged from the upcoming shift to T+1 settlement to the Bank of England's paper on clearing and mandatory haircuts for gilt repos. Globally, there has also been increasing interest in the role and use cases of distributed ledger technology (DLT) within these markets.
Another important development for the repo market has been the increase in electronic trading activity which continues to accelerate with the pace of government borrowing; looking forward, electronification is unlikely to slow down next year. This is reflected in the volumes we have seen across our BrokerTec central limit order book and request-for-quote platforms. The advances made in the electronification of the repo market will enable it to more easily digest the amount of issuance expected in 2026, while also monitoring headline demand for auctions.
Sara Carter, Global Head of Repo, BrokerTec, CME Group
In 2025, the strongest driver of the securities finance industry has been the significant market volatility and economic uncertainty. Our data indicates a marked increase in demand for hedging and short selling activities, with strong demand to borrow exchange-traded funds (ETFs), Asian equities, and government bonds. This heightened demand has led to a notable surge in revenues, with the first three quarters of the year generating some of the highest figures seen since 2008.
The introduction of new data metrics and enhancements to intraday datasets has been another significant driver of activity, as more granular information enables market participants to engage in more calculated risk taking opportunities. Furthermore, increased data transparency across financing markets, particularly in securities lending and repo markets, has created new opportunities for sophisticated trading strategies and improved risk management.
Conversely, the greatest hindrance to the securities finance industry has been the complex and divergent regulatory landscape, particularly regarding capital requirements inconsistencies. The ongoing and often divergent global implementation of Basel III Endgame rules has introduced uncertainty for multinational financial institutions.
A significant challenge remains in two of the world's largest markets for retail investors: China and India, which still do not permit international participation in securities lending markets. This limitation prevents global firms from accessing potentially lucrative opportunities in these rapidly growing economies and restricts the development of truly global securities finance strategies, creating artificial boundaries in what should ideally function as an integrated global market.
Matt Chessum, Executive Director, Equity Analytic Products, S&P Global Market Intelligence
In 2025, the strongest driver of securities finance has been the accelerating integration of technology — particularly artificial intelligence and blockchain-based securities finance. These innovations have already started to improve operational efficiency, enhance transparency, and enable more dynamic optimisation of assets across markets. There is much more to come in this space as additional services and clients move online. Increased automation has also supported a more data-driven approach to risk assessment and regulatory reporting, fostering trust, and attracting new participants.
Conversely, the greatest hindrance has been the tightening global regulatory environment, with fragmentation in rules and approaches, which continues to hold compliance costs at a static level. Divergent regional frameworks — especially regarding short selling disclosure, regulatory reporting, and capital adequacy — have created complexity and limited cross-border fluidity. As institutions devote significant resources to meeting evolving standards, both agility and profitability have suffered.
Darren Crowther, General Manager, Íø±¬³Ô¹Ï Finance & Collateral Management, Broadridge
2025 rewarded firms willing to move beyond vanilla securities finance. Elevated macro volatility, diverging central bank paths, and renewed equity dispersion pushed more sophisticated directional and hedging activity — particularly in equities, credit, and Asia following South Korea's short-selling ban lift. Hedge fund de-crowding from Magnificent Seven names into broader markets created fresh borrow demand, while deep specials like CoreWeave generated outsized returns. Íø±¬³Ô¹Ï lending revenues hit record highs, up nine per cent year-on-year in H1.
The industry is straining under regulatory and plumbing pressures. Preparing for coordinated UK-EU-Swiss T+1 settlement in October 2027 — while managing divergent Basel III Endgame timelines and capital asymmetries — has absorbed significant resources. Too many firms still run legacy workflows against compressed settlement deadlines that need transformation — across repo, collateral management, and equity finance. Operational friction and capital constraints are absorbing value that should flow through to clients.
Roy Zimmerhansl, Head of Capital Markets, WTS Hansuke
Sometimes the largest hindrance to our industry can also be one of the strongest drivers of change. In 2025, we experienced a massive awakening in the importance of technology supporting the total trade lifecycle and therefore the impact to the bottom line. The speed of digital automation from trading through to post-trade operations across securities finance is challenging market participants to prioritise efficient connectivity to counterparts and platforms.
Trading counterparts can no longer rely on fragmented legacy operations or manual processes, but deciding how to improve today's trade flows while also shifting to new digital technology solutions, requires a delicate balance of priorities, resources, and counterparty adoption.
And that is before we even start talking about the potential impact of AI.
Ben Challice, CEO, Pirum
In 2025, the strongest driver for the Japanese securities lending market was the progress in the normalisation of monetary policy by the Bank of Japan and the strong performance of the Japanese equity market. These factors contributed to increased market activity in the securities borrowing and lending (SBL) market, including the growing demand for Japanese yen funding and the rising demand for Japanese government bonds as high-quality liquid assets (HQLA). Furthermore, the depreciation of the yen, alongside reforms to Japan’s Corporate Governance Code, which improved transparency and strengthened shareholder returns, made the Japanese equity market more attractive to foreign investors. These changes boosted investor confidence, encouraged the expansion of international participation, and ultimately served as a driver for the growth of Japan’s securities finance industry.
On the other hand, the greatest hindrance to the market was the imbalance in supply and demand. Changes in the interest rate environment and quantitative tightening limited the growth of funding providers, resulting in a slowdown in the growth of Japan’s SBL market.
Yoshiaki Nemoto, Managing Director, Íø±¬³Ô¹Ï Finance Group, Japan Íø±¬³Ô¹Ï Finance Co.
From our perspective, both the strongest driver and greatest hindrance to the securities finance industry in 2025 has been the impact of risk and capital regulations. Reforms such as Basel III Endgame and Basel IV implementation and counterparty credit or default limitations are intensifying capital pressures in the sector, with bilateral securities financing transactions (SFTs) involving unrated counterparties — such as most UCITS funds and other beneficial owners — becoming subject to punitive 100 per cent risk-weighted assets (RWAs).
This makes capital efficiency essential, and we believe central clearing is one of the answers, with the mutualisation of risk through a central counterparty (CCP) helping to reduce counterparty exposure and easing capital constraints. Cboe Clear Europe’s new SFT clearing service, which completed its first trades in March 2025, enables participants to benefit from a far lower two per cent risk weighting on their SFT transactions.
Beyond capital relief, the service standardises and simplifies post-trade operations, including settlement, reporting, and onboarding. In addition, the service is part of Europe’s largest cash equities clearing house, and therefore also delivers cost savings on both asset classes due to cross-product margining efficiencies.
Jan Treuren, SFT Product Lead, Cboe Clear Europe
In 2025, we have seen clear evidence that the first wave of repo market electronification has taken hold, and the industry is now moving into a new stage of evolution. The strongest driver has been the continued shift toward automation, particularly in how prices are generated and trades are executed. A growing number of dealers are developing automated pricing engines to respond to client requests for quotes and expanding trading API connectivity, bringing price generation and execution closer together. This growing integration is setting the foundation for a more data and algorithm-driven market, creating greater transparency, efficiency, and responsiveness across the repo landscape. With these technologies becoming standard, repo markets are poised to unlock a more efficient and dynamic securities finance ecosystem.
Nicola Danese, Co-Head of International Developed Markets, Tradeweb
The strongest driver for securities finance in 2025 has been increased demand for high-volatility equities and ETFs, fueled by thematic trends such as AI and clean energy. A robust IPO market added momentum, creating significant specials activity and pushing revenues to record highs. APAC markets also delivered strong performance, becoming increasingly meaningful to global revenues, underscored by the lifting of South Korea’s short-selling ban, which reignited lending activity.
The primary challenge has been operational complexity from accelerated settlement cycles and borrower capital constraints. With the move to T+1 settlement, timelines for recalls and collateral movements have been compressed, requiring faster processing and tighter controls. This shift has driven firms to invest in automation and optimise workflow to minimise settlement risk. Meanwhile, borrower capital constraints have spurred innovation in balance sheet friendly trade structures, paving the way for greater capital efficiency and sustained demand in the years ahead.
Jill Rathgeber, Vice President, Product Strategy, Fidelity Agency Lending
2025 has been a significant year for the repo market, marked by consideration of transformative structural changes to the market. Discussions have ranged from the upcoming shift to T+1 settlement to the Bank of England's paper on clearing and mandatory haircuts for gilt repos. Globally, there has also been increasing interest in the role and use cases of distributed ledger technology (DLT) within these markets.
Another important development for the repo market has been the increase in electronic trading activity which continues to accelerate with the pace of government borrowing; looking forward, electronification is unlikely to slow down next year. This is reflected in the volumes we have seen across our BrokerTec central limit order book and request-for-quote platforms. The advances made in the electronification of the repo market will enable it to more easily digest the amount of issuance expected in 2026, while also monitoring headline demand for auctions.
Sara Carter, Global Head of Repo, BrokerTec, CME Group
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