Asiaās markets: Poised for strength
03 March 2026
Industry participants discuss the Asian securities finance market, from South Koreaās reintroduction of short selling to how recent political changes are shaping Japan
Image: stock.adobe.com/f11photo
Panellists
Benoit Uhlen, Head of Market and Financing Services APAC, Ķų±¬³Ō¹Ļ Services, BNP Paribas
Serge Micallef, APAC Head of Trading Ķų±¬³Ō¹Ļ Finance, BNY
Adnan Hussain, Global Head of Agency Lending & Liquidity Services, HSBC
Shinsuke Yamamoto, Executive Director, Ķų±¬³Ō¹Ļ Finance Group, Japan Ķų±¬³Ō¹Ļ Finance Co.
Stephen Michael, Head of Buyside Trading Services Sales, APAC, J.P. Morgan
Marion Au, Vice President, Financing Solutions, Agency Trading, APAC, State Street
William Han, Managing Director, Financing Solutions, Head of Sales and Client Management, Asia-ex Japan, tate Street
How do you assess the performance of APAC securities finance markets during 2025? What key lessons have you learned from this period that will help guide your business through the next 12 months?
Shinsuke Yamamoto: The APAC securities finance markets in 2025 showed strong performance, driven by growth in AI and semiconductor-related stocks, with Japan, Taiwan, and South Korea at the centre. This bullish market created an active securities lending environment. However, the significant rise in specific stocks, which drove overall market growth, led to inefficiencies in the lending space, as certain stocks remained underutilised due to a focus on avoiding excessive concentration. We anticipate that rapid market growth driven by significant price increases in certain stocks may continue. Over the next 12 months, we plan to explore initiatives such as developing schemes to better utilise underused assets arising from stock concentration and providing securities finance services for underdeveloped regions with rapidly growing markets.
Adnan Hussain: Hong Kong, Korea, Japan, and Taiwan led the pack ā achieving the largest year-on-year (YoY) revenue increases across the region in 2025, according to market data. Hong Kong benefited from robust activity in equity issuances, placements and IPOs, alongside evolving lock-up periods and shifting sentiment from mainland China towards technology firms. Japan profited from attractive opportunities in tenders and IPOs, while lending activity in Taiwan continued to be driven by growth across its IT, computer manufacturing, and semiconductor sectors ā despite speculation around rapid technological advancements prompting temporary market stabilisation measures to be implemented from April to May 2025.
Benoit Uhlen: The APAC securities finance market so far in 2026 appears as both constructive and selective in its outlook, building on 2025ās robust performance. Global revenues have been up in January 2026, with APAC up by over 50 per cent, led by Taiwan, Hong Kong, and Japan.
Serge Micallef: APAC delivered a standout year in 2025, with Hong Kong and South Korea leading the gains. Industry revenues rose markedly, lendable assets expanded, and sentiment finished the year on a constructive footing ā an outcome that contrasts sharply with the uncertain start to 2025. Despite headline risks around tariffs and geopolitics, markets proved resilient, supply chains adapted rather than fractured, and several indices set new records. We enter 2026 with a clearer runway than a year ago.
Hong Kongās IPO revival was a defining theme: after a modest 2024, issuance accelerated in 2025 and the pipeline for 2026 is strong, supported by several hundred listing applications. That momentum underpins robust borrow and lend turnover across corporate events, new listings, and related hedging activity.
The core lesson is the importance of agility ā remaining flexible and solution-oriented as conditions shift on both the supply and demand sides. For the year ahead, we are prioritising collateral optimisation and post-trade automation to deepen efficiency, strengthen controls, and scale capacity across the region. We will also expand our third-party lending programme and invest in our principal lending and cash collateral capabilities to support clientsā financing needs, enhance balance sheet resilience, and improve funding optionality in key regional markets.
Stephen Michael: 2025 was a standout year for the APAC securities finance industry. Our lending programme delivered robust revenues across the region, with Hong Kong leading the way thanks to a strong local stock market that spurred capital raising and directional trading activity. Japan also experienced elevated specials trading and sustained demand for offshore inventory throughout the year.Ā US trade restrictions and tariffs continued to drive heightened demand in sectors where supply was limited or volatility increased, notably technology, manufacturing, energy, and AI.Ā These industries remained key growth drivers. Looking ahead to 2026, we anticipate ongoing deal flow and volatility, with APAC expected to again contribute a significant share of global balances and revenues.
William Han: Looking back at 2025 and our ongoing conversations with beneficial owners, I see clear value in a āback to basicsā approach that has stood the test of time, and which will shape how we guide our clients in the year ahead.
To begin with, diversification remains fundamental to lowering risk and return volatility. In 2025, industry benchmark data suggests performance for securities finance markets in Europe, the Middle East, and Africa grew only moderately, while the Americas experienced a YoY decline. In contrast, Asia Pacific markets outperformed these regions, generating outsized revenue and fee growth compared to the year before. Against that backdrop, it was clear that beneficial owners with broad geographical allocations in their asset pools (as well as asset class and segments), generally experienced more stable returns relative to single market allocations, when assessed on a YoY basis.
For investors, that value predictability is particularly important to forecast financial outcomes ā such as a corporate looking to plan income streams for treasury management, or a fund manager seeking a more balanced Sharpe ratio (or risk-adjusted return). Maintaining a diversified lending portfolio continues to be an effective way to support those objectives.
Flexibility remains another critical differentiator. Beneficial owners with wide non-cash collateral guidelines and a variety of structures (central clearing counterparties, UK-style pledge, etc.) are expected to differentiate their supply and generate better returns than those who do not. However, it is important to note that flexibility is not an āall-or-nothingā decision; it exists on a spectrum that should align to the investorās appetite and objectives.
Marion Au: APACās equity trading performance in 2025 was truly unprecedented, defined not only by its scale, but also by the broad-based momentum seen across all markets in the region. Ongoing geopolitical uncertainty, a resurgence in corporate-action activity, AI-sector driven demand and heightened market volatility ā all contributed to the yearās record revenues.
Specifically, Hong Kong was a standout market, marked by exceptionally strong fundraising activity, be that IPOs or convertible bond issuance and robust stock price performance across sectors including real estate, financial services, consumer discretionary, and technology.
On reflection, the year moved quickly. Despite exceptional flow and continued product expansion, the core fundamentals of teamwork and experience remain the real differentiators. We are fortunate to have a trading team at State Street that consistently delivers meaningful value for clients while carefully managing risk. This strong foundation has made us resilient across market cycles and enables us to provide a customised, high-touch client experience. The performance of 2025 was a clear demonstration of those strengths, which will continue to guide our approach in the year ahead.
How has the reintroduction of short selling in South Korea in March 2025 impacted this particular market? And how do you evaluate attitudes towards short selling in other APAC markets?
Uhlen: The South Korean securities borrowing and lending (SBL) market has seen rapid expansion since the lifting of the short sell ban. It has been a very profitable market across the street with a few counterparties holding out on returning into the space and a number of participants not fully opening their pipes. The impact and interest on short selling in other markets has continued to grow, but as these markets may not necessarily be the main attraction anymore, Korea may move up the leader board.
Michael: The reintroduction of short selling in South Korea has reinvigorated trading demand in the market. While only a subset of participants have resumed active borrowing and lending, fee levels and revenues have been strong.Ā Market participants remain cautious, mindful of regulatory scrutiny, but overall demand for both borrowing and lending is resilient.
Au: The steadfast commitment by South Korean authorities to the resumption of covered short selling on āLiberation Dayā ā despite heightened global market volatility ā was commendable. At a time when peer markets moved quickly to contract their short sell quota (Taiwan) and suspended short selling (Thailand), the Governor of South Koreaās Financial Supervisory Service (FSS) took a constructive approach by visiting Hong Kong in mid-April. During the visit, the Governor engaged directly with a wide range of market participants about stabilising their regulatory position on rules around short selling. This engagement helped reinforce confidence in policy continuity and regulatory intent.
Furthermore, the new South Korean administration has shown clear willingness to take necessary actions to reduce the āKorea-discountā and strengthen the investment case for South Koreaās capital market. Whether achieved through corporate governance initiatives or broader market reforms, the ability to deliver lower hedging costs for net long investors has provided substantial support for South Korean equities in 2025 and contributed meaningfully to the marketās strong performance.
Peer markets would do well to view the Korean experience as a key learning opportunity and draw on this to understand how best to navigate the optics and perceptions of key stakeholders around short selling. Getting ahead of potential negative press, emotive social media, and political influence remain key challenges for authorities, especially in markets with high retail participation and outsized volatility. Ongoing investor education around short selling remains critical and should be proactive and continuous, rather than reactive.
Han: More generally, I think beneficial owners have maintained broadly consistent attitudes towards short selling over the years.
On one hand, to the extent that beneficial owners continue to see short selling supporting the price discovery process within a mature and efficient market ā and as a driver for lending returns ā it is probably fair to say that short selling is viewed neutrally at worst or positively as an enabler of liquidity and opportunity.
On the other hand, I recognise there are beneficial owners ā especially retail investors and corporate executives ā and policy makers, who remain philosophically conflicted about short selling. They may believe short selling drives prices down, particularly during periods of market stress, and contributes to excessive volatility and steep price declines, even though research shows mixed evidence about the correlation between short selling and market impact.
Micallef: South Koreaās restart catalysed a sharp rebound in borrowing activity and revenues after an 18-month hiatus. While some participants returned cautiously as new rules bedded in, confidence has been rebuilding. We expect the market to normalise further, with elevated margins and healthy volumes sustained by hedging, relative-value strategies, and tactical shorts.
Across APAC, the tone toward short selling is generally supportive when transparency and compliance are clear. Regulators recognise its role in price discovery and market liquidity. China has announced a number of initiatives to increase cross-border financing for government bonds, and regional frameworks continue to evolve toward robust, transparent practices.
Which regulatory initiatives in APAC markets will consume most attention for your agency lending and collateral management teams over the coming 12 months? What is your firm doing to prepare clients for these movements?
Hussain: A range of regulatory initiatives are underway across the region, all of which require strategic attention from market participants. APAC is seeing a broader acceptance of collateral types, with eligible assets now including emerging market credit, equities, ETFs, corporate credit, agencies, and supranationals. This expansion is expected to continue through 2026 as demand grows for new forms of accepted collateral ā including alternatives, tokenisation, digital assets, and gold. This is further illustrated by the Taiwan Stock Exchangeās (TWSEās) upcoming induction of pledge collateral, taking effect in late-March 2026. At the same time, platforms such as Bond Connect, Euroclear, and Clearstream are enabling a more prominent and coordinated role for offshore agent lenders in the financing of renminbi-denominated assets ā unlocking new opportunities for international and domestic investors alike.
Another key change is the transition to T+1 settlement cycles across major exchanges, including the Australian Stock Exchange (ASX), the TWSE and the Hong Kong Stock Exchange (HKEX). This shift introduces new considerations around liquidity and the operation of buy-in market structures, particularly given the increased risk profile.
Au: APACās progressive move to T+1 settlement is the major regulatory development. While the larger developed markets such as Japan, Hong Kong, and Australia are expected to face some potential liquidity hurdles, it is the more nuanced APAC markets that are likely to encounter greater challenges. The transition to T+1 will likely push borrowing rates higher and may reduce overall supply. In addition, South Korea has floated the ambition to move toward 24-hour trading, a concept that is also receiving increasing attention in the US. Both initiatives represent structural shifts that will require careful coordination across trading, settlement, and collateral management workflows.
Against this backdrop, scalable and automated solutions will be essential to mitigate any operational complexities, while also engaging closely with our peers and our clients to collectively respond to significant market changes and build aligned, common solutions.
Han: We take our roles as fiduciaries on behalf of our clients seriously. That means we proactively track and respond to regulatory changes, assess their implications for our programme and engage with our clients early on so that they can plan ahead. Depending on the specific regulatory matter, engagement can happen in various forms ā a letter providing background and implications (and in some cases requiring a decision to maintain the status quo or change), a discussion as part of a scheduled service review, a deep-dive session with relevant subject matter experts, etc. Across the board, we lead with transparency and engagement in our outreach, qualities that help us establish credibility and trust with our clients.
Michael: The two main areas we see are accelerated settlement cycles and regulatory developments in the collateral market;
Accelerated settlement cycle: APAC markets are actively considering reductions in settlement timeframes to align with the T+1 cycles adopted or targeted globally. While implementation in APAC may take time, we are engaged with industry groups to ensure readiness and effective planning. J.P. Morgan continues to provide thought leadership for clients in this area.
Regulatory developments in the collateral market: In Taiwan, recent amendments to the āOperating Rules on the Use of Domestic Ķų±¬³Ō¹Ļ by Overseas Chinese and Foreign Nationals as Collaterals for Offshore Investment ActivitiesāĀ wouldĀ permit Foreign Institutional Investors (FINIs) to pledge Taiwanese securities as collateral for offshore investment activities. These amendments will be effective 30 March 2026.Ā J.P. Morgan is actively monitoring and engaging with these developments to support anticipated opportunities.
Micallef: Korea and Thailand will headline the regulatory focus.
Korea: Proposed extensions to trading hours (potentially to 20:00 by mid-2026) and the longer-term ambition for 24-hour trading add operational complexity. We are evaluating impacts on recalls for sales and corporate actions, late-day locates, and collateral timing, and building extended-hours service models with clear cut-offs and escalation paths.
Thailand: Authorities are reviewing short-selling and SBL frameworks, including tighter definitions, reinforced pre-borrow certification, and stronger broker risk systems. We are aligning order flows with pre-borrow evidence, enhancing inventory controls, and coordinating with counterparties on standardisation.
T+1 discussions: Two years on from the US switch, APAC debate continues. Hong Kong appears closer to enabling T+1 subject to industry coordination; Australiaās timeline is linked to the Clearing House Electronic Subregister System (CHESS) replacement. Regardless of dates, we are preparing for compressed settlement ā earlier recalls, tighter pre-borrow gates, and accelerated collateral cycles.
BNYās collaboration with Cboe Clear Europe in centrally cleared SFTs ā featuring a title-transfer model with pledge-back for UCITS ā has elevated liquidity, collateral efficiency, and risk management across Europe. As adoption accelerates, APACās scale, institutional depth, and cross-border connectivity make it the natural next frontier, where clearing can harmonise regional complexity into a competitive advantage ā unlocking new liquidity, optimising balance sheets, and driving market innovation.
We continue to engage with peers and trade associations, including PASLA, and provide clients with market-specific playbooks, training, and operational dry-runs to ensure readiness.
What investments and adaptations to technology and working practices have you made during 2025 to sustain and grow your securities finance activity in the Asia Pacific region? What part has the use of digital assets played in this respect?
Micallef: AI sits at the centre of our investment agenda at BNY. We are not only embedding AI into existing workflows; we are rethinking operating models to unlock new solutions and decisioning capabilities for clients and counterparties.
Digital assets are already influencing our business. We have partnered across the ecosystem to develop tokenised collateral solutions in both bonds and cash, aiming to enhance settlement efficiency, collateral mobility, and transparency. These initiatives mark a forward path for how transactions could be processed and financed in the years ahead.
Michael: We have continued to invest in our front office trading tools to automate processes across trading, compliance, collateral management, and reporting. Our quantitative research teams leverage AI and machine learning to analyse large datasets, optimise security pricing, assess elasticity, and identify trading opportunities to deliver the best outcomes for clients. In 2025, we rolled out enhancements to our client portal, Ķų±¬³Ō¹Ļ Finance Central, offering clients advanced analytics, customisable reporting, and API access.
Tokenisation is gaining significant traction across the industry, particularly as a means to enhance collateral efficiency. However, adoption of securities finance solutions leveraging tokenised assets remains in its early stages, with market participants seeking greater regulatory clarity and legal certainty before scaling up. Achieving the full benefits of reduced risk and improved operational and capital efficiency will require broader industry collaboration and scale. At J.P. Morgan, we are actively involved in industry initiatives and driving standards and best practices through International Ķų±¬³Ō¹Ļ Lending Association (ISLA) working groups and participation in industry sandboxes, and we are advancing targeted connectivity to market infrastructure solutions that meet the risk, liquidity, and scalability standards needed to make tokenisation scalable. In parallel, we continue to invest in and develop our Tokenised Collateral Network and Collateral Token Agent solutions, expanding beyond the initial tokenised money market funds (MMF) collateral use case to encompass other asset types and transaction flows, with a particular focus on securities financingĀ as part of our ongoing roadmap.
Han: At an overarching level, our capital expenditure in recent years reflects our multi-year growth strategy to continue strengthening our core products in securities financing ā namely agency lending, prime services and secured financing ā while driving greater synergies across these products. We continue to invest in building on the unique positioning of our core products across the wholesale/supply and retail/demand ends of the value chain, further differentiating our offerings, and strengthening the integrated value across our platform.
I can point out a couple of examples that illustrate this approach. Firstly, we are expanding our suite of solutions with the objective of increasing capital efficiencies while providing our clients with greater access to securities lending opportunities. This ambition led us to a key milestone in December 2025. State Street became the first bank to become an Options Clearing Corporation (OCC) clearing member, with OCC providing central counterparty clearing and settlement through its stock loan programme for our prime services platform.
Strategically, the investment strengthens our prime services offering, benefits our beneficial owners within our agency lending programme, and reflects our commitment to expanding our core products and delivering greater value for our clients.
State Streetās Financing Hub represents a multi-year commitment to strengthening our core franchises while unlocking integrated value for our clients. It consolidates financing operations, enhances liquidity and collateral management, integrates with repo and lending markets and equips clients with data-driven tools to optimise balance sheet usage and funding decisions. The platform also supports agency lending and secured financing workflows, leveraging modern interoperability standards to integrate all relevant systems and deliver a seamless client experience.
How have monetary conditions and political changes shaped securities finance opportunities in the Japanese market? How are you positioning yourself to maximise opportunities for lenders and borrowers in this environment?
Au: Corporate governance reforms and the Japanese governmentās pro-growth policies have been key drivers of robust corporate deal activity and a sustained market rally in Japan. This momentum has, in turn, supported steady borrower demand for Japanese equities. At the same time, rising Japanese yields and the end of negative interest rates have compressed basis point levels, tightening US Treasury-Japanese government bond (JGB) spreads. Although volatile, this spread has long underpinned one of the marketās largest funding trades. Conversely, demand for JGBs has increased as yields have moved higher, fueling greater borrowing across a wide range of specific issues.
Looking ahead, a key question is whether a higher-yield environment and a steeper curve will create new opportunities for money market funds. We are also monitoring yen volatility closely for signs that rising hedging costs could prompt domestic investors to repatriate foreign assets, potentially putting a cap on long-term yields.
Michael: Monetary conditions and political changes have fueled increased activity in Japanās securities finance market since 2025, with momentum continuing into 2026. The Bank of Japan (BOJ) has remained cautious on rate hikes, but volatility in long-term JGB yields has risen amid fiscal expansion concerns. Japanese equities have outperformed regional peers, supported by stable policies that attract momentum-driven capital flows and boost stock borrowing and lending. Yen volatility, influenced by monetary policy divergence and potential Ministry of Finance intervention, has led to active two-way trading in USD/JPY, impacting stock lending demand.
As an agency lender, despite narrower USD/JPY spreads limiting cross-currency lending, we see opportunities in increased market-wide activity, special trades from heightened equity volatility, stronger JGB lending demand, and reinvestment/lending of JPY cash as rates rise.Ā To maximise these opportunities, we are deepening relationships with existing borrowers, forging new partnerships, and expanding our localised business within the domestic market.
Hussain: Following the recent election in Japan, equity markets have responded positively to the governmentās pro-market and pro-economy stance, supported by fiscal stimulus and tax relief initiatives. However, investors remain cautious regarding Japanās long-term fiscal sustainability, given the nationās elevated debt levels.
In terms of fixed income, the BOJ has scaled back its Bond Purchase Programme over the past year, resulting in higher JGB yields. There is ongoing discussion about potential foreign exchange market intervention in 2026, particularly in light of the weak yen. The BOJās gradual balance sheet reduction is creating opportunities for lenders to provide liquidity in the JGB repo market. Additionally, the diversification of funding needs is expected to benefit Asian high-quality liquid assets (HQLA), including JGBs.
Yamamoto: The BOJās gradual interest rate hikes, coupled with the strong performance of the Japanese equity market, have significantly invigorated Japanās securities finance market in recent years. The historic victory of the Liberal Democratic Party (LDP) in the February 2026 general election has further solidified political stability, boosting confidence in Japanās markets. This environment, reminiscent of the growth during the Abenomics era, has supported the expansion of the securities lending market and driven an increase in funding demand. To address the growing demand for yen funding, we are accommodating diverse collateral types, including foreign equities and both domestic and international bonds. Additionally, we are offering solutions like collateral swaps through upgrade and downgrade repos and schemes tailored to meet liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements, aiming to contribute to the sustainable growth and dynamism of the securities finance sector.
Micallef: Japanās policy normalisation and yen volatility have periodically created specials in JGBs, particularly at the super-long end. That environment has opened opportunities for specific-name borrows, term trades, and collateral transformation. We are expanding inventory channels in JGBs and working closely with partners to support liquidity, manage haircuts dynamically, and capture revenue while maintaining robust risk and governance standards. On the equity side, governance-driven corporate actions continue to present event-led borrow demand that we are positioned to serve.
How do you assess the outlook for APAC securities finance markets for 2025? And what opportunities do you foresee for these markets?
Au: Looking ahead, APAC is well positioned to build on the strong momentum of 2025, as elevated market activity continues to drive demand for regional assets. We expect Hong Kong to remain a key revenue-generating market, with the IPO market likely to sustain its momentum. Taiwan, as a technology-heavy market, is expected to continue attracting substantial borrow demand. Supported by ongoing AI themes, we anticipate steady lending performance from this market.
Japan is also expected to remain a robust lending market, driven by the Japanese governmentās growth-focused policies, ongoing corporate governance reforms and investorsā desire to diversify beyond the US. South Korea is likely to increase its share of regional market revenues as participants re-enter and scale up their activity following significant investments in risk management, compliance, and operational enhancements. Overall, APAC is set to remain one of the most diversified, resilient, and opportunity-rich regions for securities finance globally in the year ahead.
Micallef: APAC markets are poised for strength in 2026, extending the positive trajectory established in 2025. Continued progress in collateral optimisation, coupled with improving liquidity across key Asian venues, is set to drive meaningful gains across multiple product lines. Early-year activity already points to rising volumes and deeper client engagement, reinforcing a constructive outlook for the months ahead.
South Korea: With short-selling fully reinstated, borrow demand should remain firm in index heavyweights and tech/industrial names. Standardised processes and improved surveillance reduce friction and broaden participation. Term borrows and market-making inventory are likely to be in high demand.
Hong Kong: Expect policy calibration from the mainland to support stability, with Hong Kong driven by event-led specials (buybacks, restructurings), IPO pipelines, and convertibles hedging. Tokenised instruments are poised to gain traction as infrastructure matures.
Australia: Policy is likely to remain comparatively restrictive, but this supports attractive collateral transformation trades. Corporate actions and placements will keep equity lending active, while term funding opportunities should remain.
Taiwan: Tech momentum (AI/semiconductors) continues to underpin elevated fees and frequent specials. Supply constraints persist in flagship names, but lendable inventory should keep expanding as more participants enter the market. Term supply and careful recall management will be key.
Yamamoto: The outlook for the APAC securities finance market in 2025 is highly positive, with sustained strong performance expected across equity markets in the region. This is likely to further increase the demand for securities as collateral, driving the growth of the securities finance market. As this trend continues, the need for solutions that enhance collateral utilisation and ensure liquidity will become even more critical. As a Japan-based institution, we aim to support the expanding APAC market by offering structured securities finance transactions. Specifically, we plan to accept emerging market securities as collateral and lend Japanese assets such as Japanese equities, yen, and government bonds.
Michael: We expect trading momentum to continue in 2026, building on the strong performance of 2025. Beyond Hong Kong and Japan, higher spread markets such as Taiwan and Korea will remain a key focus as borrowing demand stays robust.Ā Geopolitical uncertainties will continue to shape the landscape, prompting beneficial owners to optimise their portfolios and potentially impacting trading inventories.Ā From a trading perspective, we aim to expand our lending distribution channels across the region and focus on growing our product offering to meet evolving market needs.
Hussain: A range of trends will be impacting the APAC securities finance markets landscape in the year ahead, particularly collateral diversification, capital flows, and evolving portfolio management strategies. There is a clear shift towards diversification into non-USD denominated collateral as a means of managing risk. Historically, a weaker US dollar has benefited non-USD assets, leading to increased capital flows into Asia and emerging markets. This dynamic is resulting in higher asset valuations, more shorting opportunities, and a growing need for effective hedging strategies.
Asset owners are increasingly seeking holistic solutions that integrate securities lending, financing, and liquidity management to optimise portfolio performance. APAC is likely to be a beneficiary as markets across the region continue to maintain a strong emphasis on transparency, stability, and market fairness.
Uhlen: We remain cautiously optimistic about the APAC securities finance landscape in 2026. Market participants continue to focus on three pillars ā access to liquidity, balance sheet efficiency, and cost discipline. This environment may drive noticeable increase in collateral-pledge structures that can involve both APAC-listed securities and regional participants.
Lending activity in the technology sector is expected to be dynamic and a key opportunity in 2026, driven by elevated valuations in that category.
Geopolitical uncertainties, including potential tensions or shifts in trade policies, could also trigger price swings and temporarily increase short-term borrowing demand. The combination of continuous demand for HQLA, particularly the Australian Commonwealth Government Bonds (ACGBs), a strong pipeline of IPOs, and rapid technological adoption positions the APAC securities-finance market for continued growth and innovation throughout 2026.
As an agent lender, we will need to continue to enhance collateral flexibility and structures around triparty so borrowers can obtain better liquidity ratios. We also need to embrace technology fast to enhance our offering.
Benoit Uhlen, Head of Market and Financing Services APAC, Ķų±¬³Ō¹Ļ Services, BNP Paribas
Serge Micallef, APAC Head of Trading Ķų±¬³Ō¹Ļ Finance, BNY
Adnan Hussain, Global Head of Agency Lending & Liquidity Services, HSBC
Shinsuke Yamamoto, Executive Director, Ķų±¬³Ō¹Ļ Finance Group, Japan Ķų±¬³Ō¹Ļ Finance Co.
Stephen Michael, Head of Buyside Trading Services Sales, APAC, J.P. Morgan
Marion Au, Vice President, Financing Solutions, Agency Trading, APAC, State Street
William Han, Managing Director, Financing Solutions, Head of Sales and Client Management, Asia-ex Japan, tate Street
How do you assess the performance of APAC securities finance markets during 2025? What key lessons have you learned from this period that will help guide your business through the next 12 months?
Shinsuke Yamamoto: The APAC securities finance markets in 2025 showed strong performance, driven by growth in AI and semiconductor-related stocks, with Japan, Taiwan, and South Korea at the centre. This bullish market created an active securities lending environment. However, the significant rise in specific stocks, which drove overall market growth, led to inefficiencies in the lending space, as certain stocks remained underutilised due to a focus on avoiding excessive concentration. We anticipate that rapid market growth driven by significant price increases in certain stocks may continue. Over the next 12 months, we plan to explore initiatives such as developing schemes to better utilise underused assets arising from stock concentration and providing securities finance services for underdeveloped regions with rapidly growing markets.
Adnan Hussain: Hong Kong, Korea, Japan, and Taiwan led the pack ā achieving the largest year-on-year (YoY) revenue increases across the region in 2025, according to market data. Hong Kong benefited from robust activity in equity issuances, placements and IPOs, alongside evolving lock-up periods and shifting sentiment from mainland China towards technology firms. Japan profited from attractive opportunities in tenders and IPOs, while lending activity in Taiwan continued to be driven by growth across its IT, computer manufacturing, and semiconductor sectors ā despite speculation around rapid technological advancements prompting temporary market stabilisation measures to be implemented from April to May 2025.
Benoit Uhlen: The APAC securities finance market so far in 2026 appears as both constructive and selective in its outlook, building on 2025ās robust performance. Global revenues have been up in January 2026, with APAC up by over 50 per cent, led by Taiwan, Hong Kong, and Japan.
Serge Micallef: APAC delivered a standout year in 2025, with Hong Kong and South Korea leading the gains. Industry revenues rose markedly, lendable assets expanded, and sentiment finished the year on a constructive footing ā an outcome that contrasts sharply with the uncertain start to 2025. Despite headline risks around tariffs and geopolitics, markets proved resilient, supply chains adapted rather than fractured, and several indices set new records. We enter 2026 with a clearer runway than a year ago.
Hong Kongās IPO revival was a defining theme: after a modest 2024, issuance accelerated in 2025 and the pipeline for 2026 is strong, supported by several hundred listing applications. That momentum underpins robust borrow and lend turnover across corporate events, new listings, and related hedging activity.
The core lesson is the importance of agility ā remaining flexible and solution-oriented as conditions shift on both the supply and demand sides. For the year ahead, we are prioritising collateral optimisation and post-trade automation to deepen efficiency, strengthen controls, and scale capacity across the region. We will also expand our third-party lending programme and invest in our principal lending and cash collateral capabilities to support clientsā financing needs, enhance balance sheet resilience, and improve funding optionality in key regional markets.
Stephen Michael: 2025 was a standout year for the APAC securities finance industry. Our lending programme delivered robust revenues across the region, with Hong Kong leading the way thanks to a strong local stock market that spurred capital raising and directional trading activity. Japan also experienced elevated specials trading and sustained demand for offshore inventory throughout the year.Ā US trade restrictions and tariffs continued to drive heightened demand in sectors where supply was limited or volatility increased, notably technology, manufacturing, energy, and AI.Ā These industries remained key growth drivers. Looking ahead to 2026, we anticipate ongoing deal flow and volatility, with APAC expected to again contribute a significant share of global balances and revenues.
William Han: Looking back at 2025 and our ongoing conversations with beneficial owners, I see clear value in a āback to basicsā approach that has stood the test of time, and which will shape how we guide our clients in the year ahead.
To begin with, diversification remains fundamental to lowering risk and return volatility. In 2025, industry benchmark data suggests performance for securities finance markets in Europe, the Middle East, and Africa grew only moderately, while the Americas experienced a YoY decline. In contrast, Asia Pacific markets outperformed these regions, generating outsized revenue and fee growth compared to the year before. Against that backdrop, it was clear that beneficial owners with broad geographical allocations in their asset pools (as well as asset class and segments), generally experienced more stable returns relative to single market allocations, when assessed on a YoY basis.
For investors, that value predictability is particularly important to forecast financial outcomes ā such as a corporate looking to plan income streams for treasury management, or a fund manager seeking a more balanced Sharpe ratio (or risk-adjusted return). Maintaining a diversified lending portfolio continues to be an effective way to support those objectives.
Flexibility remains another critical differentiator. Beneficial owners with wide non-cash collateral guidelines and a variety of structures (central clearing counterparties, UK-style pledge, etc.) are expected to differentiate their supply and generate better returns than those who do not. However, it is important to note that flexibility is not an āall-or-nothingā decision; it exists on a spectrum that should align to the investorās appetite and objectives.
Marion Au: APACās equity trading performance in 2025 was truly unprecedented, defined not only by its scale, but also by the broad-based momentum seen across all markets in the region. Ongoing geopolitical uncertainty, a resurgence in corporate-action activity, AI-sector driven demand and heightened market volatility ā all contributed to the yearās record revenues.
Specifically, Hong Kong was a standout market, marked by exceptionally strong fundraising activity, be that IPOs or convertible bond issuance and robust stock price performance across sectors including real estate, financial services, consumer discretionary, and technology.
On reflection, the year moved quickly. Despite exceptional flow and continued product expansion, the core fundamentals of teamwork and experience remain the real differentiators. We are fortunate to have a trading team at State Street that consistently delivers meaningful value for clients while carefully managing risk. This strong foundation has made us resilient across market cycles and enables us to provide a customised, high-touch client experience. The performance of 2025 was a clear demonstration of those strengths, which will continue to guide our approach in the year ahead.
How has the reintroduction of short selling in South Korea in March 2025 impacted this particular market? And how do you evaluate attitudes towards short selling in other APAC markets?
Uhlen: The South Korean securities borrowing and lending (SBL) market has seen rapid expansion since the lifting of the short sell ban. It has been a very profitable market across the street with a few counterparties holding out on returning into the space and a number of participants not fully opening their pipes. The impact and interest on short selling in other markets has continued to grow, but as these markets may not necessarily be the main attraction anymore, Korea may move up the leader board.
Michael: The reintroduction of short selling in South Korea has reinvigorated trading demand in the market. While only a subset of participants have resumed active borrowing and lending, fee levels and revenues have been strong.Ā Market participants remain cautious, mindful of regulatory scrutiny, but overall demand for both borrowing and lending is resilient.
Au: The steadfast commitment by South Korean authorities to the resumption of covered short selling on āLiberation Dayā ā despite heightened global market volatility ā was commendable. At a time when peer markets moved quickly to contract their short sell quota (Taiwan) and suspended short selling (Thailand), the Governor of South Koreaās Financial Supervisory Service (FSS) took a constructive approach by visiting Hong Kong in mid-April. During the visit, the Governor engaged directly with a wide range of market participants about stabilising their regulatory position on rules around short selling. This engagement helped reinforce confidence in policy continuity and regulatory intent.
Furthermore, the new South Korean administration has shown clear willingness to take necessary actions to reduce the āKorea-discountā and strengthen the investment case for South Koreaās capital market. Whether achieved through corporate governance initiatives or broader market reforms, the ability to deliver lower hedging costs for net long investors has provided substantial support for South Korean equities in 2025 and contributed meaningfully to the marketās strong performance.
Peer markets would do well to view the Korean experience as a key learning opportunity and draw on this to understand how best to navigate the optics and perceptions of key stakeholders around short selling. Getting ahead of potential negative press, emotive social media, and political influence remain key challenges for authorities, especially in markets with high retail participation and outsized volatility. Ongoing investor education around short selling remains critical and should be proactive and continuous, rather than reactive.
Han: More generally, I think beneficial owners have maintained broadly consistent attitudes towards short selling over the years.
On one hand, to the extent that beneficial owners continue to see short selling supporting the price discovery process within a mature and efficient market ā and as a driver for lending returns ā it is probably fair to say that short selling is viewed neutrally at worst or positively as an enabler of liquidity and opportunity.
On the other hand, I recognise there are beneficial owners ā especially retail investors and corporate executives ā and policy makers, who remain philosophically conflicted about short selling. They may believe short selling drives prices down, particularly during periods of market stress, and contributes to excessive volatility and steep price declines, even though research shows mixed evidence about the correlation between short selling and market impact.
Micallef: South Koreaās restart catalysed a sharp rebound in borrowing activity and revenues after an 18-month hiatus. While some participants returned cautiously as new rules bedded in, confidence has been rebuilding. We expect the market to normalise further, with elevated margins and healthy volumes sustained by hedging, relative-value strategies, and tactical shorts.
Across APAC, the tone toward short selling is generally supportive when transparency and compliance are clear. Regulators recognise its role in price discovery and market liquidity. China has announced a number of initiatives to increase cross-border financing for government bonds, and regional frameworks continue to evolve toward robust, transparent practices.
Which regulatory initiatives in APAC markets will consume most attention for your agency lending and collateral management teams over the coming 12 months? What is your firm doing to prepare clients for these movements?
Hussain: A range of regulatory initiatives are underway across the region, all of which require strategic attention from market participants. APAC is seeing a broader acceptance of collateral types, with eligible assets now including emerging market credit, equities, ETFs, corporate credit, agencies, and supranationals. This expansion is expected to continue through 2026 as demand grows for new forms of accepted collateral ā including alternatives, tokenisation, digital assets, and gold. This is further illustrated by the Taiwan Stock Exchangeās (TWSEās) upcoming induction of pledge collateral, taking effect in late-March 2026. At the same time, platforms such as Bond Connect, Euroclear, and Clearstream are enabling a more prominent and coordinated role for offshore agent lenders in the financing of renminbi-denominated assets ā unlocking new opportunities for international and domestic investors alike.
Another key change is the transition to T+1 settlement cycles across major exchanges, including the Australian Stock Exchange (ASX), the TWSE and the Hong Kong Stock Exchange (HKEX). This shift introduces new considerations around liquidity and the operation of buy-in market structures, particularly given the increased risk profile.
Au: APACās progressive move to T+1 settlement is the major regulatory development. While the larger developed markets such as Japan, Hong Kong, and Australia are expected to face some potential liquidity hurdles, it is the more nuanced APAC markets that are likely to encounter greater challenges. The transition to T+1 will likely push borrowing rates higher and may reduce overall supply. In addition, South Korea has floated the ambition to move toward 24-hour trading, a concept that is also receiving increasing attention in the US. Both initiatives represent structural shifts that will require careful coordination across trading, settlement, and collateral management workflows.
Against this backdrop, scalable and automated solutions will be essential to mitigate any operational complexities, while also engaging closely with our peers and our clients to collectively respond to significant market changes and build aligned, common solutions.
Han: We take our roles as fiduciaries on behalf of our clients seriously. That means we proactively track and respond to regulatory changes, assess their implications for our programme and engage with our clients early on so that they can plan ahead. Depending on the specific regulatory matter, engagement can happen in various forms ā a letter providing background and implications (and in some cases requiring a decision to maintain the status quo or change), a discussion as part of a scheduled service review, a deep-dive session with relevant subject matter experts, etc. Across the board, we lead with transparency and engagement in our outreach, qualities that help us establish credibility and trust with our clients.
Michael: The two main areas we see are accelerated settlement cycles and regulatory developments in the collateral market;
Accelerated settlement cycle: APAC markets are actively considering reductions in settlement timeframes to align with the T+1 cycles adopted or targeted globally. While implementation in APAC may take time, we are engaged with industry groups to ensure readiness and effective planning. J.P. Morgan continues to provide thought leadership for clients in this area.
Regulatory developments in the collateral market: In Taiwan, recent amendments to the āOperating Rules on the Use of Domestic Ķų±¬³Ō¹Ļ by Overseas Chinese and Foreign Nationals as Collaterals for Offshore Investment ActivitiesāĀ wouldĀ permit Foreign Institutional Investors (FINIs) to pledge Taiwanese securities as collateral for offshore investment activities. These amendments will be effective 30 March 2026.Ā J.P. Morgan is actively monitoring and engaging with these developments to support anticipated opportunities.
Micallef: Korea and Thailand will headline the regulatory focus.
Korea: Proposed extensions to trading hours (potentially to 20:00 by mid-2026) and the longer-term ambition for 24-hour trading add operational complexity. We are evaluating impacts on recalls for sales and corporate actions, late-day locates, and collateral timing, and building extended-hours service models with clear cut-offs and escalation paths.
Thailand: Authorities are reviewing short-selling and SBL frameworks, including tighter definitions, reinforced pre-borrow certification, and stronger broker risk systems. We are aligning order flows with pre-borrow evidence, enhancing inventory controls, and coordinating with counterparties on standardisation.
T+1 discussions: Two years on from the US switch, APAC debate continues. Hong Kong appears closer to enabling T+1 subject to industry coordination; Australiaās timeline is linked to the Clearing House Electronic Subregister System (CHESS) replacement. Regardless of dates, we are preparing for compressed settlement ā earlier recalls, tighter pre-borrow gates, and accelerated collateral cycles.
BNYās collaboration with Cboe Clear Europe in centrally cleared SFTs ā featuring a title-transfer model with pledge-back for UCITS ā has elevated liquidity, collateral efficiency, and risk management across Europe. As adoption accelerates, APACās scale, institutional depth, and cross-border connectivity make it the natural next frontier, where clearing can harmonise regional complexity into a competitive advantage ā unlocking new liquidity, optimising balance sheets, and driving market innovation.
We continue to engage with peers and trade associations, including PASLA, and provide clients with market-specific playbooks, training, and operational dry-runs to ensure readiness.
What investments and adaptations to technology and working practices have you made during 2025 to sustain and grow your securities finance activity in the Asia Pacific region? What part has the use of digital assets played in this respect?
Micallef: AI sits at the centre of our investment agenda at BNY. We are not only embedding AI into existing workflows; we are rethinking operating models to unlock new solutions and decisioning capabilities for clients and counterparties.
Digital assets are already influencing our business. We have partnered across the ecosystem to develop tokenised collateral solutions in both bonds and cash, aiming to enhance settlement efficiency, collateral mobility, and transparency. These initiatives mark a forward path for how transactions could be processed and financed in the years ahead.
Michael: We have continued to invest in our front office trading tools to automate processes across trading, compliance, collateral management, and reporting. Our quantitative research teams leverage AI and machine learning to analyse large datasets, optimise security pricing, assess elasticity, and identify trading opportunities to deliver the best outcomes for clients. In 2025, we rolled out enhancements to our client portal, Ķų±¬³Ō¹Ļ Finance Central, offering clients advanced analytics, customisable reporting, and API access.
Tokenisation is gaining significant traction across the industry, particularly as a means to enhance collateral efficiency. However, adoption of securities finance solutions leveraging tokenised assets remains in its early stages, with market participants seeking greater regulatory clarity and legal certainty before scaling up. Achieving the full benefits of reduced risk and improved operational and capital efficiency will require broader industry collaboration and scale. At J.P. Morgan, we are actively involved in industry initiatives and driving standards and best practices through International Ķų±¬³Ō¹Ļ Lending Association (ISLA) working groups and participation in industry sandboxes, and we are advancing targeted connectivity to market infrastructure solutions that meet the risk, liquidity, and scalability standards needed to make tokenisation scalable. In parallel, we continue to invest in and develop our Tokenised Collateral Network and Collateral Token Agent solutions, expanding beyond the initial tokenised money market funds (MMF) collateral use case to encompass other asset types and transaction flows, with a particular focus on securities financingĀ as part of our ongoing roadmap.
Han: At an overarching level, our capital expenditure in recent years reflects our multi-year growth strategy to continue strengthening our core products in securities financing ā namely agency lending, prime services and secured financing ā while driving greater synergies across these products. We continue to invest in building on the unique positioning of our core products across the wholesale/supply and retail/demand ends of the value chain, further differentiating our offerings, and strengthening the integrated value across our platform.
I can point out a couple of examples that illustrate this approach. Firstly, we are expanding our suite of solutions with the objective of increasing capital efficiencies while providing our clients with greater access to securities lending opportunities. This ambition led us to a key milestone in December 2025. State Street became the first bank to become an Options Clearing Corporation (OCC) clearing member, with OCC providing central counterparty clearing and settlement through its stock loan programme for our prime services platform.
Strategically, the investment strengthens our prime services offering, benefits our beneficial owners within our agency lending programme, and reflects our commitment to expanding our core products and delivering greater value for our clients.
State Streetās Financing Hub represents a multi-year commitment to strengthening our core franchises while unlocking integrated value for our clients. It consolidates financing operations, enhances liquidity and collateral management, integrates with repo and lending markets and equips clients with data-driven tools to optimise balance sheet usage and funding decisions. The platform also supports agency lending and secured financing workflows, leveraging modern interoperability standards to integrate all relevant systems and deliver a seamless client experience.
How have monetary conditions and political changes shaped securities finance opportunities in the Japanese market? How are you positioning yourself to maximise opportunities for lenders and borrowers in this environment?
Au: Corporate governance reforms and the Japanese governmentās pro-growth policies have been key drivers of robust corporate deal activity and a sustained market rally in Japan. This momentum has, in turn, supported steady borrower demand for Japanese equities. At the same time, rising Japanese yields and the end of negative interest rates have compressed basis point levels, tightening US Treasury-Japanese government bond (JGB) spreads. Although volatile, this spread has long underpinned one of the marketās largest funding trades. Conversely, demand for JGBs has increased as yields have moved higher, fueling greater borrowing across a wide range of specific issues.
Looking ahead, a key question is whether a higher-yield environment and a steeper curve will create new opportunities for money market funds. We are also monitoring yen volatility closely for signs that rising hedging costs could prompt domestic investors to repatriate foreign assets, potentially putting a cap on long-term yields.
Michael: Monetary conditions and political changes have fueled increased activity in Japanās securities finance market since 2025, with momentum continuing into 2026. The Bank of Japan (BOJ) has remained cautious on rate hikes, but volatility in long-term JGB yields has risen amid fiscal expansion concerns. Japanese equities have outperformed regional peers, supported by stable policies that attract momentum-driven capital flows and boost stock borrowing and lending. Yen volatility, influenced by monetary policy divergence and potential Ministry of Finance intervention, has led to active two-way trading in USD/JPY, impacting stock lending demand.
As an agency lender, despite narrower USD/JPY spreads limiting cross-currency lending, we see opportunities in increased market-wide activity, special trades from heightened equity volatility, stronger JGB lending demand, and reinvestment/lending of JPY cash as rates rise.Ā To maximise these opportunities, we are deepening relationships with existing borrowers, forging new partnerships, and expanding our localised business within the domestic market.
Hussain: Following the recent election in Japan, equity markets have responded positively to the governmentās pro-market and pro-economy stance, supported by fiscal stimulus and tax relief initiatives. However, investors remain cautious regarding Japanās long-term fiscal sustainability, given the nationās elevated debt levels.
In terms of fixed income, the BOJ has scaled back its Bond Purchase Programme over the past year, resulting in higher JGB yields. There is ongoing discussion about potential foreign exchange market intervention in 2026, particularly in light of the weak yen. The BOJās gradual balance sheet reduction is creating opportunities for lenders to provide liquidity in the JGB repo market. Additionally, the diversification of funding needs is expected to benefit Asian high-quality liquid assets (HQLA), including JGBs.
Yamamoto: The BOJās gradual interest rate hikes, coupled with the strong performance of the Japanese equity market, have significantly invigorated Japanās securities finance market in recent years. The historic victory of the Liberal Democratic Party (LDP) in the February 2026 general election has further solidified political stability, boosting confidence in Japanās markets. This environment, reminiscent of the growth during the Abenomics era, has supported the expansion of the securities lending market and driven an increase in funding demand. To address the growing demand for yen funding, we are accommodating diverse collateral types, including foreign equities and both domestic and international bonds. Additionally, we are offering solutions like collateral swaps through upgrade and downgrade repos and schemes tailored to meet liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements, aiming to contribute to the sustainable growth and dynamism of the securities finance sector.
Micallef: Japanās policy normalisation and yen volatility have periodically created specials in JGBs, particularly at the super-long end. That environment has opened opportunities for specific-name borrows, term trades, and collateral transformation. We are expanding inventory channels in JGBs and working closely with partners to support liquidity, manage haircuts dynamically, and capture revenue while maintaining robust risk and governance standards. On the equity side, governance-driven corporate actions continue to present event-led borrow demand that we are positioned to serve.
How do you assess the outlook for APAC securities finance markets for 2025? And what opportunities do you foresee for these markets?
Au: Looking ahead, APAC is well positioned to build on the strong momentum of 2025, as elevated market activity continues to drive demand for regional assets. We expect Hong Kong to remain a key revenue-generating market, with the IPO market likely to sustain its momentum. Taiwan, as a technology-heavy market, is expected to continue attracting substantial borrow demand. Supported by ongoing AI themes, we anticipate steady lending performance from this market.
Japan is also expected to remain a robust lending market, driven by the Japanese governmentās growth-focused policies, ongoing corporate governance reforms and investorsā desire to diversify beyond the US. South Korea is likely to increase its share of regional market revenues as participants re-enter and scale up their activity following significant investments in risk management, compliance, and operational enhancements. Overall, APAC is set to remain one of the most diversified, resilient, and opportunity-rich regions for securities finance globally in the year ahead.
Micallef: APAC markets are poised for strength in 2026, extending the positive trajectory established in 2025. Continued progress in collateral optimisation, coupled with improving liquidity across key Asian venues, is set to drive meaningful gains across multiple product lines. Early-year activity already points to rising volumes and deeper client engagement, reinforcing a constructive outlook for the months ahead.
South Korea: With short-selling fully reinstated, borrow demand should remain firm in index heavyweights and tech/industrial names. Standardised processes and improved surveillance reduce friction and broaden participation. Term borrows and market-making inventory are likely to be in high demand.
Hong Kong: Expect policy calibration from the mainland to support stability, with Hong Kong driven by event-led specials (buybacks, restructurings), IPO pipelines, and convertibles hedging. Tokenised instruments are poised to gain traction as infrastructure matures.
Australia: Policy is likely to remain comparatively restrictive, but this supports attractive collateral transformation trades. Corporate actions and placements will keep equity lending active, while term funding opportunities should remain.
Taiwan: Tech momentum (AI/semiconductors) continues to underpin elevated fees and frequent specials. Supply constraints persist in flagship names, but lendable inventory should keep expanding as more participants enter the market. Term supply and careful recall management will be key.
Yamamoto: The outlook for the APAC securities finance market in 2025 is highly positive, with sustained strong performance expected across equity markets in the region. This is likely to further increase the demand for securities as collateral, driving the growth of the securities finance market. As this trend continues, the need for solutions that enhance collateral utilisation and ensure liquidity will become even more critical. As a Japan-based institution, we aim to support the expanding APAC market by offering structured securities finance transactions. Specifically, we plan to accept emerging market securities as collateral and lend Japanese assets such as Japanese equities, yen, and government bonds.
Michael: We expect trading momentum to continue in 2026, building on the strong performance of 2025. Beyond Hong Kong and Japan, higher spread markets such as Taiwan and Korea will remain a key focus as borrowing demand stays robust.Ā Geopolitical uncertainties will continue to shape the landscape, prompting beneficial owners to optimise their portfolios and potentially impacting trading inventories.Ā From a trading perspective, we aim to expand our lending distribution channels across the region and focus on growing our product offering to meet evolving market needs.
Hussain: A range of trends will be impacting the APAC securities finance markets landscape in the year ahead, particularly collateral diversification, capital flows, and evolving portfolio management strategies. There is a clear shift towards diversification into non-USD denominated collateral as a means of managing risk. Historically, a weaker US dollar has benefited non-USD assets, leading to increased capital flows into Asia and emerging markets. This dynamic is resulting in higher asset valuations, more shorting opportunities, and a growing need for effective hedging strategies.
Asset owners are increasingly seeking holistic solutions that integrate securities lending, financing, and liquidity management to optimise portfolio performance. APAC is likely to be a beneficiary as markets across the region continue to maintain a strong emphasis on transparency, stability, and market fairness.
Uhlen: We remain cautiously optimistic about the APAC securities finance landscape in 2026. Market participants continue to focus on three pillars ā access to liquidity, balance sheet efficiency, and cost discipline. This environment may drive noticeable increase in collateral-pledge structures that can involve both APAC-listed securities and regional participants.
Lending activity in the technology sector is expected to be dynamic and a key opportunity in 2026, driven by elevated valuations in that category.
Geopolitical uncertainties, including potential tensions or shifts in trade policies, could also trigger price swings and temporarily increase short-term borrowing demand. The combination of continuous demand for HQLA, particularly the Australian Commonwealth Government Bonds (ACGBs), a strong pipeline of IPOs, and rapid technological adoption positions the APAC securities-finance market for continued growth and innovation throughout 2026.
As an agent lender, we will need to continue to enhance collateral flexibility and structures around triparty so borrowers can obtain better liquidity ratios. We also need to embrace technology fast to enhance our offering.
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