The next phase for securities financing
09 June 2026
Dan Long, global head of securities lending product at GLMX, delves into the balance between standardisation and nuanced engagement to drive liquidity across market segments
Image: stock.adobe.com/atha_lintar
Throughout securities financing markets, firms are working in a more connected ecosystem across securities borrowing and lending (SBL), repo, and total return swap (TRS) workflows. The strategic drivers behind these market segments often overlap: balance sheet optimisation, liquidity management, capital efficiency, collateral mobility, and access to inventory or exposure to meet client demands.
Market participants that take advantage of the connections among these market segments can improve efficiency, enhance liquidity access, reduce operational complexity and risks, and optimise financing decisions more holistically across products.
With financing business models shifting, successful tech platforms will serve clients and solve funding needs across tradeflows and workflows. Market technology innovators will need to understand which tools are most valuable to market leaders, not just today but also in the future. What was once theory is now turning into execution. From our observations, one thing is clear: nuance matters.
While securities lending, repo, and TRS increasingly sit alongside one another within firms’ secured funding businesses, each market retains distinct characteristics across liquidity profiles, participant behaviours, and execution requirements. The opportunity for modern solutions platforms is no longer simply automating workflows and digitising executions in silos. It is enabling firms to operate at scale across products while preserving the nuances that make each market function effectively.
The value of convergence
Historically, different secured funding business units operated through separate workflows despite supporting related objectives, servicing overlapping clients, and deploying the same scarce financial resources. Today, participants are looking across products and markets more holistically to maximise efficiencies.
For a hedge fund seeking to establish or maintain a short position, the decision is not always limited to a single financing product. Depending on the security, availability, economics, and trading objective, firms may turn to physical securities borrowing, synthetic exposure, or a combination of both. Prime brokers/dealers similarly evaluate inventory, financing opportunities, balance sheet, and capital considerations across multiple market segments. Prime brokers and dealer financing desks should be able to quickly identify availability from a collective of securities lenders and long holders of inventory, to seamlessly execute the borrowing within a unified platform.
The ability to view and access financing opportunities across different market segments with ease is becoming increasingly valuable.
The tools most needed by market participants are those which enable users to move with fluidity across the value chain while preserving market-specific workflows and nuances each product and firm requires.
Íø±¬³Ô¹Ï lending dynamics
The securities lending market segment has its own drivers, and equity and fixed income lending are further differentiated. Equity lending dynamics are often driven by short selling demand, corporate actions trading, hedging requirements, and rapidly changing availability, particularly in specials. In fixed income lending, participants must solve for collateral sourcing, settlement coverage, market making activity, and implications around funding and balance sheet.
SBL as a whole has made progress towards a form of electronic trading, particularly around general collateral (GC). GC flow is highly standardised and well suited to automated execution. For these transactions, machine-to-machine interaction can deliver meaningful efficiency gains, reduce operational risk, and enable participants to manage large volumes of activity at scale. In this lower-margin but higher volume area, low latency is paramount. Especially here, full end-to-end automation remains a critical component of modern securities lending.
However, a meaningful portion of securities lending activity is still analog and transacted through voice negotiation and manual processes. This reflects the need for context and nuance to find and engage with liquidity in warms, specials, and hard-to-borrow securities. That dynamic also presents an opportunity for participants to streamline negotiation, increase visibility, and reduce settlement friction via straight-through processing.
Hard to borrow securities, exclusive inventory, rerates, and recalls frequently introduce considerations that cannot be easily captured through fully automated workflows. These require a high-touch and hybrid approach.
As bank balance sheets and the macro environment have evolved, transactions have become more sensitive to inventory, market events, and availability. Financing is more strategically important than ever. Traders require greater flexibility and seek solutions to negotiate terms and structures (for example evergreens and extendables), source pocket liquidity, and optimise outcomes.
They routinely evaluate factors beyond the headline fee/rate. Borrowers may focus on financing cost, inventory certainty, risk-weighted asset, and execution flexibility. Lenders may prioritise revenue optimisation, both from lending fees and in the case of cash collateral, the reinvestment yield, utilisation rates, collateral requirements, and recall certainty. The value of a loan depends not only on the security itself but on who needs it, why they need it, and for how long.
Because these priorities vary by participant and transaction, securities lending cannot always be reduced to a simple price and size decision. Liquidity discovery and execution often require a more nuanced approach that reflects the objectives of both borrowers and lenders.
Supporting multiple paths to liquidity in securities lending
In financing markets, interaction is part of the liquidity discovery process. However, that does not mean every transaction requires negotiation. The best path to liquidity discovery, access, and execution depends on the situation.
In high pressure, illiquid, or complicated situations, request for quotes, auctions, and instant pricing provide powerful avenues to find and execute on liquidity. Clear evidence of the best execution option available under any given circumstance provides critically needed certainty.
Standardisation has a role to play in supporting automation. A highly liquid general collateral trade may be suitable for straight-through automation. A warm and hard-to-borrow equity special may require more sophisticated interaction around availability, pricing, rerates, or term.
The challenge for market participants is not choosing between automation and bespoke interaction. The challenge is accessing both effectively and efficiently. That requires solutions capable of supporting multiple execution and workflow protocols simultaneously.
Trading firms are looking for solutions that allow them to manage more sophisticated interactions at scale with efficient balance sheet usage. We hear every day from clients that they want streamlined liquidity discovery and the ability to negotiate and execute without sacrificing the nuances that many securities lending transactions require.
The most effective technology platforms will support all of these workflows within a unified environment. This flexibility is becoming increasingly important as firms seek to optimise financing decisions holistically across converging products.
Supporting sophisticated financing workflows
Standardisation and specialisation are not mutually exclusive.
As the broader financing market becomes increasingly interconnected, firms require technology that enables participants to access securities lending, repo, and TRS workflows within a common ecosystem while preserving the unique dynamics that drive liquidity formation within each market segment.
For securities lending in particular, the objective is not simply to automate existing workflows. It is to make liquidity easier to discover, inventory easier to access and deploy, financing decisions easier to evaluate, and market interaction more efficient for both borrowers and lenders, thereby fostering scalability.
As the financing market continues to evolve, it will require combined automation, connectivity, and flexible interaction within a single environment. GLMX helps market participants manage the complexity of global securities lending workflows, across both equity and fixed income, more efficiently while preserving the nuances which drive liquidity.
Market participants that take advantage of the connections among these market segments can improve efficiency, enhance liquidity access, reduce operational complexity and risks, and optimise financing decisions more holistically across products.
With financing business models shifting, successful tech platforms will serve clients and solve funding needs across tradeflows and workflows. Market technology innovators will need to understand which tools are most valuable to market leaders, not just today but also in the future. What was once theory is now turning into execution. From our observations, one thing is clear: nuance matters.
While securities lending, repo, and TRS increasingly sit alongside one another within firms’ secured funding businesses, each market retains distinct characteristics across liquidity profiles, participant behaviours, and execution requirements. The opportunity for modern solutions platforms is no longer simply automating workflows and digitising executions in silos. It is enabling firms to operate at scale across products while preserving the nuances that make each market function effectively.
The value of convergence
Historically, different secured funding business units operated through separate workflows despite supporting related objectives, servicing overlapping clients, and deploying the same scarce financial resources. Today, participants are looking across products and markets more holistically to maximise efficiencies.
For a hedge fund seeking to establish or maintain a short position, the decision is not always limited to a single financing product. Depending on the security, availability, economics, and trading objective, firms may turn to physical securities borrowing, synthetic exposure, or a combination of both. Prime brokers/dealers similarly evaluate inventory, financing opportunities, balance sheet, and capital considerations across multiple market segments. Prime brokers and dealer financing desks should be able to quickly identify availability from a collective of securities lenders and long holders of inventory, to seamlessly execute the borrowing within a unified platform.
The ability to view and access financing opportunities across different market segments with ease is becoming increasingly valuable.
The tools most needed by market participants are those which enable users to move with fluidity across the value chain while preserving market-specific workflows and nuances each product and firm requires.
Íø±¬³Ô¹Ï lending dynamics
The securities lending market segment has its own drivers, and equity and fixed income lending are further differentiated. Equity lending dynamics are often driven by short selling demand, corporate actions trading, hedging requirements, and rapidly changing availability, particularly in specials. In fixed income lending, participants must solve for collateral sourcing, settlement coverage, market making activity, and implications around funding and balance sheet.
SBL as a whole has made progress towards a form of electronic trading, particularly around general collateral (GC). GC flow is highly standardised and well suited to automated execution. For these transactions, machine-to-machine interaction can deliver meaningful efficiency gains, reduce operational risk, and enable participants to manage large volumes of activity at scale. In this lower-margin but higher volume area, low latency is paramount. Especially here, full end-to-end automation remains a critical component of modern securities lending.
However, a meaningful portion of securities lending activity is still analog and transacted through voice negotiation and manual processes. This reflects the need for context and nuance to find and engage with liquidity in warms, specials, and hard-to-borrow securities. That dynamic also presents an opportunity for participants to streamline negotiation, increase visibility, and reduce settlement friction via straight-through processing.
Hard to borrow securities, exclusive inventory, rerates, and recalls frequently introduce considerations that cannot be easily captured through fully automated workflows. These require a high-touch and hybrid approach.
As bank balance sheets and the macro environment have evolved, transactions have become more sensitive to inventory, market events, and availability. Financing is more strategically important than ever. Traders require greater flexibility and seek solutions to negotiate terms and structures (for example evergreens and extendables), source pocket liquidity, and optimise outcomes.
They routinely evaluate factors beyond the headline fee/rate. Borrowers may focus on financing cost, inventory certainty, risk-weighted asset, and execution flexibility. Lenders may prioritise revenue optimisation, both from lending fees and in the case of cash collateral, the reinvestment yield, utilisation rates, collateral requirements, and recall certainty. The value of a loan depends not only on the security itself but on who needs it, why they need it, and for how long.
Because these priorities vary by participant and transaction, securities lending cannot always be reduced to a simple price and size decision. Liquidity discovery and execution often require a more nuanced approach that reflects the objectives of both borrowers and lenders.
Supporting multiple paths to liquidity in securities lending
In financing markets, interaction is part of the liquidity discovery process. However, that does not mean every transaction requires negotiation. The best path to liquidity discovery, access, and execution depends on the situation.
In high pressure, illiquid, or complicated situations, request for quotes, auctions, and instant pricing provide powerful avenues to find and execute on liquidity. Clear evidence of the best execution option available under any given circumstance provides critically needed certainty.
Standardisation has a role to play in supporting automation. A highly liquid general collateral trade may be suitable for straight-through automation. A warm and hard-to-borrow equity special may require more sophisticated interaction around availability, pricing, rerates, or term.
The challenge for market participants is not choosing between automation and bespoke interaction. The challenge is accessing both effectively and efficiently. That requires solutions capable of supporting multiple execution and workflow protocols simultaneously.
Trading firms are looking for solutions that allow them to manage more sophisticated interactions at scale with efficient balance sheet usage. We hear every day from clients that they want streamlined liquidity discovery and the ability to negotiate and execute without sacrificing the nuances that many securities lending transactions require.
The most effective technology platforms will support all of these workflows within a unified environment. This flexibility is becoming increasingly important as firms seek to optimise financing decisions holistically across converging products.
Supporting sophisticated financing workflows
Standardisation and specialisation are not mutually exclusive.
As the broader financing market becomes increasingly interconnected, firms require technology that enables participants to access securities lending, repo, and TRS workflows within a common ecosystem while preserving the unique dynamics that drive liquidity formation within each market segment.
For securities lending in particular, the objective is not simply to automate existing workflows. It is to make liquidity easier to discover, inventory easier to access and deploy, financing decisions easier to evaluate, and market interaction more efficient for both borrowers and lenders, thereby fostering scalability.
As the financing market continues to evolve, it will require combined automation, connectivity, and flexible interaction within a single environment. GLMX helps market participants manage the complexity of global securities lending workflows, across both equity and fixed income, more efficiently while preserving the nuances which drive liquidity.
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