ISLA conference: time for sec lending and repo to buddy up
19 June 2013 Prague
Image: Shutterstock
Securities lending and repo desks should move closer together to provide a better overview of collateral, according to one panellist at the International Securities Lending Association’s (ISLA’s) annual conference in Prague.
Prior to a panel on collateral, attendees were asked whether the desks should move closer together, with 92 percent of respondents saying that they should.
One panellist agreed, after pointing out that a ‘global collateral shortfall’, as some have described it, may be off the mark, with more than 70 trillion securities available worldwide.
“Securities lending and repo desks should move closer together, as a lot of collateral is wasted. Coming together is more efficient.”
Another panellist said that as central banks stop pumping liquidity into markets, the practice of collateral multiplication, in which counterparties re-use collateral to create new credit lines, may be affected.
This could “hurt the real economy” in turn, explained the panellist.
Prior to a panel on collateral, attendees were asked whether the desks should move closer together, with 92 percent of respondents saying that they should.
One panellist agreed, after pointing out that a ‘global collateral shortfall’, as some have described it, may be off the mark, with more than 70 trillion securities available worldwide.
“Securities lending and repo desks should move closer together, as a lot of collateral is wasted. Coming together is more efficient.”
Another panellist said that as central banks stop pumping liquidity into markets, the practice of collateral multiplication, in which counterparties re-use collateral to create new credit lines, may be affected.
This could “hurt the real economy” in turn, explained the panellist.
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