ISLA: CCPs—what's in it for me?
23 June 2016 Vienna
Image: Shutterstock
The growth of central counterparties (CCPs) in the securities lending market is being held back by a lack of clear incentives, according to ISLA conference panellists.
A panel of senior market participants at the 25th Annual Securities Finance and Collateral Management Conference were united in their belief that CCPs offer compression and netting advantages, but that these were limited to specific demographics of the market.
One panellist from a large agent lender described his business as "standing ready to work with CCPs", but noted that all the benefits for agent lenders are yet to sway beneficial owners when concerns collateral visibility and other issues remain.
Despite this, CCPs have enjoyed a significant shift in market sentiment towards acknowledgment of their legitimacy in the securities lending market so far in 2016, although there is still a distinct geographic divide.
At the IMN Beneficial Owners' International Securities Lending Conference in the US in February, scepticism around CCPs was highlighted. A forward-looking poll showed that 63.9 percent of respondents expected less than 5 percent of their business to use central clearing by 2017.
Delegates at the IMN Beneficial Owners' International Securities Lending Conference in the US in February saw polling of predicted CCP use by 2017 highlight their scepticism, with 63.9 percent expecting less than 5 percent of their business to use central clearing.
ISLA's European delegates in Vienna voted in stark contrast to this when asked a similar question.
More than half, 56 percent, of the audience said they could see between 1 and 25 percent of their trades using a CCP in three years’ time, while 23 percent of respondents said 26 and 50 percent of their trades could go through a CCP.
A panel of senior market participants at the 25th Annual Securities Finance and Collateral Management Conference were united in their belief that CCPs offer compression and netting advantages, but that these were limited to specific demographics of the market.
One panellist from a large agent lender described his business as "standing ready to work with CCPs", but noted that all the benefits for agent lenders are yet to sway beneficial owners when concerns collateral visibility and other issues remain.
Despite this, CCPs have enjoyed a significant shift in market sentiment towards acknowledgment of their legitimacy in the securities lending market so far in 2016, although there is still a distinct geographic divide.
At the IMN Beneficial Owners' International Securities Lending Conference in the US in February, scepticism around CCPs was highlighted. A forward-looking poll showed that 63.9 percent of respondents expected less than 5 percent of their business to use central clearing by 2017.
Delegates at the IMN Beneficial Owners' International Securities Lending Conference in the US in February saw polling of predicted CCP use by 2017 highlight their scepticism, with 63.9 percent expecting less than 5 percent of their business to use central clearing.
ISLA's European delegates in Vienna voted in stark contrast to this when asked a similar question.
More than half, 56 percent, of the audience said they could see between 1 and 25 percent of their trades using a CCP in three years’ time, while 23 percent of respondents said 26 and 50 percent of their trades could go through a CCP.
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