IMN: New US administration takes centre stage
07 February 2025 US
Image: admin_design/stock.adobe.com
Much of investors’ time will be consumed with how the political scene will create situations in different sectors that may cause underperformance and opportunities for special trading, according to Andrew Lazar, managing director, head of rates sales at BUCKLER Securities.
The IMN’s Beneficial Owners' International Securities Finance & Collateral Management Conference welcomed attendees to the event in Fort Lauderdale, Florida with the ‘Global Securities Finance Market Outlook for 2025’ panel.
Moderating the panel, Lazar directed the speakers to review the major impacts of the US election, which saw Donald Trump elected to serve a second term in the White House.
Last year, and leading up to the election, M&A activity proved stagnant, according to Craig Starble, eSecLending CEO.
However, Starble noted that the administration will be more lenient for M&A activity this year, which should create special opportunities for client holdings in 2025.
In addition, tariffs will, in this environment, change things dramatically. Starble explains: “It'll, unfortunately, probably impact Fed policy too. Generally, tariffs — especially when they're retaliatory — can be significantly inflationary. So let's hope that these are short-term events and that we can work through it.”
The market saw the stock market fall on Monday 3 February following tariffs placed on Canada, Mexico, and China.
Commenting on this, Starble noted: “That does create opportunity for our markets. Sadly, we can say that volatility is a good thing for securities lending. It may not be great for long portfolios, but it's good for securities lending and creates some winner and loser opportunities.”
Going forward, and despite challenges, 2025 looks to be an interesting year and a better year, the panel heard.
Furthering the conversation, Justin Aldridge, senior vice president, head of Agency Lending at Fidelity Investments, said: “My glass is always half full, so my expectations are that it will be a good year from a lending perspective. There are two ways to get there. One, we get what we’re hoping for with this administration and we see more IPOs and M&A deals in the marketplace.
“The alternative, if that doesn’t happen, then maybe something is systematically wrong. And so we will probably see some single stock demand coming back into the marketplace.”
Aldridge is also keen to see activity in 2025 as it relates to the focus on borrowers' balance sheets, and the focus on “coming to the table with flexibility on balance sheet-friendly trade structures”.
Fidelity Agency Lending, as a lender in the marketplace, is looking to actively help create trades and efficiencies for borrowing counterparties. He believes finding solutions to mitigate balance sheet usage will continue to be key for borrowing entities in 2025.
Adding to what will be key in 2025, one panellist advised looking more specifically at capital and regulation, suggesting that participants talk so much about capital that they need to step back and see why it is in place — they noted it’s not a good thing if the requirements go away.
Covering regulation in respect of opportunities for 2025, they also highlighted mandatory clearing as top of mind. While it is set to come into effect in June 2026, the US Treasury mandatory clearing mandate could be postponed.
Circling back to the US election results, Matthew Chessum, director of securities finance at S&P Global Market Intelligence, explained that, from a data perspective, some of the direct impacts seen in the financial market can pinpoint to the date of when the new US administration was elected.
For example, a vast increase in the amount of short interest that took place over Asian microchip semiconductor stocks was connected to the tariffs hawk, according to Chessum.
He also highlighted two recently reported “unheard of” events. The first was the Bank of England’s move to hold off on any transformation to advance to Basel III implementation, which he believes is a direct result of waiting to see what happens in the US under the new administration.
The second event was a decision by France and Germany to push back on new EU ESG directives as the regions were worried it would hamper their competition in relation to other states around the world. It is a “complete mindshift from where we've been over the last few months”, Chessum added.
He concluded: “From a pure regulatory perspective, there is a time for reflection, and that particularly in Europe, we're going to be responsive to what happens in the US, and that's going to directly impact our market.”
The IMN’s Beneficial Owners' International Securities Finance & Collateral Management Conference welcomed attendees to the event in Fort Lauderdale, Florida with the ‘Global Securities Finance Market Outlook for 2025’ panel.
Moderating the panel, Lazar directed the speakers to review the major impacts of the US election, which saw Donald Trump elected to serve a second term in the White House.
Last year, and leading up to the election, M&A activity proved stagnant, according to Craig Starble, eSecLending CEO.
However, Starble noted that the administration will be more lenient for M&A activity this year, which should create special opportunities for client holdings in 2025.
In addition, tariffs will, in this environment, change things dramatically. Starble explains: “It'll, unfortunately, probably impact Fed policy too. Generally, tariffs — especially when they're retaliatory — can be significantly inflationary. So let's hope that these are short-term events and that we can work through it.”
The market saw the stock market fall on Monday 3 February following tariffs placed on Canada, Mexico, and China.
Commenting on this, Starble noted: “That does create opportunity for our markets. Sadly, we can say that volatility is a good thing for securities lending. It may not be great for long portfolios, but it's good for securities lending and creates some winner and loser opportunities.”
Going forward, and despite challenges, 2025 looks to be an interesting year and a better year, the panel heard.
Furthering the conversation, Justin Aldridge, senior vice president, head of Agency Lending at Fidelity Investments, said: “My glass is always half full, so my expectations are that it will be a good year from a lending perspective. There are two ways to get there. One, we get what we’re hoping for with this administration and we see more IPOs and M&A deals in the marketplace.
“The alternative, if that doesn’t happen, then maybe something is systematically wrong. And so we will probably see some single stock demand coming back into the marketplace.”
Aldridge is also keen to see activity in 2025 as it relates to the focus on borrowers' balance sheets, and the focus on “coming to the table with flexibility on balance sheet-friendly trade structures”.
Fidelity Agency Lending, as a lender in the marketplace, is looking to actively help create trades and efficiencies for borrowing counterparties. He believes finding solutions to mitigate balance sheet usage will continue to be key for borrowing entities in 2025.
Adding to what will be key in 2025, one panellist advised looking more specifically at capital and regulation, suggesting that participants talk so much about capital that they need to step back and see why it is in place — they noted it’s not a good thing if the requirements go away.
Covering regulation in respect of opportunities for 2025, they also highlighted mandatory clearing as top of mind. While it is set to come into effect in June 2026, the US Treasury mandatory clearing mandate could be postponed.
Circling back to the US election results, Matthew Chessum, director of securities finance at S&P Global Market Intelligence, explained that, from a data perspective, some of the direct impacts seen in the financial market can pinpoint to the date of when the new US administration was elected.
For example, a vast increase in the amount of short interest that took place over Asian microchip semiconductor stocks was connected to the tariffs hawk, according to Chessum.
He also highlighted two recently reported “unheard of” events. The first was the Bank of England’s move to hold off on any transformation to advance to Basel III implementation, which he believes is a direct result of waiting to see what happens in the US under the new administration.
The second event was a decision by France and Germany to push back on new EU ESG directives as the regions were worried it would hamper their competition in relation to other states around the world. It is a “complete mindshift from where we've been over the last few months”, Chessum added.
He concluded: “From a pure regulatory perspective, there is a time for reflection, and that particularly in Europe, we're going to be responsive to what happens in the US, and that's going to directly impact our market.”
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