Developments in the global securities lending market

Matthew Dive (), Ronan Hodge (), Catrin Jones () and James Purchase ()
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Matthew Dive: Bank of England, Postal: Threadneedle Street, London, EC2R 8AH, http://www.bankofengland.co.uk
Ronan Hodge: Bank of England, Postal: Threadneedle Street, London, EC2R 8AH, http://www.bankofengland.co.uk
Catrin Jones: Bank of England, Postal: Threadneedle Street, London, EC2R 8AH, http://www.bankofengland.co.uk
James Purchase: Bank of England, Postal: Threadneedle Street, London, EC2R 8AH, http://www.bankofengland.co.uk

Bank of England Quarterly Bulletin, 2011, vol. 51, issue 3, 224-233

Abstract: Securities lending plays an important role in supporting financial markets. For example, it can improve market liquidity, potentially reducing the cost of trading and increasing market efficiency. But by increasing the interconnections between institutions it can pose potential risks to financial stability, which are exacerbated by a lack of transparency in the securities lending market. Since the onset of the financial crisis, market participants have attempted to address some of these risks, and fundamental changes to market infrastructure are being discussed, such as the use of central counterparties. New regulations under way to improve the resilience of the financial system may also impact both the risks to financial stability from securities lending and its benefits.

Date: 2011
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