Securities Finance Times: Basel Changes Could Trigger 35% Decline in Sec Lending Income for Europe’s Buy-Side

New EU capital rules scheduled for implementation in 2025 are likely to trigger a sharp rise in trading costs for buy-side firms in Europe, writes Bob Currie at Securities Finance Time, citing a recent report published by Credit Benchmark.

The London-based credit consensus ratings and analytics company predicts that these changes may contribute to a 35 per cent decline in the securities lending income generated by European buy-side institutions, causing lending income to contract from its current €1.2 billion to less than €800 million.

It predicts that these changes are also likely to reduce market liquidity and to widen bid-offer spreads, resulting in a potential increase in the annual cost of trading of between €20 billion and €40 billion.

The full original research cited by Securities Finance Times can be accessed here.

Securities Finance Times, September 6, 2022.

View original article (external link).

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Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.