The Trade: Securities Lending Reg Reforms Could Hike European Buy-Side Trading Costs by €40 Billion, Report Finds

Trading costs for the European buy-side could be set to hike up by up to €40 billion due to new securities lending regulation, writes Annabel Smith at The Trade, citing research from Credit Benchmark.

“…according to Credit Benchmark’s report…the new rules will have a “dramatic” impact on the buy-side that will see spreads widened and liquidity lessened.

The firm predicts that the changes will see lending out of securities for general collateral (GC) cease due to a reduction in the annualised €1.2 billion income that European savers currently receive. They could also spark a decline in securities financing activity that Credit Benchmark predicts will dry up market liquidity.

The full original research cited by The Trade can be accessed here.

The Trade, September 16, 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.