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.