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8 Securities Lending Market Report | December 2023 9

Introduction

The second half of 2023 turned out to be much quieter than the first half. The
banking crisis of early 2023 is fully in the rear-view mirror and Central Banks have
paused the interest rate rises that have dominated the economic headlines for
the last 18 months. Securities lending revenues flattened amidst a lower specials
environment. The second half of 2023 saw some big regional variances in securities
lending activity with the US leading the transactional chart. Asia Pacific saw some
strong revenue pick up but Europe fell into the doldrums.
The industry has been focused on preparations for the move to T+1 in May 2024,
Securities Lending particularly in the high-volume US market. As attendees flew back from the RMA
Securities Finance & Collateral Management Conference in October 2023, the SEC
released its highly anticipated 10c-1a ruling which starts to define the reporting of
securities lending activity, in all likelihood, from early 2026. Most readers breathed a
Biannual Market Review sigh of relief at the changes from the initial version that was launched for consultation
in 2021 and 2022 but more detail won’t be known until the first half of 2024.
In Asia, 6 November 2023 proved to be an interesting day as South Korea banned
short selling until at least June 2024, simultaneously as the Philippines launched its
short selling regime. 2023 was also the year when securities lending in Saudi Arabia
became real. Volume grew steadily, particularly in the second half of the year. We
anticipate most lending agents will look to play some role in Saudi Arabia in 2024.
H2 2023 Meanwhile the Basel III endgame continues to focus attention for the whole industry.

In particular, disparity in rules between the US, UK and EU leads to concerns that
some Banks will be penalized more than others. Continued advocacy keeps this
issue front and centre and will see the efforts of CCPs remain in the spotlight as a
potentially important option for industry players.

In the following pages, we examine in more detail the performance of the various
asset classes in the last six months of 2023 and taking a first look at what we can
expect from 2024.

Introduction & Outlook
Michael Brooks
Vice President, Fixed Income
Simon Lee
Managing Director, Head of Business Development, EMEA & APAC
Ed Oliver
Managing Director, Product Development
eSecLending Trading Team