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Securities Lending Market Report | H2 2024

>>> United States >>> European

Fig 2 - S&P Global Fig 3 - S&P Global
North American Government Bond Market European Government Bond Market

3.20 1.05 1.40 440.00
Lendable Value (Trillions €) 2.90 0.95 On-Loan Value (Trillions €) Lendable Value (Trillions €) 1.25 400.00 On-Loan Value (Trillions €)
1.35
3.10
1.00
420.00
3.00
1.30
2.80
0.90
380.00
1.20
2.70
1.15
0.85
360.00
1.10
2.60
2.50
320.00
1.00
2.40
0.75
Jan 2024
Jan 2024 Feb 2024 Mar 2024 Apr 2024 May 2024 Jun 2024 Jul 2024 Aug 2024 Sep 2024 Oct 2024 Nov 2024 Dec 2024 0.80 1.05 Feb 2024 Mar 2024 Apr 2024 May 2024 Jun 2024 Jul 2024 Aug 2024 Sep 2024 Oct 2024 Nov 2024 Dec 2024 340.00
Group Lendable On-Loan Balance Group Lendable On-Loan Balance
US treasury loan volume continued to grow with values breaching €1 trillion in December. Rate volatility and changing European Central Bank (ECB) rhetoric remained dovish into the end of 2024 with a combination of falling inflation and
interest rate expectations drove activity, while demand increased significantly post the US elections as banks sought to weak growth prompting policymakers into a succession of rate cuts, pushing the euro ever closer to parity with the dollar.
shore up balance sheets and source the highest-rated assets available.
Moreover, political instability in the bloc’s largest economies The threat of stagflation, so rising price pressures at a
While pollsters predicted a knife-edge US presidential Repo activity continued to grow in the US as the inflationary has threatened public finances, triggering a widening of time of slow economic growth and high unemployment,
election result, the reality was much more decisive landscape maintained elevated short-term rates, thus sovereign bond yields. Michel Barnier’s French government has acted to push UK borrowing costs significantly higher.
as President Trump was elected for a second term. helping to preserve cash allocations in the ultra-short end. has already fallen after a no-confidence vote, leading to This has prompted renewed fears the UK is to repeat the
Expectations that tax cuts and imposed tariffs will prove The treasury curve was in fact inverted for periods of the French sovereign bond yields temporarily passing those of reaction from Liz Truss’ ill-fated mini budget in 2022, which
inflationary drove US treasuries yields immediately wider, year, meaning investors enjoyed higher returns from leaving Greece. Alongside similar instability in Germany which is pushed long-end gilt yields significantly higher in a very
while equities and the dollar rallied. Markets continued to cash parked in the front-end. As the year progressed, the set to go to the polls in February, this will keep European short period of time, resulting in heavy margin calls on LDI
reprice the future path of US interest rates, with a pivot higher-for-longer narrative resulted in record inflows to politics in the fore throughout 2025, pressuring sovereign funds. The BoE cut interest rates by half a percentage point
away from rate cuts at each upcoming Fed meeting. One money market funds, with much of the excess liquidity bond yields, which should in turn drive specials activity. As in 2024 and are expected to cut the base rate by 75 basis
consequence of potential deregulation led to a post-election allocated to repo, particularly sponsored activity at the per the chart above, on-loan volumes continued to grow points in 2025, given the deterioration in economic activity.
rally in financial stocks, meaning banks had to contend Fixed Income Clearing Corporation (FICC). As such, cleared into year-end as banks sought highly rated core sovereign This should translate to policy uncertainty and opportunities
with GSIB score challenges over year-end. The scores are volumes at the central counterparty reached a new all-time bonds. in the gilt curve, prompting robust specials activity in
measured at year-end and monitored quarterly, though high of over $2 trillion at year-end. This was also driven In the United Kingdom, the Bank of England (BoE) has securities finance exposures.
importantly use a GSIB’s stock price as an input into the by significant treasury net new issuance, with oversupply seen increased usage of short-term repo operations. This
calculation. As such, a higher stock price will have a direct acting to drive repo rates higher, and maintain hedge fund indicates robust demand for liquidity, suggesting central
consequence, effectively defining the individual bank as financing demands. Moreover, the Treasury cash/futures banks will remain pivotal in assuring market stability. This has
more systemically important. Therefore, GSIBs were forced basis trade continued to attract hedge fund demand, with been in response to market nerves around the new Labour
to unwind uneconomical activity so as not to breach leveraged investors shorting treasury futures and positioning government’s ability to deliver economic growth at a time of
and jump into the next bucket. This saw a strong bid for long the physical asset. International markets are watching ballooning government debt.
US treasuries in term collateral upgrade trades as banks the outcome of the Securities and Exchange Commission’s
positioned for ever-increasing equity valuations. (SEC) adoption of mandatory clearing from June 2026,
with some expectations this will prompt international repo
markets to eventually mandate central clearing.