the-future-of-securities-lending-in-the-asiapacific

The future of securities lending in the Asia-Pacific

Despite its many benefits, securities lending has never truly made it big in Asia, says Amod Dixit, group product manager, securities services, Standard Chartered Bank

Standard Chartered Bank

October 12, 2006

The fact that securities lending has never truly made it big in Asia is surprising given its multifold potential in terms of delivering low custody fees, avoidance of settlement failure, reduction in auction trades and an additional source of income for investors. It also supports shorts in derivatives trading.

Then and now

In the 1970s, US custodian banks started lending of specific stocks on behalf of clients, to broker dealers. Then came the failure of the Drysdale securities in 1982 which had a profound impact on the securities lending industry. The Drysdale securities failure led to careful scrutiny of counterparties and their balance sheets and collateral requirements and standardisation of contracts and daily mark-to-market became...

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