State Street has launched a ‘Direct Access Lending’ service which enables direct, principal loans between its lending clients and its borrowing clients. In Australia, State Street holds an estimated 35 per cent of the total inventory in the securities lending market and accounts for about 45 per cent of total volumes.
To facilitate the direct lending transactions, State Street will leverage both its Agency Lending and Enhanced Custody programs to offer both sets of customers the benefits of each program required to operate in a peer-to-peer transaction while also enjoying an economic benefit associated with Direct Access loans. The managed peer-to-peer product aims to leverage the size of State Street’s Agency Lending and Enhanced Custody programs. It offers a peer-to-peer model, currently being explored by most of the major Australian banks, supported by the operational efficiency and expertise of a managed securities lending program.
Martin Tell, State Street’s global head of securities finance, said: “Over the last decade, we have worked hard to manage balance sheet constraints across banks and broker/dealers participating in securities lending. State Street has created a number of innovative solutions to support clients, expanding the program to add new markets and collateral types and diversifying methods for borrowers to post non-cash collateral by pledging securities instead of a title transfer.
“With this prior innovation and development, we are uniquely positioned to create a peer-to-peer securities finance platform given the scale and sophistication of the Agency Lending and Enhanced Custody businesses that we run today,” Tell said.
State Street’s Global Markets team provides specialised research, trading, securities finance and innovative portfolio strategies to owners and managers of institutional assets. Its goal is to enhance and preserve portfolio values for clients through original flow-based research, proprietary portfolio and risk management technologies that optimise trading.