While the first quarter of 2026 has faced much geopolitical turmoil, it has also seen strong global securities lending activity. From an NBC perspective, how do you review the performance of your securities lending programme in 2026?
Mathilda Yared: It is fair to say that periods of volatility tend to create opportunity, and in 2026 that has certainly been the case. At National Bank of Canada, our ability to capture that opportunity is largely driven by our integrated platform, robust risk management framework, and agility in responding to changing market conditions.
Our Global Securities Finance (GSF) business brings together repo, securities borrowing and lending, delta one, and funding activities under one umbrella. This integrated model allows us to dynamically allocate balance sheet and trading resources across products, depending on where we see the most compelling opportunities from both a market and client perspective.
From a performance standpoint, we have seen increased activity across both general collateral and hard-to-borrow segments, including equities, corporate bonds, and ETFs. One notable trend has been a shortening in trade duration, which is consistent with the higher volatility environment and more tactical positioning by market participants. In Canada specifically, we have also been more active in supporting transactions such as bought deals and Dutch auctions, reflecting strong primary market activity.
The continued rise of the retail investor remains an important structural theme. NBC led the effort for domestic regulatory approval and was the first major bank to offer fully paid lending in Canada. We are seeing fully paid lending programmes expanding across both the US and Canada, as clients increasingly look to enhance returns on their long portfolios, as an area of continued growth.
Steven Scholl: Building on a record-breaking 2025 for our securities lending programme, 2026 is shaping up to be even stronger, which we view as a fantastic outcome given the evolving macro and market backdrop. Our agility allows us to respond quickly to changing — and often challenging — market conditions, including major geopolitical events.
Our model allows us to allocate resources across products as market conditions evolve, ensuring we can both mitigate downside risks and lean into dislocations where compelling client and market opportunities emerge. For example, recent dislocations in the ETF market — driven in part by the ongoing conflict in Iran — have created meaningful supply-demand imbalances.
Last year, NBC went live on EquiLend’s 1Source and Trading Apps’ TA.Link. How are these developments shaping your focus on technology-driven solutions?
Yared: Our goal is to be the number one in our use of technology in securities finance. Within the GSF group, the GSFWeb team focuses on technology-driven solutions that support front to back processes and strategy. The team was recognised as the Technology-enhanced Trading Desk of the Year by the Securities Finance Times Industry Excellence Awards in 2025.
James Bryce: NBC has always been heavily invested in technology-driven solutions, so going live on EquiLend’s 1Source and Trading Apps’ TA.Link did not change our direction as much as reinforce it. Our view is that we need to be present wherever there is liquidity, efficiency, or a differentiated market offering that can help us generate value.
A big part of that is maintaining a flexible, platform-agnostic architecture that allows us to connect across venues and workflows as the market evolves. Platforms like 1Source can support greater productivity, automation, and operational efficiency, while broader connectivity helps us access opportunities across the market without being locked into a single workflow or venue.
More broadly, technology is central to how we continue to drive the business forward. The pace of change is accelerating, and we see AI as both an accelerant for developing new capabilities and a transformational tool for improving workflows across the desk.
The use of digital assets is at the forefront of conversation in the financial world, but how are you seeing this impact securities lending?
Bryce: Digital assets are clearly an important conversation across financial markets, but in traditional securities lending, I would say the impact is still early. We are not yet at a point where digital assets are materially changing day-to-day securities lending activity in Canada.
Where it becomes relevant is around the infrastructure questions it raises: tokenisation, collateral mobility, settlement speed, transparency, and interoperability between platforms. Those themes are directly connected to securities finance, even if the adoption curve is still developing. If tokenised assets or digital forms of collateral become more widely accepted, they could eventually change how collateral is mobilised, how quickly transactions settle, and how efficiently firms manage balance sheet resources.
So for us, the focus is not on forcing digital assets into the securities lending model today. It is about watching the space carefully, understanding where the market structure is heading, and making sure our technology and operating model are flexible enough to adapt when there is real liquidity, clear regulation, and practical institutional use cases.
Scholl: We see significant progress in US government policies around digital assets and more specifically on stablecoin regulations. We also see significant investments in tokenisation of securities by TradFi institutions. The hot topic is the ability to allow 23/5 real-time movement of collateral and collateral mobilisation. Interoperability and TradFi adoption of tokenised securities will likely be key to a widespread adoption and to avoid ‘isolated’ collateral that cannot be moved just because someone else is on a chain.
With upcoming regulation, such as the SEC’s 10c-1a, on the horizon, how are you navigating the regulatory landscape within both the US and Canada?
Scholl: With a significant amount of regulatory change underway across both the US and Canada, we are taking a proactive and coordinated approach to navigating the evolving regulatory landscape to ensure readiness while also thoughtfully assessing the strategic implications for our securities lending business.
In the US, the Securities and Exchange Commission’s (SEC’s) 10c-1a represents a shift toward greater transparency in securities lending by requiring the reporting of transaction level data to the Financial Industry Regulatory Authority (FINRA). Although the compliance date for 10c-1a reporting has been extended to 28 September 2028, with public dissemination requirements following on 29 March 2029, the National Bank of Canada — like many industry participants — has already begun the foundational build to ensure we are well-positioned to meet the eventual reporting requirements.
The SEC’s exemptive relief under Rule 15c3-3, allowing highly liquid US equities such as S&P 500 and Russell 1000 constituents to be used as collateral, is also a significant regulatory change. Once US institutions complete their required internal builds to be able to leverage this change, additional balance sheet relief should be achieved. As a Canadian institution, we are well positioned to support US counterparties as they expand in the equity for equity space.
Yared: On the Canadian side, the Canadian Investment Regulatory Organization (CIRO) has taken a more principles-based approach following industry consultation, stepping back from its proposed mandatory close-out requirements due to concerns around operational complexity and cost. Rather than prescribing the same regulatory consequence to every scenario, the proposed amendments permit investment dealers to take measures that would be appropriate for their business.
These measures would consider the circumstances of the client and the failure. CIRO is also proposing a conduct-based framework that focuses on the investment dealer’s policies and procedures governing client delivery failures, with ongoing consultation around key elements such as timelines and responsibilities. The comment period for these proposed amendments ends 3 July.
Across both jurisdictions, GSF’s strategy is anchored in early engagement and strong cross-functional coordination. We work closely across our business, operations, risk, compliance, and legal teams, while also maintaining active involvement with cross-border industry associations, to ensure regulatory impacts are well understood and implementation is thoughtful and robust.
In addition to these regulatory developments, we are closely monitoring broader market structure themes such as 23/5 trading and tokenisation. In Canada specifically, industry initiatives like the Canadian Collateral Management Service (CCMS) for repo transactions and ongoing discussions around fixed income repo clearing are key areas of focus. We are also interested in TMX’s initiative to introduce clearing for equity swaps, which has the potential to drive balance sheet and risk-weighted assets (RWA) optimisation.
A core part of all firms is the client. Can you explore how client demand is evolving and what this means for the future of securities lending in Canada?
Scholl: A core part of this business is understanding the client, and client demand today is becoming more tactical and headline driven. In Canada, we have seen clients react quickly to news around rates, inflation, geopolitics, regulation, corporate actions, and sector-specific developments. That has made both long and short positioning more volatile, increasing the need for lenders to respond quickly as borrow demand shifts.
The Canadian securities lending market remains resilient, but success is increasingly about agility, collateral flexibility, data, and owning the right inventory. Looking ahead, the future of securities lending in Canada will be shaped less by broad market exposure and more by how well firms can respond to fast-moving client demand and monetise volatility when it appears.
Over the next 12 months, what will be top of mind for the National Bank of Canada?
Scholl: Geopolitical uncertainty will likely persist over the next 12 months, so my focus is on finding ways to lean into dislocations while remaining prudent about liquidity amid fast-moving events. Our GSF group effectively integrates activities across securities lending, repo, delta one, and funding. This setup allows for better balance sheet agility, capital efficiency, and event-driven lending.
Bryce: Over the next 12 months, technology and AI will remain top of mind. The focus is not simply on adopting new tools, but on using them to drive productivity, improve efficiency, and transform workflows across the business.
AI is becoming an accelerant for building new capabilities and rethinking how work gets done. As it becomes more embedded in day-to-day processes, the key will be balancing innovation with the right human oversight, expertise, and control framework. The opportunity is to move faster and operate more efficiently, while making sure the operating model remains scalable, controlled, and aligned with how the business creates value.
Yared: From a business perspective, our internal structure allows us to remain focused on working closely with counterparties to navigate various constraints, including balance sheet usage, RWA optimisation, and Comprehensive Capital Analysis and Review (CCAR) considerations.
We are also actively exploring opportunities in emerging securities lending markets. These markets offer attractive return profiles but come with their own structural nuances, regulatory considerations, and operational complexities.
Leveraging technological transformation, navigating evolving capital, liquidity, and balance sheet dynamics, and targeted geographic expansion will be central to how we position the business in the coming year. Our focus remains on staying adaptable — leveraging innovation where it adds value and ensures we have the right people, technology, and partnerships in place to support sustainable growth.
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