Converging markets in securities finance
22 June 2026
Andy Wiblin, chief operating officer at GLMX, discusses the evolution of securities finance, from the blurring of boundaries among financing desks, to the integration of liquidity management frameworks between large banks and buy side firms
Image: stock.adobe.com/vectortatu
The structure of securities finance is undergoing a fundamental shift. In past decades, repo trading teams, securities lending desks, and swaps desks have been separated inside trading institutions physically and culturally. These once distinct market segments are increasingly converging into a more unified, interconnected ecosystem. This convergence is reshaping how institutions think about liquidity, funding, execution, and technology.
At its core, this evolution reflects a simple reality: balance sheets are constrained, markets are becoming more electronic, and opportunities are opening with the ability to navigate across financing channels — not within them. As a result, market participants are seeking solutions that allow them to scale with confidence while operating across an increasingly complex landscape.
Financing markets are growing and evolving across instruments and regions
Historically, financing desks operated in silos. Repo desks focused on collateralised funding, securities lending teams on managing the connection between asset supply and demand, and derivatives desks on synthetic exposure. Today, those boundaries are breaking down across instruments and regions.
As regulatory pressures have increased over the past two decades, banks have improved their proficiency at pricing the use of their balance sheet both internally and externally. Potential reductions in the global systemically important bank (G-SIB) buffer may enable greater capacity, but the finely tuned balance sheet controls are here to stay. As always, the dealer community is at the forefront of identifying new ways to serve client needs while financing their businesses and optimising the use of their own balance sheet.
The repo market has traditionally worked as the critical glue between cash markets (money market funds and other cash providers), fixed income trading markets, and directional and relative value participants in the market. This market is now well over US$20 trillion globally.
The US Treasury repo market is preparing to implement mandatory clearing in 2027. This has kicked off a new wave of change as clients, dealers and central counterparties (CCPs) all plan for a new configuration and new roles in the market. This will drive further electronification and greater growth in repo markets as netting becomes more efficient.
The securities lending market — now at over US$3 trillion of securities on loan — is a critical pillar of financing and supply, linking beneficial owners to directional players through the growing prime brokerage industry complex. The ‘equification’ of credit and new segments of lenders such as retail supply have increased the need to transact with more efficiency. Furthermore, the entire market is at a critical point in its electronic evolution — the past few years have seen a proliferation of solutions to serve lenders and borrowers in pre-trade, execution, and post-trade needs.
The market for total return swaps (TRS) has grown in recent years as dealers and counterparties have looked for balance sheet-efficient ways to execute both standard financing and exposure. This ecosystem has evolved with the inclusion of structurally long institutions such as sovereign wealth funds. TRS market participants are organically discovering new opportunities to solve for both financing and exposure use cases. Both use cases rely on complex trades that have significant impact at scale. Fortunately, leading market actors are far along the curve of electronic trading solution adoption and the future is bright for growth in TRS.
The march of electronification and market evolution in securities financing markets is strong globally. As the GLMX team saw at the recent Pan Asia Securities Lending Association (PASLA) Annual Conference on Asian Securities Finance, these markets are changing for the better, enabling even greater access across regional asset classes and onshore and offshore counterparties.
Convergence is inevitable, and happening now
Large banks and sophisticated buy side firms are beginning to operate in integrated liquidity management frameworks. Hedge funds, for example, now routinely compare the cost of financing a position in the repo market with achieving the same exposure through a total return swap. While repo may offer lower headline financing costs, TRS can provide balance sheet efficiency for the dealer and greater margining flexibility.
Prime brokers seeking to supply corporate bonds to hedge fund clients check both the repo market and the securities lending market segments now, leading to new flow between dealers in fixed income.
The optimal choice depends not only on price, but on netting benefits, collateral availability, and internal balance sheet constraints. This type of cross-market optimisation is becoming more prevalent as firms evaluate financing decisions holistically rather than within individual product silos.
Clarity and confidence are key
Leading market participants need the ability to scale with confidence in these changing markets. Some 40 per cent of repo transactions are now executed on electronic platforms in certain geographies. In the fourth quarter of 2025, GLMX supported single-day repo volume of over US$2 trillion and single-day repo balance outstanding of over US$4.9 trillion. The single-day balance number recently reached US$5 trillion. Similar dynamics are playing out as securities lending market transaction volumes continue to grow. These markets and the demand to execute more transactions with more counterparties are only growing.
Automation is now essential. Large parts of the mature market segments are supported by deeply integrated workflows, often with integration to pre-trade order and execution management systems, and with post-trade straight-through processing. This level of integration and automation reduces manual intervention, lowers costs, and minimises settlement fails.
As repo, securities lending, and TRS markets converge, leading firms are asking for coordinated pre-trade, execution, and post-trade workflows across instruments. The focus today is on efficiency and effectiveness at scale — how can I generate additional revenue, reduce cost, and avoid messy setups that generate fails and breaks?
Furthermore, counterparties will choose the best execution option with visibility into their historical activity and current liquidity conditions. Traders can ramp up only when using such visibility to engage the market in a way that provides clear comparison across trading options and easy engagement with counterparties.
Firms seeking to engage across the comprehensive financing market need to see its segments clearly, to engage with counterparties crisply and to execute trades with clarity and speed. Winning solutions for the future will empower them with the confidence to do so.
The road ahead
This is an exciting time in the evolution of financing. Funding, sales, and trading desks are working together to deliver new and innovative solutions that optimise for client needs, profitable business results, and balance sheet usage. This makes markets more efficient, effective, and safer as firms have more tools to deal with a wider range of market conditions.
To serve these critical markets, technological innovation will continue at pace as segments of the broader financing market converge in the very near future.
At its core, this evolution reflects a simple reality: balance sheets are constrained, markets are becoming more electronic, and opportunities are opening with the ability to navigate across financing channels — not within them. As a result, market participants are seeking solutions that allow them to scale with confidence while operating across an increasingly complex landscape.
Financing markets are growing and evolving across instruments and regions
Historically, financing desks operated in silos. Repo desks focused on collateralised funding, securities lending teams on managing the connection between asset supply and demand, and derivatives desks on synthetic exposure. Today, those boundaries are breaking down across instruments and regions.
As regulatory pressures have increased over the past two decades, banks have improved their proficiency at pricing the use of their balance sheet both internally and externally. Potential reductions in the global systemically important bank (G-SIB) buffer may enable greater capacity, but the finely tuned balance sheet controls are here to stay. As always, the dealer community is at the forefront of identifying new ways to serve client needs while financing their businesses and optimising the use of their own balance sheet.
The repo market has traditionally worked as the critical glue between cash markets (money market funds and other cash providers), fixed income trading markets, and directional and relative value participants in the market. This market is now well over US$20 trillion globally.
The US Treasury repo market is preparing to implement mandatory clearing in 2027. This has kicked off a new wave of change as clients, dealers and central counterparties (CCPs) all plan for a new configuration and new roles in the market. This will drive further electronification and greater growth in repo markets as netting becomes more efficient.
The securities lending market — now at over US$3 trillion of securities on loan — is a critical pillar of financing and supply, linking beneficial owners to directional players through the growing prime brokerage industry complex. The ‘equification’ of credit and new segments of lenders such as retail supply have increased the need to transact with more efficiency. Furthermore, the entire market is at a critical point in its electronic evolution — the past few years have seen a proliferation of solutions to serve lenders and borrowers in pre-trade, execution, and post-trade needs.
The market for total return swaps (TRS) has grown in recent years as dealers and counterparties have looked for balance sheet-efficient ways to execute both standard financing and exposure. This ecosystem has evolved with the inclusion of structurally long institutions such as sovereign wealth funds. TRS market participants are organically discovering new opportunities to solve for both financing and exposure use cases. Both use cases rely on complex trades that have significant impact at scale. Fortunately, leading market actors are far along the curve of electronic trading solution adoption and the future is bright for growth in TRS.
The march of electronification and market evolution in securities financing markets is strong globally. As the GLMX team saw at the recent Pan Asia Securities Lending Association (PASLA) Annual Conference on Asian Securities Finance, these markets are changing for the better, enabling even greater access across regional asset classes and onshore and offshore counterparties.
Convergence is inevitable, and happening now
Large banks and sophisticated buy side firms are beginning to operate in integrated liquidity management frameworks. Hedge funds, for example, now routinely compare the cost of financing a position in the repo market with achieving the same exposure through a total return swap. While repo may offer lower headline financing costs, TRS can provide balance sheet efficiency for the dealer and greater margining flexibility.
Prime brokers seeking to supply corporate bonds to hedge fund clients check both the repo market and the securities lending market segments now, leading to new flow between dealers in fixed income.
The optimal choice depends not only on price, but on netting benefits, collateral availability, and internal balance sheet constraints. This type of cross-market optimisation is becoming more prevalent as firms evaluate financing decisions holistically rather than within individual product silos.
Clarity and confidence are key
Leading market participants need the ability to scale with confidence in these changing markets. Some 40 per cent of repo transactions are now executed on electronic platforms in certain geographies. In the fourth quarter of 2025, GLMX supported single-day repo volume of over US$2 trillion and single-day repo balance outstanding of over US$4.9 trillion. The single-day balance number recently reached US$5 trillion. Similar dynamics are playing out as securities lending market transaction volumes continue to grow. These markets and the demand to execute more transactions with more counterparties are only growing.
Automation is now essential. Large parts of the mature market segments are supported by deeply integrated workflows, often with integration to pre-trade order and execution management systems, and with post-trade straight-through processing. This level of integration and automation reduces manual intervention, lowers costs, and minimises settlement fails.
As repo, securities lending, and TRS markets converge, leading firms are asking for coordinated pre-trade, execution, and post-trade workflows across instruments. The focus today is on efficiency and effectiveness at scale — how can I generate additional revenue, reduce cost, and avoid messy setups that generate fails and breaks?
Furthermore, counterparties will choose the best execution option with visibility into their historical activity and current liquidity conditions. Traders can ramp up only when using such visibility to engage the market in a way that provides clear comparison across trading options and easy engagement with counterparties.
Firms seeking to engage across the comprehensive financing market need to see its segments clearly, to engage with counterparties crisply and to execute trades with clarity and speed. Winning solutions for the future will empower them with the confidence to do so.
The road ahead
This is an exciting time in the evolution of financing. Funding, sales, and trading desks are working together to deliver new and innovative solutions that optimise for client needs, profitable business results, and balance sheet usage. This makes markets more efficient, effective, and safer as firms have more tools to deal with a wider range of market conditions.
To serve these critical markets, technological innovation will continue at pace as segments of the broader financing market converge in the very near future.
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