Securities lending outlook for 2026
11 March 2026
Andrew Geggus, global head of Agency Securities Lending, Triparty Services at BNP Paribas’ Securities Services, reviews key industry focuses for the new year from regulatory initiatives to emerging markets and AI
Image: Andrew Geggus
A year ago, we anticipated an eventful 2025, driven by macroeconomic shifts, regulatory changes, and evolving market structures. What we saw was exactly that; bouts of volatility driven by the aforementioned factors, record highs in certain indices assisted by rate cuts and tech demand focused on AI, and greater divergence in macroeconomic policies.
The securities lending market benefitted from a record-breaking year, closing in on US$15 billion of total market revenue, according to S&P Global data. Nearly all asset classes were up double-digit percentage revenue wise year-on-year, with only a minor drop in Americas equity and flat in corporate bonds to miss the full sweep. A significant part of the increased revenues came from specials, which rebounded in all markets from muted figures in 2024.
Looking onwards in 2026
We expect 2026 to be another dynamic year, with the level of uncertainty and macroeconomic divergence on the rise. Will the various trade policies strategies have a significant impact on securities lending revenues? Perhaps not directly, but as we see the impact on foreign exchange swings and earnings, this could drive directional demand as well as some potential arbitrage opportunities.
Despite the demand for high-quality liquid assets (HQLA) remaining robust through 2025, we did see downward pressure on spreads in the more liquid trade types, which could be continuing into 2026, unless we see prolonged periods of volatility or the cross-currency basis spreads pick up.
Once again, a trend might be that divergence keeps growing between lending programmes with very flexible collateral and tenor parameters and those that have a more conservative programme. The gap is continuing to widen and flexibility is the key to optimal revenues.
Exploring other key themes
New and emerging markets
We see the increasing development of securities lending in a host of new markets going forward, with particular intrigue into APAC, South America, the Middle East, and Africa as areas of possible growth.
We expect to see further regulatory changes to allow for more securities financing possibilities across multiple different countries that currently have limited securities lending opportunities.
Retail investors
Another key trend we expect to see in 2026 is the continued growth of retail investors in securities lending. Platforms designed for retail investors have made the market more accessible for individuals and, in recent years, this has brought new special supply into the market.
The challenge for market participants will be to work with investors whose behaviour is markedly different from traditional institutional investors — more actively managed and more volatile — and who operate under a regulatory framework of investor protection designed for individuals. However, for those who can offer a compelling offering to these investors, the opportunity could be significant, as retail investors can be the key holders of small and mid-cap names that can be highly in demand.
Settlement efficiency and T+1
The EU, UK, and Switzerland confirm that they will be moving to a T+1 settlement cycle from October 2027, and regulators gave the market clear guidance that they expect firms to be ready for that implementation date. Market participants are therefore likely to spend 2026 building new processes and making system amendments to allow for this constrained timeframe, focusing on automating and streamlining as much as possible.
A key challenge for the securities lending market which — while exempt itself is the engine behind the buy/sell market — will be the management of recalls for sold positions, where sales are agreed late in the trading day. Resolving this will require close collaboration between market participants, investors, and regulators.
For additional information on T+1, you may also want to read our two latest articles for the financial intermediaries or for the asset managers and asset owners.
US Treasury Securities central clearing
The changing landscape in US Treasury central clearing may not directly impact securities lending, as it is out of scope, however it does impact the ecosystem including the cash repo market. It is a major shift in market practice and therefore requires significant effort to implement seamlessly.
While the market continues to prepare and confidence in the readiness of the market increases, there are still some pertinent issues pending clarification. As we move into 2026, we expect regulators, clearing houses, and working groups to continue to work together to address the pending points and establish best practices.
For additional information about this change, you may also read our latest article and Q&A on US Treasury Securities Central Clearing — Securities Services.
Cost pressure
As capital rules have continued to be implemented, banks and broker-dealers will be increasingly focused on the regulatory capital costs of each trade. Solutions such as pledge and central clearing will therefore be an increased focus for borrowers.
New innovations are also emerging to manage regulatory constraints in different jurisdictions; market participants will need to invest wisely to create a tool kit of measures suiting a variety of counterparties.
We continue to see more technology providers enter the market and with limited resources, and a need to focus on development aimed at T+1, businesses cannot onboard all providers. Therefore, businesses should focus on the return on investment, the efficiency gains of technology, and the effective use of the providers they onboard. Greater efficiency and interoperability are key demands from the market; it is vital that we move away from market silos.
Artificial intelligence
The financial sector is experiencing significant transformation, driven by AI and intelligent agents, which requires strategic investments in both human and financial capital, and securities lending is no exception to this trend.
At BNP Paribas, we are experimenting with multiple use cases and training our employees to help improve efficiency within both our agency and principal lending programmes, while ensuring ethical governance and complying with applicable laws and regulations on AI.
Our priorities at BNP Paribas
Our focus in the agency lending business is the growth of our platform, we shall be onboarding new inventory to the market throughout the year and leveraging the investments made to achieve optimal returns and more automation.
We will also be scaling up our agency repo product into new currencies and markets. 2026 will also see further adoption of capital-efficient trading structures such as pledge and pledge-back, therefore we will continue to engage with our clients about programme changes that can aid performance and efficiency.
Lastly, we are committed to continuing to make our agency lending business a great place to work. The talent of the organisation is the key to its ongoing success and we want to keep the working environment one for collaboration, growth, and continuous improvement. We are excited about the opportunities 2026 will bring and will continue to work with our clients across EMEA, APAC, and the Americas to explore opportunities to expand and enhance their lending programmes.
The securities lending market benefitted from a record-breaking year, closing in on US$15 billion of total market revenue, according to S&P Global data. Nearly all asset classes were up double-digit percentage revenue wise year-on-year, with only a minor drop in Americas equity and flat in corporate bonds to miss the full sweep. A significant part of the increased revenues came from specials, which rebounded in all markets from muted figures in 2024.
Looking onwards in 2026
We expect 2026 to be another dynamic year, with the level of uncertainty and macroeconomic divergence on the rise. Will the various trade policies strategies have a significant impact on securities lending revenues? Perhaps not directly, but as we see the impact on foreign exchange swings and earnings, this could drive directional demand as well as some potential arbitrage opportunities.
Despite the demand for high-quality liquid assets (HQLA) remaining robust through 2025, we did see downward pressure on spreads in the more liquid trade types, which could be continuing into 2026, unless we see prolonged periods of volatility or the cross-currency basis spreads pick up.
Once again, a trend might be that divergence keeps growing between lending programmes with very flexible collateral and tenor parameters and those that have a more conservative programme. The gap is continuing to widen and flexibility is the key to optimal revenues.
Exploring other key themes
New and emerging markets
We see the increasing development of securities lending in a host of new markets going forward, with particular intrigue into APAC, South America, the Middle East, and Africa as areas of possible growth.
We expect to see further regulatory changes to allow for more securities financing possibilities across multiple different countries that currently have limited securities lending opportunities.
Retail investors
Another key trend we expect to see in 2026 is the continued growth of retail investors in securities lending. Platforms designed for retail investors have made the market more accessible for individuals and, in recent years, this has brought new special supply into the market.
The challenge for market participants will be to work with investors whose behaviour is markedly different from traditional institutional investors — more actively managed and more volatile — and who operate under a regulatory framework of investor protection designed for individuals. However, for those who can offer a compelling offering to these investors, the opportunity could be significant, as retail investors can be the key holders of small and mid-cap names that can be highly in demand.
Settlement efficiency and T+1
The EU, UK, and Switzerland confirm that they will be moving to a T+1 settlement cycle from October 2027, and regulators gave the market clear guidance that they expect firms to be ready for that implementation date. Market participants are therefore likely to spend 2026 building new processes and making system amendments to allow for this constrained timeframe, focusing on automating and streamlining as much as possible.
A key challenge for the securities lending market which — while exempt itself is the engine behind the buy/sell market — will be the management of recalls for sold positions, where sales are agreed late in the trading day. Resolving this will require close collaboration between market participants, investors, and regulators.
For additional information on T+1, you may also want to read our two latest articles for the financial intermediaries or for the asset managers and asset owners.
US Treasury Securities central clearing
The changing landscape in US Treasury central clearing may not directly impact securities lending, as it is out of scope, however it does impact the ecosystem including the cash repo market. It is a major shift in market practice and therefore requires significant effort to implement seamlessly.
While the market continues to prepare and confidence in the readiness of the market increases, there are still some pertinent issues pending clarification. As we move into 2026, we expect regulators, clearing houses, and working groups to continue to work together to address the pending points and establish best practices.
For additional information about this change, you may also read our latest article and Q&A on US Treasury Securities Central Clearing — Securities Services.
Cost pressure
As capital rules have continued to be implemented, banks and broker-dealers will be increasingly focused on the regulatory capital costs of each trade. Solutions such as pledge and central clearing will therefore be an increased focus for borrowers.
New innovations are also emerging to manage regulatory constraints in different jurisdictions; market participants will need to invest wisely to create a tool kit of measures suiting a variety of counterparties.
We continue to see more technology providers enter the market and with limited resources, and a need to focus on development aimed at T+1, businesses cannot onboard all providers. Therefore, businesses should focus on the return on investment, the efficiency gains of technology, and the effective use of the providers they onboard. Greater efficiency and interoperability are key demands from the market; it is vital that we move away from market silos.
Artificial intelligence
The financial sector is experiencing significant transformation, driven by AI and intelligent agents, which requires strategic investments in both human and financial capital, and securities lending is no exception to this trend.
At BNP Paribas, we are experimenting with multiple use cases and training our employees to help improve efficiency within both our agency and principal lending programmes, while ensuring ethical governance and complying with applicable laws and regulations on AI.
Our priorities at BNP Paribas
Our focus in the agency lending business is the growth of our platform, we shall be onboarding new inventory to the market throughout the year and leveraging the investments made to achieve optimal returns and more automation.
We will also be scaling up our agency repo product into new currencies and markets. 2026 will also see further adoption of capital-efficient trading structures such as pledge and pledge-back, therefore we will continue to engage with our clients about programme changes that can aid performance and efficiency.
Lastly, we are committed to continuing to make our agency lending business a great place to work. The talent of the organisation is the key to its ongoing success and we want to keep the working environment one for collaboration, growth, and continuous improvement. We are excited about the opportunities 2026 will bring and will continue to work with our clients across EMEA, APAC, and the Americas to explore opportunities to expand and enhance their lending programmes.
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100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
