Peer-to-peer lending among buy-siders could emerge due to a challenging regulatory environment for sourcing and optimising collateral, according to BNY Mellon.
A new report highlights the challenges in financing transactions due to new global collateral requirements and has suggested ways to optimise collateral and find efficiencies.
Despite talk of a shortfall subsiding in recent years, optimisation and transformation have now become the most crucial aspects of collateral.
In the report, BNY Mellon states that institutional investors may also find further opportunities in a peer-to-peer relationship, where buy-side firms are both the collateral provider and receiver.
The research highlights that posting and receiving of collateral is new to many institutional investor firms.
“Market participants need to be more efficient when financing transactions, which means they need to allocate the least expensive collateral to each trade, possess a full view of which collateral is available and which is being used, and applying efficient collateral management techniques to a variety of transactions,” said Michelle Neal, President, BNY Mellon Markets.
The entire report can be found by clicking here.