PGGM executes first cleared securities lending trade

The trade marks the end of a nine-month journey for PGGM after it signed up as the first buy-side clearing member of Eurex’s securities lending CCP.

By Joe Parsons

Dutch pension fund PGGM has successfully executed the first directly cleared securities lending trade, in a move that could pave the way to a new role for beneficial owners.

Involved in the trade was BNY Mellon as the global custodian, Equilend as the trading platform and post-trade services provider, Euroclear as the tri-party agent, Morgan Stanley as the borrower, and Eurex Clearing as the central counterparty (CCP).

“All key stakeholders were synchronised on execution and settlement date and as partners in the transaction it was critical to have a well-rehearsed script with all players knowing their parts,” said Jonathan Lombardo, senior vice president of funding and financing markets at Eurex Clearing. 

“This partnership approach enabled the transaction to flow through all relevant parties with little disruption.” 

The trade marks the end of a nine-month journey for PGGM after it signed up as the first buy-side clearing member of Eurex’s securities lending clearing house.

It is hoped the inclusion of beneficial owners into the cleared securities lending market will significantly boost volumes.

Eurex Clearing’s securities lending CCP aims to reduce counterparty risk exposure and remove the need for multiple credit evaluations for loans in global fixed income securities, equities and exchange traded funds (ETFs).

Lombardo added the clearing house has increased its engagement with the agent lending community, and plans to further drive the partnership model to add more buy-side members.

“The liquidity pipeline for 2018 is strong and with additional conversions this year we feel that a critical mass element will ensue. With the addition of aligning partnerships with further tri party agents and market infrastructure providers the route to market is becoming more accessible,” said Lombardo.

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