Your guide to 2021 in securities services part six: Securities lending

Global Custodian has compiled a series of predictions for 2021 from some of the leading voices in the securities services industry, part six focuses on securities lending.

By Jonathan Watkins

Tim Smollen, global head of global securities lending solutions at MUFG Investor Services

The 2021 securities lending market is likely to be challenging across the globe. Interest rates are predicted to remain at the current low levels, with some market commentators even predicting more cuts to come. The COVID-19 pandemic has roiled the world, battering companies and pushing governments to extraordinary measures while, of course, there continues to be numerous regulatory hurdles to be overcome. Yet not all is doom and gloom, as there is a continued drive for even greater efficiency and there is a raft of new technology coming to the market that will allow for a greater level of complexity and customisation than ever before. 2021 will be a year for evolution and development and, for those able and willing to change, there remains the opportunity for a highly successful global lending programme.


Robert Lees, head of securities lending EMEA and global head of securities lending trading at Brown Brothers Harriman

We remain optimistic for demand in securities lending to increase in 2021 after a relatively muted year. As year-end approaches, the focus among investors remains on the sustainability of the recent market rally and whether in the coming months, we will witness a less correlated more bi-directional market more rooted in fundamentals. If this pivot transpires, it should increase demand for hedging and may improve conditions for stock pickers. Separately, corporate confidence, which had been severely weakened during the crisis, appears to be returning and with it there has been an uptick in capital restructuring, IPOs, and M&A activity as pent up demand comes to market. While we feel that a recovery is underway, we recognise that it remains fragile and the risks and uncertainties that could derail optimism are still very much present.