U.S. Securities Lending Faces Change

September 13, 2012

Regarding increased regulations in the U.S securities lending industry, Steven Lofchie mentioned, "You can make an argument that regulations have reduced systemic risk but it seems easier to demonstrate that they will have a negative effect on liquidity." In reference to Title VII of Dodd-Frank and provisions for derivative reforms, Lofchie added, "Where there are shorts in the swap markets there is often a corresponding hedging short by the dealers in the cash markets so most derivatives trades already track to a cash market trade – maybe the derivative trade will go away and we will just have the cash market trade."