With its new product Direct Access Lending, State Street seeks to push the boundary on peer-to-peer lending transactions between its lending and borrowing clients. Previously, this type of model has been too cumbersome to operate for all but the largest.
With its new product, the Boston-based giant custodian seeks to leverage on its strength in its Agency Lending and Enhanced Custody areas, “to offer both sets of customers the benefits of each program required to operate in a peer-to-peer transaction while also enjoying an economic benefit associated with Direct Access loans”.
Tackling constraints
State Street’s press release cites Martin Tell, global head of Securities Finance.
“Over the last decade, we have worked hard to manage balance sheet constraints across banks and broker/dealers participating in securities lending,” he says.
He adds that State Street has expanded its program to add new markets and collateral types and diversifying methods for borrowers to post non-cash collateral by pledging securities rather than a title transfer.