1. SECURITIES LENDING Trends & Developments Guru Raghavan

2. Index Needs of the market place Requirements for cross border mobilisation Current constraints Possible solutions

3. Market needs.. Increased demand for secured lending Renewed focus on counterparty credit risk management Infrastructure that recognizes four dimensions in securities lending: custody, settlement, borrowing/lending, tri-party Demand for process automation and innovation in securities lending Demand for increased netting to minimize any unnecessary settlement

4. Market needs.. Demand for increased opportunities in balance sheet netting An environment where bonds can move freely and without friction between settlement systems Infrastructure that supports fluid upstream and downstream movement of securities Demand for cash led standardization A trading environment where cash investment is not driven or influenced by settlement considerations

5. Requirements for cross border mobilization Fragmentation of collateral liquidity pools Operating hours (time-differences and cut-off time) Legal and fiscal barriers Proliferation of different legal documentation Different fiscal reporting requirements Lack of complete set of information Lack of harmonization of relevant market practices

6. Current constraints Fragmentation of collateral liquidity pools Operating hours (time-differences and cut-off time) Legal and fiscal barriers Proliferation of different legal documentation Different fiscal reporting requirements Lack of complete set of information Lack of harmonization of relevant market practices

7. Possible solutions Netting (Vertical and Daily netting of all outstanding positions) Pooling Optimization Reporting Settlement through auto allocation mechanisms