06 June 2017

Reporter: Drew Nicol

Canada must embrace term trades


Representatives of agent lenders have called on Canadian beneficial owners to open up their programmes to term trades.

The volume of term trades has stalled in Canada, in contrast to the global trend of growth in this trade type, according to speakers at the Canadian Securities Lending Association (CASLA) Annual Conference in Toronto.

Speakers cited a number of new regulatory requirements as the primary drivers behind the increasing use of term trades in Europe and the US.

“We have to do more to educate our clients on term trades. We can do more to standardise documents for these types of trades,” said one agent lender representative.

Another speaker disputed the proposition that the volume of Canada's term trades had fallen, but advised traders to make sure their risk managers are fully comfortable with term trades in order for them to have access to the same tools as their peers in other markets.

Panellists at CASLA's annual event also highlighted the need for beneficial owners to re-examine their collateral risk profiles and open themselves up to new collateral types in order to boost their attractiveness as lenders in Canada.

The Canadian market currently sees roughly 80 percent of loans collateralised with non-cash assets, primarily government bonds and some equities.

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