Markit provides ETF collateral lists that enable securities lending professionals to identify which equity and fixed income funds to accept or post as collateral. The lists are derived using standardised filtering criteria including geographic exposure, holding type and AUM.
Recent and upcoming regulations, including Dodd-Frank and Mifid II, require some derivatives to be centrally cleared, increasing the need for collateral to address margin requirements. The use of ETFs as collateral can help mitigate the anticipated collateral shortage, and the broad composition of funds can increase diversification and limit exposure to volatility.
Markit applies a seven-tier filter to more than 6,000 global exchange traded products (ETPs) to create lists of equity and fixed income funds that meet generally acceptable criteria for use as collateral. Market participants can easily reference these lists in collateral schedules, eliminating the need to individually assess each fund’s characteristics and simplifying review of collateral eligibility by risk departments.
Simplifies assessment of ETFs for use as collateral
Access to criteria filter used to produce the lists, as well as a tool for customising filtering criteria and analysing lists
Includes any ETF that meets the filtering criteria
Daily distribution via SFTP and web
Download a copy of the Markit and Securities Lending Times whitepaper and explore how increasing the use of ETFs as collateral in securities lending can drive overall ETF growth.
Despite the impressive growth of exchange traded products (ETPs) in Europe over the past five years, Europe has significantly lagged behind the US in terms of utilising ETPs as collateral.