Collateral and liquidity

Standards and Recommendations

Collateral and liquidity

In 2019, several beneficial owners and the Sustainable Finance, the Law, Stakeholders (SFLS) Network at Exeter Law School agreed that the “primary purpose of the collateral in securities lending is to mitigate counter-party risk” and that “securities lending collateral parameters, such as exclusion lists, should be considered in ESG strategies”(PSSL 2020). However, that developmental stage included a forecast that clearer and more focussed inclusion of environmental and social matters would form part of collateral later in the future. That was embedded by independent and impartial Global PSSL in the draft principle on collateral in December 2020 and reinforced in the revised Global PSSL in 2021.

Thereafter, following a workstream on interconnected collateral, Global PSSL published a draft forward-looking standard that had a strong components relating to liquidity and transparency.

Key publication:

Global PSSL review of RISCMTP-Notes

18 July 2023

Consultation paper:
Strengthening sustainable finance with an interconnected collateral for securities lending.

A forward-looking market standard.

29 July 2021 (revised in 2023)

Progress reports:

Progress reports
#9-2021 Collateral

5 October 2021