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Executive Summary (partial) "Securities financing transaction (SFT) markets and the management and usage of collateral are elements of the financial system which are of systemic relevance. As such, there is a clear need for enhanced transparency and regulatory oversight. The European Systemic Risk board (ESRB) mandated a task force to identify the potential risks related to SFTs in Europe and to develop policy proposals to better monitor any vulnerabilities identified by the analysis. This report presents the results of two data collection exercises that were conducted to gain some initial insights into the structure of the SFT market and the correlated practices adopted by market participants concerning the re-investment or the re-use of the collateral sourced through SFTs or via equivalent transactions. A description of this landscape is, in fact, crucial as a first step in assessing the risks emanating from the cash and securities collateral markets and their potential implications for macro-prudential policy in Europe."

Additional Nematrian Commentary This paper provides a summary of the EU securities financing markets, including: the extent to which banks and non-banks rely on securities financing transactions, how fungible the collateral received is, how interconnected the market appears to be and the extent to which players in the market facilitate credit growth, undertake maturity transformation or take on liquidity risk.

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