The Bank of England's Securities Lending Committee (SLC) noted broad industry consensus that firms are on track for a transition scheduled for October 2027. While progress has been made on the corporate action workstream and Central Securities Depositories (CSDs) remain engaged, members expressed some concern regarding funding mismatches.
During its March 2026 meeting, the Committee discussed the complexities of collateral constraints and market close behaviour. It was noted that pre-emptive processes, though lender-dependent, can help reduce potential problems.
The Committee also discussed the EU Market Integration and Supervision Package (MISP), which is intended to deepen capital market integration across the EU. This legislation aims to modernise settlement finality, collateral rules for tokenised assets, and provide legal certainty for Distributed Ledger Technology (DLT).
Members observed cautious uptake from beneficial owners concerning tokenised assets, who have raised questions about insolvency protection, legal certainty regarding collateral ownership in default scenarios, and double-token issuance. Banks, however, continue to explore use-cases for tokenised assets, including intraday liquidity, instant settlement, margin call coverage, and collateral mobility.
Following recent global tensions, the Committee noted some changing behaviour among market participants, but the market remained broadly stable. There was an increased focus on regulatory requirements, such as capital efficiency and risk-weighted asset optimisation, which affects collateral supply and participation. Demand has shown resilience through recent turbulence, indicating market maturity.