US SEC Unlocks a New Currency for Wall Street’s Most Overlooked Market

The US Securities and Exchange Commission (SEC) has introduced a new rule allowing broker-dealers to utilize a broader range of stocks—specifically, baskets of large American companies from the Russell 1000 and S&P 500 Indices—as collateral when borrowing securities from institutional investors. Previously, only traditional assets like cash and government bonds were permitted. This change aims to improve liquidity and risk management in securities lending markets by providing broker-dealers with more flexibility in raising funds and managing trades. The new rule, however, comes with strict conditions, limiting participation to “Qualified Institutional Securities Lenders” who meet specific financial criteria. Loans must also be over-collateralized, and both parties must adhere to concentration and diversification standards. The SEC chose these indices based on their liquidity and stability, and has issued guidance to SIFMA and ISLA to facilitate adoption of the new framework.

(Source：BeInCrypto)