Two documents arrived in the first week of September that between them describe the state of electronic securities lending. On September 1, Fidelity and State Street described the first production use of the FIX Protocol for direct electronic lending between two firms, with others building to go live by the first quarter of 2027. On September 8, the FIX Trading Community released its Recommended Practices: Securities Lending – Trade, a usage profile of twelve existing FIX messages for agreeing a loan, bilaterally or through a venue. The trade press called it a securities lending standard. The document's own title says Trade, and the difference is the subject of this paper.
The Recommended Practices model a securities loan as an order that fills. An equity order is complete at the fill. A securities loan is created at it, and everything that makes it a loan, the collateral, the marks, the re-rates, the recalls, the returns and the reporting, happens afterward on messages the standard does not define. The dated obligations of the next fifteen months, the UK's December 31, 2026 recall-automation date, the EU roadmap's 17:00 recall cut-off, the October 11, 2027 T+1 date, all fall on that half.
The report sets out what the standard adds to FIX 4.4 (two fields and a benchmark), reads the lender's last look as an inventory control, maps the eleven handoffs in a loan's life against the four the standard covers, and shows where the Rule 10c-1a and SFTR record is written.
Selected Conclusions
• The order is not the loan. The Recommended Practices model a securities loan as an order that fills, in the grammar equities desks have used for three decades; the standard ends where the loan's operational life begins.
• Last look is an inventory control. An availability list is a beneficial owner's inventory that can be sold, restricted or recalled between the quote and the hit; the reject rate by reason and the hold time show whether a lender has the control or only the option.
• The reporting record is written at the fill or not at all. The fill carries the execution time, the venue, the rate and the collateral, and the optional recap carries the UTI; Rule 10c-1a is suspended until September 28, 2028 and SFTR has required those fields since 2020.
Subscribers to the Journal may download the full report, including 7 Conclusions and 20 Recommendations and Action Items.
