State Street has launched a Direct Access Lending product, which enables direct, principal loans between its lending clients and borrowing clients. The peer-to-peer product will utilise the size of the firm’s agency lending and enhanced custody programs, aiming to align solutions and technology across the firm to aid its clients in achieving their objectives.

According to the firm, the product offers a seamless peer-to-peer model, supported by the operational efficiency and expertise of a managed securities lending program.

Martin Tell, Global Head of Securities Finance said: “Over the last decade, we have worked hard to manage balance sheet constraints across banks and broker/dealers participating in securities lending,

“State Street has created a number of innovative solutions to support our clients, expanding our program to add new markets and collateral types and diversifying methods for borrowers to post noncash collateral by pledging securities instead of a title transfer. With this prior innovation and development, we are uniquely positioned to create a peer-to-peer securities finance platform given the scale and sophistication of the Agency Lending and Enhanced Custody businesses that we run today.”

Peer-to-peer lending is seen as one of the riskier asset types available in the market and is often first to show signs that the economy is faltering. However, State Street is a large custodian bank with over $24 trillion in assets under custody so is in a position to enable securities lending on a large scale.