Expanding the Option Clearing Corporation’s (OCC’s) centrally cleared (CCP) model for securities lending is a top priority this year, according to the organisation’s business development chief, Scot Warren.

Speaking at the IMN’s Beneficial Owner conference in Arizona, Warren, who oversees work on the OCC's new products, said plans to enhance the firm’s CCP route for sec lending transactions is a number one objective in 2016.

CCP’s - designed to reduce the potential financial risk of a firm defaulting on its settlement obligations - have seen enormous growth post the 2008 Lehman Brothers collapse.

But the uptake has been slow across the securities lending market. Part of the reason is that in their agent role, custodians already prevent borrower default or compensate fund management firms should a default occur.

Another sticking point is that each CCP, from Chicago-based OCC to Eurex Clearing and LCH.Clearnet, offers bespoke solutions each with unique methods.

Others, meanwhile, claim the benefits to beneficial owners have yet to be fully explained.

OCC already operates a successful service for securities lending deals, but it caters to direct bank and broker-dealer participants — not the agency lending model.

That said, growth has been strong and in 2015, OCC saw an increased interest in central clearing for stock loan.

Now, Warren is keen to provide more education from the agent lenders on behalf of their beneficial owners in terms of what benefits they can derive from a CCP, such as OCC.

“A growing number of market participants are looking at how a CCP solution can in fact enhance securities lending activity for lenders as well as the broker-dealer borrowing community,” Warren said at the IMN in Arizona.

Tim Smollen, global head of agency securities lending at Deutsche Bank, welcomed the remarks.

“We were encouraged to hear that the OCC’s number one priority this year is developing their CCP for securities lending transactions.

"We hope that the OCC’s commitment suggests that they have evolved their solutions to better align with the requirements of clients participating in agent programs like that of Deutsche Bank, since we clearly understand the benefits of the CCP model.”

There is still scepticism though, as a poll at the same event highlighted.

63.9 percent of attendees believe that central counterparties (CCPs) will account for just 5 percent of securities lending transactions by 2017.