Evaluating the impact of tech 

During March 2023, Global Investor/ISF held the annual US Beneficial Owners’ Roundtable in New York with the help of EquiLend as the lead sponsor. The roundtable was moderated by Global Investor’s Managing Director who was joined by an esteemed group of speakers to discuss recent trends, developments and challenges
in the securities finance space.

A portion of the 2023 US Beneficial Owners Roundtable is available in the video above. See below for a transcript of the highlights. 

Amélie Labbé, Managing Director, Global Investor Group: Looking specifically at how and where innovation is coming from, where it’s going as well and where you see investment going into, in terms of tech and any sort of comments you have around that. Michael Saunders - I know that you actually have some very interesting thoughts that you shared last year on this topic, so I’m keen to hear some key issues this year as well.

Mike Saunders, Head of Agency Lending, Americas, BNP Paribas: Securities finance is a maturing business. While the lender base has grown, the number of participants has grown, but the number of personnel has shrunk. For the most part, that’s through the efficiency of technology.

Aside from analytics there are vendors out there that will help you with onboarding, with liquidity discovery, with proxy identification, with collateral management, with efficient use of capital and collateral optimisation not to mention ESG analytics. And the list goes on.

Most of the information that we’re developing internally is really just pulling all of our vendor services together to make it operationally easy whether it’s a trading or risk management perspective, client web reporting, all of that, just to make that run more efficiently.

I think a lot of the technology in the fintechs that are out there allows you to do that. So, I only see that becoming a greater and greater portion of our overall business and activity.

Francesco Squillacioti, Senior Managing Director, Global Head of Client Management, State Street: To the point made about efficiency, that’s really the name of the game. We need to get the best assets out at the best rate that we can, the most efficient way possible and we can’t do it really without reliance on data and analytics.

We’ve also got a team that – our Algorithmic Trading group - is dedicated to pricing, and they’re constantly looking at pricing across the market, across what we’re doing, looking at trends within our own book and just making sure that we’re trying to capture any possible move that we can in pricing and then on the client side. So, certainly, a lot of time and investment is spent in that type of technology for us.

Cherie Jefferies, Director of Fixed Income Trading, State Board of Administration of Florida: We have a data provider that we use and we have worked with them in our sec lenders or with the information on the provider with our sec lenders to get certain securities out or look how a security is going to be loaned out before we purchase.

We don’t do it too often but we have done that in the past and when it comes to the data that was provided by our sec lenders, what we found several years ago is, we had different departments pulling different data from our sec lenders and we have created a program that accumulates all this data so everyone has access to the same information and everyone’s pulling the same information, so the beneficial owner, we’re all looking at the same ratios, we’re all looking at the same levels, revenues. We’re all making the same decisions off the same information, so we’ve been working on that for several years and almost completed and so we’re excited about that.

Nancy Allen,Head of Data and Analytics Solutions, EquiLend: On the technology front, as a fintech, we continue to focus on connectivity and bringing efficiencies to the market.

On the innovation front, I would highlight a big initiative that we’re working on, which is called OneSource, which is designed to be a single source of truth in the securities lending market for lifecycle events and the aim there is to eliminate reconciliation issues. It will be a game changer. We do have a number of the organisations who have already committed to working with us on developing OneSource. A lot of the issues in lending happened after you put that trade on and OneSource will help address those issues and streamline it to be more efficient for everybody, including the beneficial owners.