We’re half-way through a pivotal year for securities lending and capital markets. New business models, new participants and new regulations have shaken the industry out of its post-’08 comfort zone. Now, we’re in a new era.
We asked three of our team, Boaz, Chris and Matt, for one big theme they’ve seen this year. Here are their thoughts:
The jury is in. The verdict is unanimous: Collaborate!
Collaboration between fintech start-ups and major financial institutions has been happening for years. But it’s always involved tinkering at the edges. The walls were up around core business lines.
In the last six months, those walls have started to come down. Big financial institutions are combining internal and external expertise to build new business lines.
With investments: BNYMellon invested in Fireblocks’ B Round, with plans to offer crypto custody services to asset managers.
With partnerships: Citi and Sharegain launched a new, first of its kind, securities lending solution for wealth managers and online brokers. BlackRock partnered with Snowflake to offer new data services on their Aladdin platform.
Big financial institutions have woken up to the collaboration opportunity. They’ve seen the light. The way to revitalise existing business lines or build new ones is to look beyond their four walls.
This trend is a tectonic shift from the old paradigm in capital markets. Long may it continue.
– Boaz Yaari, Sharegain Founder and CEO
Securities lending has – finally – made it to the C-Suite
When I first worked in securities lending, no one outside the industry understood what it was. They certainly didn’t see the value it could bring.
Since then, it’s been creeping up the priority list. In 2021, it reached the C-Suite.
We’ve seen it with more clients investing time and budget to take an active role in their securities lending.
We’ve seen it with lenders aligning their lending programme with organisation-wide challenges like improving profitability and ESG.
And we’ve seen it with custodian banks investing in their securities lending offering, like Fidelity’s new digital securities lending offering and newcomers like DriveWealth building a securities lending team.
Securities Lending has come a long way. In the last six months it is finally taking its place as a core business pillar that senior leadership are invested in.
– Chris Dimmick, Sharegain Head of Relationship Management
It’s the end of the line for aged, inflexible data structures
Data is king – how we collect, retain, maintain and use data in all its forms. It’s unequivocal.
But the biggest barrier we face is still the lack of standardisation. Many legacy data models are fragmented, opaque and differ from firm to firm. However, in the last six months the winds of change have really begun to blow, forcing their way up institutional priority lists.
ISLA has completed the Common Domain Model pilot – we now have a viable MVP.
SFTR has triggered huge change in firms’ abilities to extract and report data on post-trade processes in the securities finance space.
We’re preparing for CSDR to (eventually) arrive, driving another wave of standardisation to deliver greater settlement efficiency.
Behind the scenes, cloud-based services are doing the heavy lifting. They’ve delivered the technological agility, capacity and reliability we need to drive further efficiency and scale, and to meet these standards.
The last six months have proved that our industry can work together to streamline our foundations using the right technology and the right processes, both pre- and post-trade.
Now, we have to use that foundation. We have to embed it in the services we’re offering so every participant has simple, standardised processes that encourage, control and regulate participation.
– Matt Barnett, Sharegain Head of Operations