- Todd Crowther, Head of Corporate Development and Collateral Services, Pirum (Moderator)
- Amar Amlani, Head of EMEA Digital Assets, Goldman Sachs
- Jamie Anderson, Managing Director, Global Head of Collateral Treasury Trading, HSBC
- Nicola Danese, Managing Director, Co-Head of International Developed Markets, Tradweb
- Emma Lovett, Executive Director, Markets DLT, J.P. Morgan
Orchestrating collateral intelligence through technology and data
Industry fragmentation, the compression of settlement cycles, plus rapidly evolving monetary policies and regulation, all require innovative solutions. Technology is a key enabler, not only in making life easier but also more profitable for the securities finance industry.
This panel analysed the technologies that are already making an impact, the ones that might lead to dead-ends, the ones that have the potential to entirely transform the industry and whether it makes sense to leverage existing technology rather than try to reinvent the wheel.
- Technology can address, if not currently fully solve, many of the challenges facing the securities financing industry. The chief hurdle concerns fragmentation. This takes many forms such as:
- securities financing providers may have a virtual view of their inventory, but it is spread across different balance sheets, depositories and triparty agents. This makes it hard to move assets around and cover exposures effectively. This problem is exacerbated by market moving events – not so much by increased volumes flowing through the system, but increased volatility leading to higher fail rates. The challenges, which the European region, in particular, faces in overcoming technological fragmentation (and moving towards T+1 settlement), should not be underestimated. One of 2025’s big themes will be trying to use technology to improve collateral mobility.
- new Distributed Ledger Technology (DLT) is locking both the buy and the sell side into inoperable proprietary systems. They want securities financing providers to collaborate in solving this as a key priority for 2025. Successful development of DLT technology could transform the repo market from just in case funding to just in time funding. - Overall investment in electrification is increasing rapidly, creating golden sources of data that not only generate additional business volumes, but in faster, cheaper and more efficient ways.
- In many instances, existing technology is being leveraged to make incremental gains rather than trying to start from scratch. Examples include the sell side extending existing triparty to cover European Market Infrastructure Regulation (EMIR) and into Central Clearing Platforms (CCPs).
- Bridge old tech with new. This is a cost-effective way to make important incremental steps forwards at a time of resource constraints.
- Take a top-down rather than a bottom-up approach. Instead of trying to rebuild the entire system from scratch (bottom-up), optimise current tech (top-down).
- Speak to the C-suite. They are likely to take a holistic approach, viewing technology as a value proposition rather than just a cost.
- Collaborate with industry peers. This is what both the buy side and sell side are looking for.
- The initial DLT focus was all about bonds, vanilla repo and FX. Some end clients are now asking about real estate and money market funds.
- Private chains were the ideal place to begin the tokenisation of the financial services industry because they are highly regulated. This initially worked well for clients in those individual ecosystems, but increasingly less so as proprietary systems have added yet more layers of fragmentation to an already fragmented system. This is because:
- none of these systems can talk to each other
- the digital asset world is not connected to the traditional one - Solving this challenge will not result in the creation of a single shared ledger that never requires moving an asset. As the industry moves towards 2025, it has reached a stage where it is about making existing platforms more interoperable through collaboration.
- A DLT utopia is several years, or decades away. What’s more important is to take one step at a time to address today’s pain points.
