In many ways, the financial services sector is going through a period of rapid digitalisation. Traditional banking and financial models, once characterised by in-person consultations, paper trails, and siloed operations, are being supplanted by a new digital-first reality. Many financial services are becoming data-driven and digital-first. However, the digital tides are not raising all boats equally. Certain areas of the financial sector have become holdouts for an analogue world and are suffering as a result, with the hard-to-borrow securities lending market a prime example.

Anyone who has worked in the market long enough can remember when the only way to do business was to pick up the phone and verbally communicate inventory lists to counterparties. While things have moved on a little since then – we now have terminals and chat functions – borrowers and lenders can still struggle to access hard-to-borrow liquidity electronically. This is particularly true in the mid-small cap universe and with special situation names. That this is so in our current age of generative AI, cloud computing, and other technological marvels seems incredible.

The problem is that manual processes invite inefficiencies, errors, and delays, and can cause significant bottlenecks in the rapid identification, allocation, and pricing of hard-to-borrow securities. As almost every other part of the financial ecosystem moves towards digital transformation, the continued reliance on outdated processes in this market hampers competitiveness, impedes real-time decision-making, and stunts potential revenue growth for institutions.

Fortunately, digital workflows are now available for the hard-to-borrow market; tools that promise to increase productivity and efficiency while reducing risk. Here, Wematch is taking the lead with our Hard-to-Borrow module.

The Wematch SBL Hard-to-Borrow module automates workflow across all elements of the market including in-demand specials, illiquid mid-small cap names and special situations. Through the module, users can unlock unique liquidity through digital matching and negotiation tools and easily offer and bid on special situation names with an RFQ feature. What’s more, our module ensures complete auditable records to help with internal governance and compliance processes.

For too long the hard-to-borrow space has lagged other areas of the financial sector in digitalisation. Finally, market participants can leverage technology to meet in one place and match interests faster, more efficiently, and with greater transparency than ever before. This will make for a more efficient and productive market. To learn more, reach out.

Pic Credit: Harli Marten on Unsplash

The views and opinions expressed are for informational and educational purposes only as of the time of the writing/production and may change at any time. The material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.