In Q1 this year, according to Securities Finance Times, overall global lender-to-broker revenue reached nearly US$4 billion – a 27% increase on last year. In part, these figures reflect the increasingly important role securities financing plays in banks’ Financial Resource Management (FRM) functions. 

It’s easy to see why. Securities lending helps banks manage and enhance liquidity, monetise their holdings, and meet the liquidity and clearing requirements of regulations including Basel III and EMIR. Securities financing structures are multi-purpose, flexible, and relatively no risk – it’s no wonder FRM teams are embracing them. 

However, the use of securities financing structures in FRM isn’t without its challenges. The key difficulty for FRM professionals is that the infrastructure, processes, and lifecycle management of securities financing markets are highly fragmented. The trades are often also bespoke, and require a time-consuming process of agreeing, executing and managing trades – made harder by incompatible trading systems. As a result, FRM teams fail to realise the full potential of securities financing; bogged down with manual processes, they have less time to focus on managing the balance sheet. 

Fortunately, advances in cloud computing and process automation mean that these challenges can be addressed. Our FRM Optimiser is a case in point: it creates a central marketplace for lenders and borrowers to meet and trade. But more than that, it turbocharges the entire trade lifecycle with powerful automation tools, driving unprecedented efficiencies.

For instance, we optimise loan principal baskets by automatically comparing recall and inventory lists with names in ongoing principal baskets and identifying inefficiencies. Similarly, by combining recall and inventory lists, we enable users to instruct recalls and send an efficient substitution simultaneously, within defined optimisation rules and constraints, at the click of a button. What’s more, the platform enables two-way communication and negotiation in a single workflow and integration options with booking systems, ensuring standardisation, accuracy, and efficiency across the trade lifecycle.

Securities financing has long been a vital tool for FRM teams. However, only now does it have the potential to be a light-touch function that saves valuable time and enables them to focus on the bottom line. To learn more, reach out.

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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.