The securities finance industry in 2024 has seen significant developments and challenges, shaping its trajectory for the near future. Below Grant Davies, our Head of Equity Sales EMEA, takes a look at a year in which the market – and regulators – had to pause and consider how to support increasing levels of technological innovation while ensuring market integrity and systemic trust.
One of the most significant drivers of growth in 2024 has been the industry’s ongoing shift towards Total Return Swaps (TRS). TRS has gained momentum due to its ability to provide flexible access to financing liquidity, balance sheet benefits, and its appeal as an alternative to traditional securities borrowing and lending (SBL). Providing execution capabilities across both TRS and SBL markets is crucial, ensuring seamless access to both pools of liquidity, and is unique to Wematch. The growth of Wematch’s SBL product in 2024 has enabled this to be a functional reality for clients in early 2025.
The momentum driving the ongoing evolution of TRS lifecycle solutions at Wematch in 2024 continues unabated. (Ongoing Balance growth for TRS 2024: +102%. 1st Jan 2024: $233bn vs 28th Nov: $470bn) The recent launch of our TRS cashflow reconciliation solution, alongside our initiatives to streamline operations and the introduction of simplified term sheet products (both Master Confirm and ISDA Term Sheets), delivers the final pieces needed to eliminate growth barriers for our clients. Furthermore, the adoption of our ETF Synthetic/Issuance solution has introduced significant efficiencies into the Synthetic ETF Capital Market, paving the way for enhanced growth opportunities.
Agency lending TRS, which received significant attention in 2024, has progressed more slowly than anticipated, raising questions about its long-term direction. The strategic emphasis on TRS underscores the industry’s shifting appetite for innovative liquidity solutions and enhanced cross-execution capabilities.
The largest hindrance to the securities finance industry in 2024 was the significant liquidity event caused by a cyberattack. This incident disrupted critical infrastructure, and underscored vulnerabilities in securities lending operations, pushing firms to prioritise risk mitigation and secure liquidity channels.
Companies like Wematch have emerged as well-positioned players in this climate. Our established, liquid, and scalable platform has proven invaluable during these disruptions, allowing clients to maintain operational continuity. The cyberattack served as a stark reminder of the need for robust technological resilience in the industry, but also as a catalyst for change in approaches taken toward traditional liquidity
We believe that the drive for connectivity solutions, particularly direct connectivity, is crucial for enhancing efficiencies and liquidity. This approach prioritises streamlined integration over layered technology, all within a robust regulatory framework.
APIs remain a cornerstone of efficient operations, enabling seamless integration and ease of use across platforms. Wematch has deep expertise in this area and is keen to adopt a collaborative approach to share best practices in API deployment so as to enhance market confidence and accelerate the adoption of connectivity solutions.
Regulatory pressures have continued to shape the securities finance landscape, particularly through the increased focus on data and reporting requirements. The heightened demand for robust data solutions has benefited offerings like Wematch’s Data & Contribution product, which has seen widespread adoption by market risk teams this year. This trend reflects the growing importance of regulatory compliance as a driver for innovation, pushing firms to adopt sophisticated tools to meet evolving standards.
The interplay between SBL and TRS continues to shape market strategies, with each offering unique benefits in terms of liquidity access and execution support. As the industry evolves, the focus will likely remain on solutions that simplify and enhance liquidity channels while adapting to emerging market trends. As stated above, ensuring execution capabilities across both TRS and SBL markets is essential, ensuring seamless access to both pools of liquidity. This product is unique to Wematch and will be a functional reality for clients in early 2025.
Furthermore, the fintech industry remains in a growth phase, and we’re seeing activity on our platform driven both by existing clients deepening their engagement and new clients returning to platforms. Services such as ETF capital market connectivity, cash flow solutions, and term sheet production are gaining traction, highlighting the diversification of client needs and opportunities for tailored solutions.
We’re excited to see the industry’s momentum carry forward into 2025, with major global events like PASLA, SASLA, ISLA Americas, ISLA EMEA, and the Clearstream Conference serving as critical touchpoints for innovation and collaboration. We are also hugely excited to continue our successful Wematch TRS and SBL Forums throughout 2025. For us, these events offer valuable opportunities for stakeholders to come together and we actively look forward to meeting up with our valued clients during the year.
Interested to find out more? Get in touch with the Wematch team today
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.
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