It’s not often senior figures from each of the
three competing securities lending data providers appear in the
same room together, facing some of the largest pension funds
and asset managers in the US.
DataLend, FIS (formerly SunGard) and IHS Markit - the trio
of stock loan analytics firms - have each worked to build up
their own comprehensive coverage of global lending and
borrowing activity for their clients over the years.
Enhancing their respective benchmarking capabilities, which
allow agent lenders and beneficial owners to measure
performance against the total market and pre-defined
peer-groups, has also been a key focus for each company and
appears to be growing in importance.
Indeed, benchmarking is the topic of choice when the data
providers meet to address an audience of asset owners at the
IMN’s International Securities Finance &
Collateral Management Conference in Florida on January
"The discussion is reflective of the fact that beneficial
owners are becoming far more engaged with evaluating program
performance, both on a macro level and security level," Melissa
Gow, director of securities finance at IHS Markit - one of
three panelists taking part in the closed-door afternoon
discussion, told Global Investor/ISF.
"We’re spending a greater amount of time
speaking directly to asset owners and educating them on the
best ways to utilize the data, analyze their returns and spot
missed opportunities. Above all, we aim to offer our clients
appropriate levels of transparency."
Josh Gray, associate director, securities lending and proxy
governance at Russell Investments, recently told Global
Investor/ISF that benchmarking is a key component when it
comes to running a successful lending program.
"Russell Investments monitors exposures, looks at
performance metrics and parameter requirements of our lending
agents, and uses third-party benchmarking services to ensure
loans are competitively priced in the market," he said.
IHS Markit's Gow has been involved in the securities finance
market for nearly 15 years. Much of that time has been spent
working closely with some of the largest lenders and borrowers
on IHS Markit’s platform, which tracks over $15trn
of assets in lending programs across the globe.
Statistics from the firm, now a merged company after Markit
joined with IHS last year, show that 2016 securities lending
returns were the highest in four years mostly driven by lenders
being able to achieve better pricing for their loans.
Weighted average fees achieved throughout the year were
43.8bps, a 1.1bps uptick. Meanwhile, overall lending supply
increased by 3.5%. North American equities, led by the US, were
the single largest revenue generator in 2016. Canadian equities
also saw a significant lift in fees generated.
"Clear and concise data is playing a critical role in
improved program performance today," Gow believes.
The securities lending business and the wider financial
industry has had to deal with its fair share of shock political
outcomes, market volatility and growth concerns over the past
twelve months. Meanwhile, pledges of deregulation, lower taxes
and the likelihood of rising interest rates in the US will keep
the markets busy in 2017.