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Equilend : EquiLend 10th Anniversary
the neXt ten years www.equilend.com 17 While not many participants engage in securities lending to increase their broader market knowledge, the crisis of 2008 has made all of them better informed. Lenders report that, after years spent trying to engage their clients about how and to what ends their securities are being used, clients are now actively grilling them for information. In particular, report brokers, they have focussed on harder- to-borrow stock, where margins are higher. In addition, they are now wiser to the ways to generate revenue, such as collateral reinvestment, and more open to mitigating counterparty risk through initiatives such as tri-party collateral agreements. Lenders must raise their game to meet this growing level of scrutiny. Providers who score well on responsiveness and client servicing have always been at a competitive advantage. But, in future, these qualities will become crucial to growing business. “ You must be ‘all in’ at all times, making those decisions to continuously invest in enhancing technology platforms and servicing capabilities even while earnings from securities lending activities may be in a cyclical downturn,” explains Andrew Clayton, head of global securities lending at Northern Trust in London. The industry must also work hard to educate participants about its practices. Educational support to regulators and governments entities – has increased, bringing many who are entering the market for the first time. As asset owners understand more about securities lending, many are benefiting from the visibility that stock lending provides on shorting activity. Having a presence in the market, these participants have realised, provides intelligence about which stocks are being loaned in large numbers. If a sizeable proportion of a long position has been loaned, they reason, it may be time to consider what this means for their investment. You must be ‘all in’ at all times, making those decisions to continuously invest in enhancing technology platforms and servicing capabilities even while earnings from securities lending activities may be in a cyclical downturn” Andrew Clayton, Northern Trust >> EL.indb 17 26/08/2011 09:55