Insight
October 2024
As Featured in SFT
EquiLend’s Dan Dougherty on Tackling Securities Finance System Inefficiencies at Source
EquiLend: Tackling System Inefficiencies at the Source
The securities finance market has evolved considerably over the years, and so has EquiLend. Here’s where we’ve been—and where we’re going.
Technology has consistently accelerated transformation in the securities finance sector, with vendor solutions playing a crucial role. EquiLend began by addressing inefficiencies in trading and post-trade activities, but our focus has since expanded. Today, we offer a full suite of solutions tailored to industry demands, increasing regulatory pressures and data products that bring transparency to the market.
The expectation now is that systems operate autonomously – delivering real-time trade execution, seamless lifecycle management and regulatory compliance as standard features, all underpinned by future-proof technology. Our goal is to eliminate friction in securities finance. This mission drives our commitment to continuously improve through automation and reliable, scalable technology.
Bridging Legacy and Modern Technology
To enhance execution and lifecycle management, we’ve focused on continuous upgrades to our core platforms: Next Generation Trading (NGT) and Post-Trade Solutions. Integrating real-time market, post-trade and DataLend insights into NGT has given market participants centralized access to all crucial information on one platform. New functionalities like Competitive Bid negotiation and the integration of NGT with the ECS Loan Market have driven significant growth in trading volumes across all asset classes and fee bands.
However, liquidity and participant breadth define a platform’s success. NGT stands out, facilitating over $122 billion in daily trading with 130+ global counterparties across 30 markets. For firms seeking risk mitigation and capital relief, our ECS Loan Market enables central clearing of U.S. securities at the OCC, with record volumes in 2024. As the market transitions from manual to automated platforms like NGT and ECS, we’ve adapted our systems to accommodate diverse trade types and fee structures, from automated GC to high-value negotiated specials across equities and fixed income.
Beyond execution, our focus on post-trade efficiency has been catalyzed by the shift to T+1 settlement. Our redesigned Recalls Notification and Workflow tool, created in anticipation of T+1 in the U.S. and Canada, directly addressed clients’ concerns. Automated Recalls integrates with the broader EquiLend ecosystem, leveraging real-time messaging to streamline post-trade processes. Within a week of the U.S. T+1 transition, we saw a 176% increase in automated recalls on our platform, signaling an industry-wide shift.
We are heavily involved with the UK’s Accelerated Taskforce for T+1 as a key industry contributor, ensuring we stay in touch with and can get ahead of market developments to best support clients across our solutions. Automation, a key recommendation from the taskforce, is already embedded in our systems, providing end-to-end lifecycle management from recalls to billing.
Transformative, Interconnected Technology
EquiLend Spire, our state-of-the-art SaaS platform designed to unify fragmented systems, increases efficiency for firms still reliant on manual processes. Spire offers flexible solutions for managing recordkeeping, inventory, locates, client asset lending and other functions, enabling firms to reduce operational risk, increase efficiency and improve transparency into the business.
Transparency, in fact, is a critical pillar of our platform offerings. Our data solutions, including DataLend and Orbisa, provide real-time insights into global securities finance activity. DataLend aggregates data from diverse sources including client submissions, platform activity, and third-party inputs, delivering real-time market intelligence. This capability offers clients a competitive edge by enabling them to view market trends as they happen, rather than waiting for T+1 data from other sources.
Staying Ahead of Regulatory Change
Proactively anticipating regulatory shifts, rather than merely reacting, is another area where we differentiate ourselves. We are actively supporting clients through changing regulatory landscapes, drawing on our extensive experience with compliance solutions for ALD, SFTR, and CSDR, as well as the pending SEC 10c-1a requirements.
In some cases, existing technology provides the answers to emerging challenges. For example, our partnerships with SSImple and valid8Me address inefficiencies in SSI management and fund onboarding. Our Enhanced SSI Repository, developed with SSImple, offers centralized matching and monitoring for SSIs, while EquiLend Onboard+, in partnership with Valid8Me, streamlines fund onboarding, delivering a reduction in onboarding timelines by up to 90%.
Anticipating the Future
We see technology as a catalyst for transformation. Our development of 1Source.io, a DLT-based “single source of truth” for securities finance transactions powered by smart contracts, marks a bold step toward eliminating reconciliation and streamlining lifecycle management. Built on the Canton Network, 1Source.io ensures interoperability while maintaining privacy and data access through secure shared ledgers. By future-proofing for innovations like tokenization, we’re preparing for the evolving needs of the market while enhancing security, transparency, and resiliency. This approach addresses today’s challenges and positions us to lead the next wave of transformation in securities finance.
Persistent Innovation
Legacy platform maintenance, crisis-driven workarounds and poor data transparency creates significant friction for clients, and as industries digitize, inefficiency becomes increasingly costly. EquiLend was founded 23 years ago to modernize trading and post-trade practices in securities finance, and we’ve since saved our clients significant sums through procedural efficiency. But our work is far from over.
We aim to relieve systemic pressure across the securities finance ecosystem through a constantly evolving suite of solutions and partnerships. By outsourcing development to specialized vendors, firms can stay focused on innovation without being bogged down by daily operations. At EquiLend, driving change is our core business, and we remain committed to leading the industry forward with every new solution we deliver.
