Management Insight

2023 in Securities Lending: A Good Year for Innovation, Talent and Regulation

Brian Lamb

January 2023

2022 was a year of returning to normal for some and it was a year of extreme chaos for others. In stark contrast to 2021 in which COVID-19 stubbornly remained a key concern, 2022 saw a broader range of concerning developments: political unrest, economic challenges, alarming inflation worldwide, and, amidst this, chaos amongst the tech giants of Silicon Valley. There are still positives to be found, however, as in times of global change, businesses look for steady ships. And, with our long history and client-first approach to our business, we are fortunate that EquiLend has seen significant growth in 2022.  

Looking forward, I predict that 2023 will be a year of big things for securities lending. We are working to deliver greater innovation than we have attempted since our inception. NGT was a game changer for trading technology, achieving inventory and trade flow management in real-time. In 2023, we plan to continue to leverage the innovation, interoperability, and client-first approach we are known for with further digital transformation. Delivering on our promise of 1Source is key to demonstrating those strengths as it represents seismic change for securities finance. We firmly believe Distributed Ledger Technology (DLT) has the power to revolutionize the industry, coupled with the exciting capabilities available to clients within EquiLend Spire, which will allow true interoperability. We have a busy year ahead.  

Let’s not forget we are also anticipating a key ruling from the SEC on 10c-1 in 2023. 10c-1 looks to solve for some of the same issues in North America which were addressed by SFTR in Europe, but there is significant nuance in the differing approaches of the two regions. We are, as always, keeping our finger on the pulse of this and other impending regulations, which have the potential to be real game changers this year and beyond.

Innovation Will Continue to Accelerate

We are keeping pace with the innovation we undertook last year, introducing 1Source, our DLT solution to transform securities lending by eradicating breaks, and enhancing many of our existing products to keep pace with client demand. I can certainly predict that the pace of innovation will only accelerate in 2023. It is more expensive to maintain ailing, legacy systems after a point, and market appetite from firms to replace outdated technology has reached that tipping point. Already we hear that some of the big accounting firms have been pooling resources directed at consolidating back offices through a shared service demonstrating that there is appetite for digital transformation across all sectors.  

1Source is now in its build phase, in continued collaboration with our working group, in order to bring to the securities finance world a single source of truth. Continuing on this journey with us are a number of big players whose values align with ours: to transform our industry for the better in the long term.

Out of Sector Talent Sourcing as a Disruptor

In 2021, many spoke of the Great Resignation, yet EquiLend itself has not seen many departures. Instead, we have been presented with a new pool of available talent due to the recent disruption in the tech and finance sectors. We are now bringing even more diverse talent to the securities lending industry. This continues to build on the work we have undertaken with our 2021 and 2022 Graduate Rotational Program in building a robust talent pipeline. As we increasingly recruit great people in new places, we increase our ability to cater to our clients’ needs and create the conditions for different energy, experience, and skills to enter our business, continuing to build some of the best initiatives our industry has ever seen.

SEC Regulation as a Gateway to Industry Wide Efficiencies

My final prediction, one I have said many times before, is that regulation will continue to challenge both vendors and market participants. Both sides must continue to be prepared for the impact of such change by adopting the best products for their firm’s needs to become or remain compliant to all regulation. SEC 10c-1 will bring its challenges, and we await the deadline for the final ruling from the SEC this year. It will have a dramatic impact on the industry, but we are ready to support 10c-1. 

EquiLend is regulated in every region we operate in; we support beneficial regulation across the sector and we’re ready for securities finance to be brought up to speed in yet another region. Knowing our clients rely on us to guide them through an increasingly complicated regulatory landscape, we are putting all our efforts into ensuring we are prepared to support them from the get-go.

EquiLend in 2023

EquiLend put in the hours in 2022 to do what we do best and drive positive, largescale sector change with our solutions, and with new energy from out-of-sector talent, we’re all the more certain of our direction of travel. 2023 will see the build phase of 1Source, our DLT solution, so I can easily predict you’ll hear a lot more from myself and Ken DeGiglio on that one. Keeping pace with the ever accelerating pace of change is the bare minimum a firm should do, many don’t, and realize too late the investment it will take to catch up is out of reach. We’re in the business of trying to outpace change, 2023 will be no different.

Who We Are

EquiLend is a global financial technology, data and analytics firm offering Trading, Post-Trade, Data & Analytics, RegTech and Securities Finance Platform Solutions for the securities finance industry. EquiLend has offices in New York, New Jersey, Boston, Toronto, London, Dublin, India, Hong Kong and Tokyo and is regulated in jurisdictions around the globe.