EquiLend

Management Insight

Securities finance 2022 outlook: 3 trends to watch

Brian Lamb

APR 2022

In the past couple of years, I’ve heard friends and colleagues reference (with an air of irony) the phrase: “May you live in interesting times.” It sounds like a well-wish, but “interesting times” are filled with challenges and curve balls. That’s what makes them interesting.

We’re certainly living in interesting times. Despair is easy to feel, but in the face of challenges and curve balls, we must be brave enough to find hope. 

I have nothing but hope for our future, both personally and professionally.

At EquiLend, 2021 was our best year yet. We’re planning on making 2022 our best year yet, again. 

We’re returning to the office with weekly social gatherings, and I am planning trips to our overseas offices. My goal will be to spread hope for our future. I know that it’s bright, and I want others at EquiLend to feel the same.

In securities finance more broadly, we see big changes on the horizon. We believe 2022 will be a critical year for our industry, as we see several burgeoning trends come to fruition and start to make tangible impacts.

Of the many trends we observe at EquiLend, three stand out.

Trend 1: A need for efficiency will drive industry consolidation.

As the only securities finance exchange in the world, we are experts on the sec finance ecosystem. We have conversations about consolidation regularly. We won’t see consolidation for its own sake–the goal will continue to be efficiency.

By now, the market understands that securities finance is ripe for additional digital transformation, which, if implemented correctly, will unlock huge, first-of-their-kind efficiencies. EquiLend’s Next Generation Trading (NGT) service brought unprecedented automation to sec finance trading 20 years ago, but despite ongoing innovation much of the rest of the industry remains surprisingly antiquated. The potential positive impacts of digital transformation in sec finance cannot be overstated. Our sector lags behind other financial services–like banking, wealth management, and certainly digital currency/payments–in terms of technology. The types of costly mistakes being made in our industry have been eliminated from other sectors for years. Digital transformation will unlock massive efficiencies.

In this space, take efficiency one step further and what we’re looking at is automation. Apply automation to an industry burdened by creaking legacy tech systems and human errors from manual input, and we will unlock scale. 

Automation and scale are two key pillars of EquiLend’s value proposition. They are a part of our DNA in the truest sense. They make us who we are. 

We are excited about the opportunities we see in the market in 2022. We intend to stay alert, nimble, and innovative and continue to deliver the automation and scale that this industry needs.

Trend 2: An onslaught of regulation will drive digital transformation and an increasing need for regulatory technology (RegTech).

It’s clear that regulators are moving the industry forward with technology, whether that’s their intention or not. Regulations including CSDR, SFTR, and SEC 10c-1 are ramping up requirements for communication between counterparties, disclosures, and regulatory reporting within compressed timelines. For example, as currently proposed, SEC 10c-1 demands reporting within 15 minutes of initiating a security loan (EquiLend’s RegTech solutions report in real time). 

In 2021, the meme stock saga took center stage and ramped up regulators’ appetites for compliance with regulations focused on transparency and reporting. 

Industry consolidation is congruent with what we are seeing in the regulatory space: the solution to the increased pressure is technology. 

Firms will have to implement new technology solutions to remain compliant. Technology enables automation, which unlocks efficiency, and efficiency delivers scale. It’s the same logic applied to an even higher stakes, costlier situation. Those who can meet the moment this trend is creating will have to undertake transformational projects, and it won’t always be easy. But those who don’t could be in for even greater pain.

Trend 3: Forget the Great Resignation. We’re in the midst of the Great Hiring.

Broadly, people have reassessed where work should fit into their priorities. Instead of number 1, a lot of people are placing it at 2 or 3 below things like family relationships and lifestyle. This is appropriate and we believe in this. In fact, we see it as an opportunity.

Culture is more important than ever. At EquiLend, we pride ourselves on our values-based, collaborative culture. We uphold 13 values in our culture, several of which are: Embrace change; See the bigger picture; Be a team player; and Grow the EquiLend community. As people continue to focus on other priorities outside of work, workplaces must continue to demonstrate their investments in employees. Not only that, they must show employees that they are rising to the challenges of these ‘interesting times’ and adapting and changing along with the employees themselves. Our values lend themselves to times like these. We’re ready to meet any challenge because we’re in it together.

That’s why we’ve launched a bespoke ESG data analysis and validation service to help our clients understand where they’re doing well and where they need to make improvements. It’s why we’ve given unique flexibility to each employee by offering a bank of 100 annual work from home days to be used at each individual’s discretion. And, of course, it’s why we’re excited to chat over coffee, collaborate in person, and reunite at our staff happy hours in New York, London, and our other locations around the world.

We know we’re better together, but we respect the need to be apart sometimes.

Looking ahead

Though the challenges we face today will not disappear tomorrow, I believe we should look forward to what the future holds. I am certain that with hope, collaboration and a little grit, we can overcome any obstacle. It’s this mindset that has enabled us to grow into the only securities finance exchange in the world, with the foresight and opportunity to take our industry into the future.

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.