“Alpha” in the context of securities lending is itself a controversial term, with some participants arguing that it’s a euphemism for optimizing transaction costs. But in a purely definitive sense, alpha means excess returns, which is what beneficial owners can get by using technology to mitigate those costs while targeting missed opportunities. At the Finadium Investors in Securities Lending (FISL) NYC 2018 event, one participant said that in considering whether portfolio finance teams generate “alpha” for funds, a number of questions are raised: “I could benchmark all our rates against a data set, and maybe we are winning on some and losing on some.”
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