Leading Asset Managers on Securities Lending, Collateral Management and Custody 2011: A Finadium Survey

Finadium Research Report

Leading Asset Managers on Securities Lending, Collateral Management and Custody 2011: A Finadium Survey

June 2011

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Now in its fourth year, the Finadium annual survey of asset managers looks to identify current concerns and future trends across custody, securities lending and collateral management.

In custody, we look at the drivers of quality service and the increasing tendency of asset managers to unbundle their RFPs for custody and securities lending.

In securities lending, we cover a range of topics including selecting and managing agent lenders, alternatives for lending programs and expectations for revenue growth over the next few years.

Our collateral management section focuses on risk management and optimal cash collateral holding structures as seen by the asset management community.

This report covers particular topics of interest to asset managers including the dividend arbitrage trade in Europe and the value of counterparty indemnification agreements provided by securities lending agents.

Using a newly collected database, we compare the responses of surveyed executives to the expenses and securities lending returns of 164 lending mutual funds to better understand perception versus the monetary impact of lending programs. The report contains primary data and peer recommendations for the asset management community.

These pages present asset manager expectations for future change and their willingness to adjust their business models, revenues and expenses to accommodate new market structures.

This report should be read by asset managers, their service providers, advisors and regulators for a clear understanding of the perspectives of asset managers in the custody, securities lending and collateral management markets today.

This report is 47 pages with 29 exhibits.

■ Executive Summary

■ The Partnership Approach to Asset Servicing
– Methodology

■ Opinions on Custodial Services
– Drivers of Quality Custody Service
– Bundling Services in the RFP

■ Securities Lending as an Asset Class
– Selecting and Managing Lending Agents
– Central Credit Counterparties and Other Routes to Market
– Revenue Generation and Future Expectations

■ The Dividend Arbitrage Trade in Europe

■ Valuing Counterparty Indemnification

■ Best Practices in Collateral Management
– Cash Collateral Holdings

■ Peer Advice on Risk and Operations Management

■ About the Author

■ About Finadium


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