Leading Asset Managers on Securities Lending, Collateral Management and Custody 2012: A Finadium Survey

July 2012

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The fifth annual Finadium survey of asset managers identifies current concerns and future trends across custody, securities lending and collateral management.

In custody we look at Centers of Excellence and the balance that custodians have built between technology and human resources.

In securities lending we evaluate the importance of indemnification as seen by asset managers and the impact this may have on revenues and program participation. We also consider the value-add of Central Counterparties (CCPs) in securities lending, the importance of cash vs. non-cash collateral and perspectives on using a custodian versus a third party agent lender.

Changes in the collateral management space include the massive importance of collateralizing previously uncollateralized OTC derivative contracts including FX forwards, impacts from money market fund reform and diminished supply in the repo markets.

This survey is a unique view into the thinking of large asset managers in North America and Europe. Our methodology relies on an interview process with leading asset management executives focused on custody, securities lending and collateral management. The results are both quantitative, including data on fee splits and collateral management fees, and qualitative, focusing on how managers evaluate the success of their asset servicing and securities finance activities.

This report should be read by asset managers, their service providers and their advisors for a better understanding of the perspectives of asset managers in the custody, securities lending and collateral management markets today. The report also contains helpful peer commentary and asset manager expectations on the direction of the asset servicing and securities finance markets over the next twelve months.

This report is 50 pages with 28 exhibits.

■ Executive Summary

■ Regulatory Change, Risk and Rewards
– Methodology

■ Opinions on Custodial Services
– Outsourcing for Data Management, Middle and Back Office
– Centers of Excellence
– Bundling Services in the RFP

■ Managing Securities Lending in Uncertain Times
– Custodians, Third Parties and Internal Desks
– The Value-Add of Central Counterparties
– Benchmarking
– Revenue Generation, Fee Splits and Future Expectations

■ Will Asset Managers Pay More for Counterparty Indemnification?

■ Best Practices in Collateral Management
– Cash vs. Non-cash Collateral

■ Collateralizing FX Forwards

■ The Regulations that Matter Most

■ About the Author

■ About Finadium


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