Finadium report: emerging technologies in securities finance and collateral management

A new Finadium research report profiles twelve vendors with new or evolved technologies in securities finance and collateral management, with lessons for what could make these firms successful over the next year or two.

As we proceeded with our earlier report on large collateral management technology vendors, we kept finding smaller firms that warranted mention yet we did not think were appropriate for major banks or insurance companies evaluating a large vendor option. The diversity of new vendors as well as their level of success in the market suggested to us an interesting new category separate from collateral management that needed to be evaluated: the emerging technology in securities finance or collateral management.

As financial regulations begin to directly impact the businesses of financial market participants, a new generation of technology vendors and service providers is emerging to capitalize on client demand and investor opportunity. Two main strategic directives drive these vendors: information delivery and operational efficiencies. However, the ways each vendor is seeking to gain or grow its foothold in the market can vary substantially.

The firms in our review are also working to make their products and services easy for their clients. Cloud-based technologies feature prominently, including the ability to upload data and download reports in a variety of formats. While the first target market for new vendors might be smaller or midsized clients without large technology budgets, several firms argued that they could already move upstream due to the simplicity and robustness of their offerings. Making things easy for clients is an old sales strategy made relevant by the genuinely complicated rules of changing markets.

This Finadium research report is a review of 12 vendors we have identified as emerging or worthy of note in this space. We profile six vendors in full and offer shorter commentary on an additional six. They cover multiple categories including securities lending, collateral management, OTC derivatives and margining calculations, and highlight unique features of each. Like large vendors of collateral management technology however, we see points of convergence both today and in the future for many of these firms.

This report has been written for a range of securities finance and collateral management market participants interested in new vendors. Potential clients including banks, asset managers, insurance companies and hedge funds may want to keep watch on new services that could impact their businesses. Other technology companies may see possible competitors, partners or acquisition opportunities. Regulators may want to see how their rules are impacting market development, particularly in resolving some of most vexing areas of complexity including the reduction of leverage and the introduction of new collateral rules across cleared and non-cleared OTC derivatives. For all of these audiences, we expect this report to be a useful overview in understanding the profiled vendors and identifying key themes for new vendor growth in the market.

For more information and the table of contents, please visit the Finadium website.

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