Finadium: User Views of Securities Finance Execution Platforms: A Finadium Survey

Finadium has conducted a primary survey of securities finance market participants on their thinking and adoption plans for new execution platforms. While the market is not yet aligned on one or two solutions besides EquiLend, there is advanced thinking about requirements for market structure at some firms and opportunities for agreement on the most important criteria. The objective of this report is to help substantiate both internal and industry conversations on possible next steps.

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Market participants are assessing multiple new options for securities finance execution and post-trade processing. While discussions were active in 2023, user attention was focused by the EquiLend outage in early 2024. There is now a much greater incentive to take action, driven in part by regulatory concerns for robust Business Continuity Plans specific to securities finance.

As users sort through new platforms, they must also consider what they want from a future securities finance market structure. Securities finance is a balance sheet business and must compete for allocation with repo, Total Return Swaps and other products. Market participants want to see how execution venues will help them be efficient, drive liquidity and build the securities finance model going forward.

Our survey finds that market participants (agent lenders, prime brokers and beneficial owners with their own trading desks) are at different stages of readiness to engage with new platforms. Some are in advanced talks, have budgets planned out and may go live shortly. Others have had introductory conversations with most firms but are six months to a year away at least from making any decisions. Some of this delay is due to organizational priorities while another part is strategic: some firms do not want to be first movers and are happy to let their counterparties and competitors lead.

As a result of fresh attention, securities finance operating models are more transparent inside market participant firms, to the regulatory community and to the general public. A series of articles by Reuters and Bloomberg tracked the incident, the disruption it was thought to have caused and the potential for increased capital costs. While some of the grander claims about how much the entire industry was impacted may have been overstated, the fact that the event gained so much attention in an age of reduced market infrastructure coverage by most financial media outlets was notable. Even casual observers now know more about securities finance trading than ever before.

The results of this survey show an industry in transition when thinking about securities finance execution platforms. Every executive we spoke with recognizes the need for change, but fewer are certain about what that change looks like or the active steps needed to achieve it. An even smaller subset has the support of their broader organizations to move forward, but there may be substantial give and take required before a consensus plan is reached. While there are multiple reasons to connect to new venues, there is a longer list of business considerations that slow decision making, and internal procurement and cybersecurity teams have taken a greater role in the discussion. Users must also project what liquidity will be on a new platform when they finally arrive.

This report is a survey of securities finance market participants on what they think about new execution venues, the factors that are driving their decisions and what will hold them back. The conversation extends well into post-trade and balance sheet management. The report provides ideas about budgets, vendor pricing, internal product development and market innovation.

This report should be read by any party interested in the future of securities finance execution and post-trade processing.

A direct link for Finadium subscribers to this report is

For non-subscribers, more information is available here.

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