FISL London 2018: reputational risk and liquidity hurdles to buy-side adoption of emerging market infrastructures

If there are mavericks in the emerging landscape of securities lending, surely it’s the matching platforms and blockchain that are making some waves, with one of the major reasons being their potential to disintermediate traditional participants.

For Peer to Peer, or All to All platforms, FISL conferences highlight AVM’s Direct Repo, Elixium and BNY Mellon’s DBVX as cases in point. But these infrastructures have very different models, and the extent to which they can pull together liquidity, not to mention disintermediate dealers from the process, ends up as a sticking point.

It also raises some questions: isn’t the point to make things simpler in connecting cash and collateral providers? Is the buy-side truly interested in electronic trading for securities lending?

Matthew Chessum, Investment Manager at Aberdeen Standard Investments, based in the UK, said that investors should be engaging directly with market infrastructure providers and that beneficial owners are “far too shy” in the market.

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