Four leading pension plans, California Public Employees’ Retirement System (CalPERS), Healthcare of Ontario Pension Plan (HOOPP), Ohio Public Employees Retirement System (OPERS), and State of Wisconsin Investment Board (SWIB) along with eSecLending, Osler, Hoskin & Harcourt LLP and Credit Benchmark, have come together to create the Global Peer Financing Association (GPFA). The shared goal of the GPFA is to create a more efficient and actionable way to increase and encourage peer-to-peer trading activity in the securities lending and repo markets for the benefit of asset owners.
Beneficial owners are increasingly turning to one another to engage in securities lending and repo transactions to supplement traditional banking counterparty trade opportunities. GPFA brings together beneficial owner members with the goal of promoting the development of a more efficient, effective and cost-favourable marketplace for peer securities financing activities, liquidity management and collateral management.
“Over time, we came together as a group of like-minded peers and recognized that there was a need for more information and support related to securities lending and repo activities,” said Dan Kiefer, Investment Manager at CalPERS. “By transacting with our peers, we have been able to increase revenue generated from our securities lending and repo activities while also expanding sources of liquidity for our plan.”
“There are several benefits we appreciate from our involvement in peer transactions,” stated Christopher Benish, Managing Analyst at SWIB. “We are diversifying our counterparts and including these highly credit worthy entities while also benefiting from lower costs, increased transparency on the trades and greater information sharing amongst the group. We also like the predictability of demand where balances are more stable than with traditional banking counterparts over month-ends and quarter-ends.”
“GPFA is focused on educating beneficial owners about credit approval solutions for non-rated counterparties and ways to navigate challenges through central connection points that allow peers to trade with each other efficiently,” said Jerry May Senior Portfolio Manager at OPERS. “We recognize each beneficial owner has different factors to consider when evaluating alternative counterparties. GPFA has developed a framework of resources to help other peers understand and navigate the approval process as well as the ongoing administration of trades for those that do not have internal resources to support securities lending or repo activity directly.”
“We are excited to increase participation in GPFA,” stated Rob Goobie, Assistant Vice President of Collateral Management, Derivatives & Fixed Income at HOOPP. “We believe it is important to promote the interest of members in making the financing market more efficient and effective. We see GPFA as a central connection point to foster collaboration and information sharing within the buy-side community.”
Although the initial founding members are all pension funds, GPFA is interested in expanding membership to include other global pensions, large asset managers, insurance companies and other beneficial owners who share a common interest in the business of peer-to-peer securities lending or repo. There is already global appeal to grow the group of active peer trading participants and GPFA welcomes all beneficial owners that may have an interest in learning more.