Congratulations to IMN for a successful beneficial owners conference in New Orleans this week. After the event in Arizona last year we were concerned about the interest of beneficial owners going forward as well as some of the panel topics becoming stale. However, IMN came bouncing back with a refreshed and refreshing topic list and very strong attendance from beneficial owners. Our highlights are below.
A big difference between this year’s event and last year’s was that this year appeared to focus more on current and pressing issues in the securities lending market that were interesting to all attendees including other agent lenders. Last year (and prior years) seemed to have a greater focus on beneficial owner education. While this of course is excellent for beneficial owners, it gives a certain repetitiveness to the panels and the closed-door sessions when there is less genuinely new to discuss. This year, panels and panelists talked about new issues they were concerned about and expectations for the next year that were presented in a way that presumed that beneficial owners already have a higher level of base education. (Anybody talking about weighted average life of a money market fund just as WAL figures that the audience knows the topic already.) This made for what we saw as snappier panel discussions that were more compelling to attend that some of the standard topics from prior years.
Among the newer topics of panels this year, we liked the panel on cash collateral management that talked about some core challenges in money markets. The panelists brought up a tricky issue, which is that cash investors have diversity of needs and that there is no one true “cash investor” marketplace. Especially with the Fed continuing to buy substantial assets, this creates opportunities for some investors and challenges for others. For example, a cash collateral program for securities lending can receive a negative return and still look great if the intrinsic value side of the trade is positive. On the other hand, a large number of institutions do not have a fleshed out Plan B in the event of negative cash returns and could be very negatively affected. IMN also introduced panels on hedge fund demand for the coming year and the view of securities lending consultants. On the consultants’ panel, we as participants enjoyed the opportunity to share our views on how we approach our work, including how many agents are ideal for an RFP and the real importance of monitoring securities lending programs.
IMN’s successful conference brings up an interesting question about what beneficial asset holders are looking for in a securities lending event in the US. While the networking is always a primary objective, the question here is whether beneficial owners want core education or want to engage in a discussion on the industry along with agent lenders and other service providers. We are inclined to think that beneficial owners for the most part have moved on from the core education piece and are now looking for engaging discussion. This would change somewhat initial mission of the IMN conference, which was for agent lenders to bring beneficial owner clients out from behind their desks into a more relaxed and social environment that combines good dinners, golf and education. Now it might be argued that a good exchange on the more challenging aspects of securities lending, especially for intellectually curious people who don’t often spend much time on the subject, might be equally or more compelling than the wining and dining.
Being on Bourbon Street in New Orleans for the evenings as opposed to a resort far from town doesn’t hurt either. Nice work IMN.