The conversation on new securities finance execution venues is shifting from a focus on resilience to which functionalities can deliver outsized value going forwards. A new research paper from Finadium and FIS explores the positioning of agent lenders, dealers and beneficial owners on execution venues in 2025.
On a practical level, the market for securities finance execution platforms has gotten crowded. How do firms prioritize new venues and what steps are necessary to get the financing and approvals to connect? While cost is important, how are firms looking at the bigger picture of how execution will evolve when making decisions on platform selection that will have long term implications?
While each provider has different strengths and weaknesses, there are questions around whether the market will consolidate around a small number of platforms or if liquidity will spread out. There are costs and risks to selecting either the right or wrong venue. There are also trade-offs between resilience and diversification vs. a need to keep vendor footprint to a minimum to reduce complexity.
Firms can struggle with how to frame the business case for a new venue and gain investment in an era of scarce resources. Senior decision makers are trying to understand what differentiates platforms and the key questions to ask when deciding which venue to select. Then there are commercial considerations around platform selection as greater competition spurs more cost-effective pricing models. For their part, providers are innovating and offering a new wave of smart matching algorithms. These tools can determine the most economic match based on multiple factors including the optimal trade type for a security, counterparty trading patterns and operational efficiency, route to market, and collateral needs.
Senior executives are asking questions around what the future of execution looks like. How are providers enabling greater front-to-back-office integration and interoperability between platforms? What are the latest advances in trader workflow tools, pre-trade analytics and matching technology based on big data, and how can they enhance P&L? Will artificial intelligence impact workflows and how will it interact with human intelligence?
Finadium and FIS have published a whitepaper – “Going live: the paradigm shift in securities finance execution platforms”, based on interviews with buy-side and sell-side market participants, that offers insights into how leading firms are thinking about the business case for onboarding to new execution platforms and what sets providers apart. It discusses how execution is evolving to a more exchange-like environment as emerging technologies and smart automation drive new efficiencies and changes in trading patterns. It also examines what the future of execution could look like and how firms should prepare for the new paradigm shift in operating models. The paper provides a practical guide that senior executives can use to inform decisions around execution.
The full whitepaper is available here