Securities finance in the press – perspectives from reporters covering the industry (Premium)

This year’s Finadium conference featured a panel discussion about securities finance and the press. The panel included capital markets journalists and editors from the Wall Street Journal, the Financial Times and Bloomberg. The conference gave us an opportunity to turn the tables and ask these premier news organizations important questions about their coverage of the industry. This panel drew many questions and observations from our attendees – and received excellent feedback. Our panelists deserve a great deal of credit for taking on the subject in front of an audience that might be considered challenging – if not on occasion hostile.

This industry has a long and sometimes contentious relationship with the press. As more than one of our attendees observed to the panel, practitioners often feel that the industry receives little credit from the mainstream press for its importance in making the system work. And receives a disproportionate amount of blame for the things that go wrong. Our panelists offered excellent responses to these observations, which the industry should consider in its relations with the press – and, by extension, everyone who is influenced by the press. These include the public, regulators, government and political figures.
The panelists offered several points of advice:
Connect financing to the average person. Securities finance activities and processes are extremely technical in nature, and as such, are relatively difficult for outsiders to understand. We have all experienced this in our day-to-day lives… most of us, at one time or another, have tried to explain what we do and how it works to friends, family, regulators, auditors, our own internal organizations with a frustrating lack of success. Our panelists were pretty clear that, as an industry, we naturally face an uphill battle against public perception because of this. People are just naturally inclined to distrust that which they do not understand.
Link financing to numbers. As panelists noted, securities finance only tends to come to the attention of the press and the public when there is something noteworthy to talk about that will resonate with news consumers. Securities finance usually only attracts attention because of the big numbers involved, and usually only when something goes wrong, or has the appearance of going wrong. One way to think of it is: if securities finance is like a utility serving the larger financial system, it only attracts attention when there is a problem… After all, the press does not cover the fact that water was successfully delivered to customers for the seven thousandth day is a row (this is not news), but they definitely cover it when a water main bursts. The industry can help promote the idea that problems are the exception, not the rule, with numbers to back up their case.
Be open. All of the panelists indicated a desire and an openness to work with industry professionals and a desire to develop a stronger and deeper understanding of the nuts and bolts. Journalists, by job description, always need information. They need background, technical, general and specific, detailed data related to stories they are working on. Firms and professionals in the industry would be well served to form bonds with the journalists who best understand the industry, and – if they have a message, and a positive story to tell – to proactively work with these journalists to get the story out. At the end of the day, the journalists on our panel advised conference attendees to tell their story, to be transparent to the press and to engage cooperatively.
On this basis, we advise Finadium clients to work with their internal organizations to develop press strategy that stresses proactive engagement and transparency rather than just crisis management. Our press panelists were representative of the financial press, and firms will find journalists receptive to a better understanding of facts that only the industry really knows.

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