Mirae Asset Securities
11 October 2022
Mirae Asset Securities鈥� (USA) head of repo, Lara Hernandez, head of securities lending, Keith Wright, and recently appointed head of prime brokerage, Rob Sackett, share their thoughts on competition in the financing markets and Mirae鈥檚 ambitions as it builds its product offerings
Image: Mirae Asset Securities
Rob Sackett, after previously building out successful securities lending and prime brokerage businesses at other companies, what brought you to Mirae?
Sackett: I always followed the successful build at Mirae from a repo and securities lending perspective, but was less familiar with the greater asset management business and investment banking business Mirae has around the world. As I learned more about Mirae, I became convinced I wanted to join the team 鈥� especially after learning that we are the top investment bank in Korea from a research, corporate access, and syndicate standpoint and the largest retail broker for US flow from Korea. Additionally, we cover 15 global markets with over 50 offices globally. Mirae manages assets worldwide of US$545 billion (as of June 2022) through its asset management business and also owns Global-X in the US, Horizon ETFs in Canada, and ETF 色花堂in Australia.
While that is impressive, I was equally impressed with the current clearing and custody operation for the US, Canada, Korea, and 30 other European and Asian markets. We have a self-clearing prime brokerage product and also a correspondent clearing business and a growing team of execution traders. This wide-ranging and complex operation could not run smoothly without 100 per cent commitment from all of our support teams and our C-Suite, all of which maintain a heavy physical presence in New York City.
From a business building perspective, it helps that our operations, corporate actions, and asset servicing teams are fully available to support client growth and onboarding, yet are also accessible to speak directly to our clients and to address their needs in an efficient and cost-effective manner. The same goes for our client technology solutions and reporting teams. Speaking for repo and securities lending, both Lara and Keith are constantly engaging with our clients to accommodate bespoke funding needs and short-side exposure to reduce funding costs and remain highly competitive with pricing and margin.
How do you assess the current state of repo and securities lending markets?
Hernandez: It has been a volatile 2022 for interest rates. The Fed has been on an upward trajectory with interest rates, seemingly shifting the pace of the trajectory from meeting to meeting. Meanwhile, the levered community continues to search for the top of the market. By having an experienced desk, we have been able to help our clients to navigate these difficult markets. Not only do we provide daily colour to both prime brokerage and repo clients, but the trading desk is immediately accessible to clients to address their market questions. It is essential through these volatile markets that both the fixed income and stock loan desks communicate market colour to one another, and to clients, on a daily basis. Mirae鈥檚 size and flexibility enables the repo and the stock loan desks to work closely together to support clients that are active across both sectors.
How are the financing teams working together and supporting the prime brokerage and correspondent clearing businesses?
Wright: Since its creation six years ago, Mirae鈥檚 色花堂Lending desk has evolved into a six-person trading desk, with each trader having an average of 15 years鈥� experience. During that time, we have onboarded over 125 stock loan clients, most of which are major banks and broker-dealers in the US and abroad. We now manage a multi-billion dollar book consisting of funding, ETFs, specials and general collateral. In addition, we are also active in several foreign markets.
At this point in our development, Mirae鈥檚 securities lending offering provides unique and highly competitive services as we add new prime brokerage clients. Although we are part of a large, global family, our support staff is local, responsive and working to personalise each client鈥檚 individual needs. Our support infrastructure resides in the US, which enables Mirae to remain nimble and to make informed decisions on a timely basis.
Given our strong balance sheet, we have the ability to self-fund different asset classes and products. We are working closely with clients to implement their trading strategies in securities that may be hard to borrow by accessing supply and providing locates and pre-borrows. Our strong relationships with the Street also enables us to liaise with other prime brokers that our clients may employ.
More broadly, Mirae is now an authorised participant in several ETFs, enabling the firm to create ETFs in kind, as well as flexibility to lend stable ETFs either on an 鈥渙pen鈥� or 鈥渢erm鈥� basis.
What can you share with SFT readers about Mirae鈥檚 development priorities?
Hernandez: With Mirae鈥檚 parent having recently contributed significant additional capital 鈥� our capital in the US now stands at $512 million 鈥� we are well positioned to continue to expand. Recently we seeded capital for a recently launched Fixed Income ETF. I have personally been at Mirae for over five years and am confident that we have built an outstanding business platform that will enable us to continue to grow and collaborate with our counterparties 鈥� who I like to call partners.
Wright: As an illustration of Lara鈥檚 point, our London affiliate recently expanded its securities lending capabilities by appointing Alasdair Sutherland as director of securities financing and Delta One, thereby expanding our global securities lending capabilities. In his new role, Alasdair will be responsible for leading the development of our UK affiliate鈥檚 new securities lending, repo and Delta One offerings in London, while also working with our other business teams in the US and Asia.
Increasing our capital base and hiring Robert Sackett to run prime brokerage in the US, as well as expanding our global operations to include the UK market, is clear evidence of Mirae鈥檚 permanent commitment to growing and refining these businesses.
Sackett: With the recent consolidation in the prime brokerage landscape, I am more bullish than ever about new entrants such as Mirae to the market. With hedge funds becoming more institutionalised, prime brokerage service providers no longer need to be 鈥渁ll things to all people鈥� and clients can instead choose from 鈥渂est-in-class鈥� services. When I talk to clients, I feel more confident than ever that they can benefit from a partnership with Mirae.
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