The new era of data
07 July 2022
Equating more data with more value is a notion that should be relegated to the past. S&P Global Market Intelligence鈥檚 Melissa Gow describes how the insight that solutions-based capabilities can offer is ushering in the new era of data
Image: stock.adobe.com/BAIVECTOR
Since the inception of the first securities lending trade, data has played a vital role in the efficient running of operational, trading and reporting functions. Over time, the proliferation of securities finance data has transformed a formerly straightforward process to one that market participants can find overwhelming for its heightening depth, breadth and complexity. In today鈥檚 environment, data for the sake of data no longer makes sense.
At S&P Global Market Intelligence 色花堂Finance (SF), which IHS Markit 色花堂Finance has now become a part of, we believe that building intelligent and insightful tools and using data-led analysis is the best way to drive efficiencies in the market. We have transformed into a new era of solutions-based capabilities by using the largest and deepest securities finance dataset as our foundation and combining it with adjacent and complementary data streams.
One area of the current focus is the development of tools to provide actionable content and insight. In the early days of data transparency, it was enough to simply provide basic metrics about the market size, number of participants, rudimentary returns to lendable, and basic fee data. As the industry has grown and evolved, more sophisticated analytics have developed along with the number of data points collected.
Over the years, securities finance has migrated from its perception of being an operational function to becoming an integral part of the investment management process. More emphasis has been placed on differentiation of fees, collateral and counterparty types; on development of inputs into alpha and predictive models; on metrics around the stability of demand and supply, short interest, and more. Today, the market鈥檚 expectation of service providers is to combine data and analytics into innovative solutions that address real-life gaps by providing actionable, relevant, timely and insightful content via the customer鈥檚 choice of delivery mechanisms. SF has met those market expectations through a robust set of tools to provide critical industry solutions.
To address the need for beneficial owners to independently monitor adherence to agreed lending parameters, we launched a Compliance Check portal for beneficial owners. The portal gives beneficial owners a simple, yet robust, exception-based tool to identify potential breaches of lending parameters at the transaction, instrument, market and counterpart level. Parameters are customised according to the specific terms of the 色花堂Lending Agreement (SLA) and monitored against loans (and soon collateral). This first-of-its-kind solution efficiently manages lending programmes through the early identification and resolution of potential compliance issues.
Actionable insight
Our 色花堂Transaction Exception Analytics Report (STEAR) tool provides insights for market participants to monitor the execution quality of their loans. The tool examines loans against all daily transactions and compares fees on a given trade to the market low, high or average for the day. The exception-based report flags any potential threshold breaches to allow timely investigation and resolution. Parameters are flexible and customisable to account for bespoke needs and results can be delivered via a portal, API, excel toolkit and datafeed.
Continuing on the theme of providing actionable insight, our Borrow Cost Optimization (BCO) tool is a powerful and intuitive way for brokers to compare their borrow rate performance. Similar to performance reporting for lenders and beneficial owners, we have created peer groups to measure borrows against other brokers, providing insight into the market size, share and trading performance. Trades in all asset classes can be tracked across fee categories and dividend requirements, monitored at the country and index level, and analysed against a peer group to provide an efficient and accurate way to gauge and manage the borrow book.
We have also focused on building solutions to address areas of inefficiency in securities finance operational processes. Our Client Onboarding Accelerator Tool (COAT) leverages existing S&P Global workflow capabilities to streamline the process of onboarding new funds. The current agent loan disclosure (ALD) onboarding process between borrowers and lenders is inefficient, time consuming, and prone to error, often leading to delays in commencing lending for new accounts. Onboarding new accounts requires mutual approval. Currently, the changing requirements between counterparts, manual communication, and the industry鈥檚 lack of standardisation and transparency have delayed the timely capture of revenue opportunities.
The efficient use of collateral has long been an area of focus for securities finance. Our ETF collateral lists leverage the strength of several S&P Global datasets to bring transparency, efficiency and automation to the collateral management process. Using our industry-agreed methodology, collateral receivers can customise parameters to meet their risk profiles. It allows clients to screen the global ETF universe for instruments that meet their eligibility standards, thereby vastly increasing the number of ETFs which can be identified and accepted as collateral. The process looks at several different criteria, including fund size and management structure, and then confirms that the collateral manager accepts the fund鈥檚 underlying securities.
Governance continues to be an essential element of a well-run securities lending programme for lenders and beneficial owners. In the past few years, ESG considerations have grown to include all segments within the industry. SF has addressed the need for enhanced ESG capabilities through several innovative solutions. First, SF provides security-specific data points on 15 corporate actions events to assist with decision-making processes around voting, including record and effective dividend dates, annual and special meetings, splits, mergers, and acquisitions. The availability of this data in multiple delivery platforms allows for easy integration into workflows and models.
Loan evaluation
Later this year, we will be introducing a loan evaluation report to provide more clarity on loan positions around upcoming annual general meetings (AGMs). The report will use SF loan data and incorporate both data from our corporate actions team and S&P Global鈥檚 existing ESG dataset. The report will evaluate open loans data (utilisation, percentage of shares outstanding, days to recall, current revenue) against customisable ESG criteria.
The report aims to provide clients with a full picture of their loan positions and to assist their decision making on when, and if, to recall a security from loan around key corporate action events. In collaboration with S&P Global鈥檚 existing ESG dataset, we will overlay raw ESG scores covering over 20 categories, loan details, and group level SF metrics to provide all the data needed to make informed decisions. This report will provide a flexible and customised solution to manage the challenges faced when evaluating risk in a fund鈥檚 portfolio.
To complement our securities finance solutions, in Q2, SF is launching Repo Data Analytics (RDA), which will offer price discovery, metrics, and market analysis for repos across global markets, tenor, and haircuts. We are partnering with Pirum鈥檚 RepoConnect聽product to allow users to automate the trade and lifecycle matching process. This will increase operational efficiency, reduce risk and ensure regulatory compliance.
While we have naturally focused on building relevant and innovative functional solutions, SF has also made a significant investment in the delivery channels required to ensure these solutions are easily available and accessible to our customers. In addition to our traditional channels such as the web portal, excel toolkit, proprietary data feeds and API, we have expanded the number of third-party platforms that support SF data. Snowflake, Broadridge, Novus, SIG Tech, Spire and TS Imagine are several new platforms we have recently partnered with.
The evolution of data from simple metrics to meaningful solutions in the securities finance world has brought a vast array of exciting potential and possibilities. At SF, we harness the power of our market intelligence, broad and deep securities finance dataset, and complementary S&P Global adjacencies to usher in the new era of data.
At S&P Global Market Intelligence 色花堂Finance (SF), which IHS Markit 色花堂Finance has now become a part of, we believe that building intelligent and insightful tools and using data-led analysis is the best way to drive efficiencies in the market. We have transformed into a new era of solutions-based capabilities by using the largest and deepest securities finance dataset as our foundation and combining it with adjacent and complementary data streams.
One area of the current focus is the development of tools to provide actionable content and insight. In the early days of data transparency, it was enough to simply provide basic metrics about the market size, number of participants, rudimentary returns to lendable, and basic fee data. As the industry has grown and evolved, more sophisticated analytics have developed along with the number of data points collected.
Over the years, securities finance has migrated from its perception of being an operational function to becoming an integral part of the investment management process. More emphasis has been placed on differentiation of fees, collateral and counterparty types; on development of inputs into alpha and predictive models; on metrics around the stability of demand and supply, short interest, and more. Today, the market鈥檚 expectation of service providers is to combine data and analytics into innovative solutions that address real-life gaps by providing actionable, relevant, timely and insightful content via the customer鈥檚 choice of delivery mechanisms. SF has met those market expectations through a robust set of tools to provide critical industry solutions.
To address the need for beneficial owners to independently monitor adherence to agreed lending parameters, we launched a Compliance Check portal for beneficial owners. The portal gives beneficial owners a simple, yet robust, exception-based tool to identify potential breaches of lending parameters at the transaction, instrument, market and counterpart level. Parameters are customised according to the specific terms of the 色花堂Lending Agreement (SLA) and monitored against loans (and soon collateral). This first-of-its-kind solution efficiently manages lending programmes through the early identification and resolution of potential compliance issues.
Actionable insight
Our 色花堂Transaction Exception Analytics Report (STEAR) tool provides insights for market participants to monitor the execution quality of their loans. The tool examines loans against all daily transactions and compares fees on a given trade to the market low, high or average for the day. The exception-based report flags any potential threshold breaches to allow timely investigation and resolution. Parameters are flexible and customisable to account for bespoke needs and results can be delivered via a portal, API, excel toolkit and datafeed.
Continuing on the theme of providing actionable insight, our Borrow Cost Optimization (BCO) tool is a powerful and intuitive way for brokers to compare their borrow rate performance. Similar to performance reporting for lenders and beneficial owners, we have created peer groups to measure borrows against other brokers, providing insight into the market size, share and trading performance. Trades in all asset classes can be tracked across fee categories and dividend requirements, monitored at the country and index level, and analysed against a peer group to provide an efficient and accurate way to gauge and manage the borrow book.
We have also focused on building solutions to address areas of inefficiency in securities finance operational processes. Our Client Onboarding Accelerator Tool (COAT) leverages existing S&P Global workflow capabilities to streamline the process of onboarding new funds. The current agent loan disclosure (ALD) onboarding process between borrowers and lenders is inefficient, time consuming, and prone to error, often leading to delays in commencing lending for new accounts. Onboarding new accounts requires mutual approval. Currently, the changing requirements between counterparts, manual communication, and the industry鈥檚 lack of standardisation and transparency have delayed the timely capture of revenue opportunities.
The efficient use of collateral has long been an area of focus for securities finance. Our ETF collateral lists leverage the strength of several S&P Global datasets to bring transparency, efficiency and automation to the collateral management process. Using our industry-agreed methodology, collateral receivers can customise parameters to meet their risk profiles. It allows clients to screen the global ETF universe for instruments that meet their eligibility standards, thereby vastly increasing the number of ETFs which can be identified and accepted as collateral. The process looks at several different criteria, including fund size and management structure, and then confirms that the collateral manager accepts the fund鈥檚 underlying securities.
Governance continues to be an essential element of a well-run securities lending programme for lenders and beneficial owners. In the past few years, ESG considerations have grown to include all segments within the industry. SF has addressed the need for enhanced ESG capabilities through several innovative solutions. First, SF provides security-specific data points on 15 corporate actions events to assist with decision-making processes around voting, including record and effective dividend dates, annual and special meetings, splits, mergers, and acquisitions. The availability of this data in multiple delivery platforms allows for easy integration into workflows and models.
Loan evaluation
Later this year, we will be introducing a loan evaluation report to provide more clarity on loan positions around upcoming annual general meetings (AGMs). The report will use SF loan data and incorporate both data from our corporate actions team and S&P Global鈥檚 existing ESG dataset. The report will evaluate open loans data (utilisation, percentage of shares outstanding, days to recall, current revenue) against customisable ESG criteria.
The report aims to provide clients with a full picture of their loan positions and to assist their decision making on when, and if, to recall a security from loan around key corporate action events. In collaboration with S&P Global鈥檚 existing ESG dataset, we will overlay raw ESG scores covering over 20 categories, loan details, and group level SF metrics to provide all the data needed to make informed decisions. This report will provide a flexible and customised solution to manage the challenges faced when evaluating risk in a fund鈥檚 portfolio.
To complement our securities finance solutions, in Q2, SF is launching Repo Data Analytics (RDA), which will offer price discovery, metrics, and market analysis for repos across global markets, tenor, and haircuts. We are partnering with Pirum鈥檚 RepoConnect聽product to allow users to automate the trade and lifecycle matching process. This will increase operational efficiency, reduce risk and ensure regulatory compliance.
While we have naturally focused on building relevant and innovative functional solutions, SF has also made a significant investment in the delivery channels required to ensure these solutions are easily available and accessible to our customers. In addition to our traditional channels such as the web portal, excel toolkit, proprietary data feeds and API, we have expanded the number of third-party platforms that support SF data. Snowflake, Broadridge, Novus, SIG Tech, Spire and TS Imagine are several new platforms we have recently partnered with.
The evolution of data from simple metrics to meaningful solutions in the securities finance world has brought a vast array of exciting potential and possibilities. At SF, we harness the power of our market intelligence, broad and deep securities finance dataset, and complementary S&P Global adjacencies to usher in the new era of data.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 色花堂Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 色花堂Finance Times
