And for my Nex trick
12th December 2017
SFTR is bringing significant changes to the securities lending landscape, but Nex is creating and collaborating to help clients through. Colin Murphy and Matthew Bernard explain
Image: Shutterstock
Nex Regulatory Reporting has been approved as a Securities Financing Transactions Regulation (SFTR) trade repository. What opportunities does this create?
Colin Murphy: We have a substantial client base through our market share for the European Markets Infrastructure Regulation (EMIR) and the second Markets in Financial Instruments Directive (MiFID II), and by becoming a trade repository for SFTR, we will be giving our clients a solution for what’s going to be a pretty substantial regulatory change going forward. I think trade repository approval will uniquely position us as an endpoint to report directly to the trade repository.
What are the main challenges for securities financing participants regarding SFTR?
Murphy: This will be the first time that this segment of the market has had a regulatory light shone on it. Until now, the securities lending repo market has been untouched from a regulatory reporting perspective. The SFTR reporting requirements will have a big impact on participants, much in the same way that EMIR has on the over-the-counter derivatives market.
An important challenge for clients is the fact that, in order for them to comply with the regulations, they are going to have to extract data from a large number of disparate systems. That process will, in itself, be onerous.
As is the case with other regulatory regimes we cover, we are able to ingest data from our clients in whatever file format they have it, we are very flexible in how we consume their information. Our existing infrastructure for MiFID II and for EMIR enables us to provide a comprehensive end-to-end solution from one vendor.
Also, in order for firms to adhere to SFTR they will need to, by definition, transfer their reportable trade data through a trade repository. That’s an absolutely necessary process. The challenge for them will be getting information from a number of different sources and then transferring it.
How does Nex fit into the SFTR space?
Murphy: Our collaboration with other Nex Group companies, such as hedge treasury platform ENSO, and BrokerTec’s repo business, uniquely positions us to capture significant market share of SFTR transactions. These businesses, and our cloud-based trade repository technology, give us a strong point of leverage to win SFTR reporting business.
This gives us a natural point of leverage for SFTR business. SFTR is going to have a significant impact for both the buy and sell side. Giving ourselves time for the implementation is going to be key.
Nex TR will be a cloud-based trade repository—it’s cutting-edge technology. From a Brexit perspective, we’re also future-proofing ourselves, hence why it will be based in Sweden.
Nex’s Pivot programme promises to optimise clients’ financial resources and reduce their costs. Why is this important?
Matthew Bernard: It’s important because it’s where the world is going. Banks have been focused on this for years, working to make significant improvements in internal technology to better optimise across clients and inventory.
Our buy-side clients are dealing with similar constraints and we’re in a time of transformation. Fees are being tightened and re-worked and our core clients have a heightened focus on efficiencies to maintain the right operating margin in their business.
Our clients are being smarter, regarding the way they interact with their financing counterparties as a result, and technology continues to play a major role in this business.
Why is it so important for hedge funds to execute cash payments directly through a portal? How secure is this?
Bernard: In a world where human beings can order pretty much any product they want directly through their phone and have it paid for and delivered the very next day, I don’t see why our industry participants would need to log into multiple sites to instruct or execute treasury- and operations-related orders and have it be so labour intensive. People want to do things faster, smarter and be more efficient and in a scalable way—Pivot allows for all those things.
The platform is extremely secure and reliable. It is built in partnership with Nex Markets, whose backbone has been providing these types of services to Fortune 500 customers globally for over a decade, and we are using the most advanced security protocols across the platform.
Colin Murphy: We have a substantial client base through our market share for the European Markets Infrastructure Regulation (EMIR) and the second Markets in Financial Instruments Directive (MiFID II), and by becoming a trade repository for SFTR, we will be giving our clients a solution for what’s going to be a pretty substantial regulatory change going forward. I think trade repository approval will uniquely position us as an endpoint to report directly to the trade repository.
What are the main challenges for securities financing participants regarding SFTR?
Murphy: This will be the first time that this segment of the market has had a regulatory light shone on it. Until now, the securities lending repo market has been untouched from a regulatory reporting perspective. The SFTR reporting requirements will have a big impact on participants, much in the same way that EMIR has on the over-the-counter derivatives market.
An important challenge for clients is the fact that, in order for them to comply with the regulations, they are going to have to extract data from a large number of disparate systems. That process will, in itself, be onerous.
As is the case with other regulatory regimes we cover, we are able to ingest data from our clients in whatever file format they have it, we are very flexible in how we consume their information. Our existing infrastructure for MiFID II and for EMIR enables us to provide a comprehensive end-to-end solution from one vendor.
Also, in order for firms to adhere to SFTR they will need to, by definition, transfer their reportable trade data through a trade repository. That’s an absolutely necessary process. The challenge for them will be getting information from a number of different sources and then transferring it.
How does Nex fit into the SFTR space?
Murphy: Our collaboration with other Nex Group companies, such as hedge treasury platform ENSO, and BrokerTec’s repo business, uniquely positions us to capture significant market share of SFTR transactions. These businesses, and our cloud-based trade repository technology, give us a strong point of leverage to win SFTR reporting business.
This gives us a natural point of leverage for SFTR business. SFTR is going to have a significant impact for both the buy and sell side. Giving ourselves time for the implementation is going to be key.
Nex TR will be a cloud-based trade repository—it’s cutting-edge technology. From a Brexit perspective, we’re also future-proofing ourselves, hence why it will be based in Sweden.
Nex’s Pivot programme promises to optimise clients’ financial resources and reduce their costs. Why is this important?
Matthew Bernard: It’s important because it’s where the world is going. Banks have been focused on this for years, working to make significant improvements in internal technology to better optimise across clients and inventory.
Our buy-side clients are dealing with similar constraints and we’re in a time of transformation. Fees are being tightened and re-worked and our core clients have a heightened focus on efficiencies to maintain the right operating margin in their business.
Our clients are being smarter, regarding the way they interact with their financing counterparties as a result, and technology continues to play a major role in this business.
Why is it so important for hedge funds to execute cash payments directly through a portal? How secure is this?
Bernard: In a world where human beings can order pretty much any product they want directly through their phone and have it paid for and delivered the very next day, I don’t see why our industry participants would need to log into multiple sites to instruct or execute treasury- and operations-related orders and have it be so labour intensive. People want to do things faster, smarter and be more efficient and in a scalable way—Pivot allows for all those things.
The platform is extremely secure and reliable. It is built in partnership with Nex Markets, whose backbone has been providing these types of services to Fortune 500 customers globally for over a decade, and we are using the most advanced security protocols across the platform.
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