Markit Securities Finance
Olly Smith & Pierre Khemdoudi
11 November 2014
Short selling disclosures and more have been added to Markit’s securities finance offering, as Olly Smith and Pierre Khemdoudi explain
Image: Shutterstock
Markit has integrated all publicly disclosed short selling positions into its securities finance offering—why have you taken this step?
Pierre Khemdoudi: We are developing our securities finance offering to make it a one-stop shop for our customers, who are seeking a holistic overview of the whole market. The inclusion of public short selling disclosures is in-line with our release strategy over the past year—it is about developing a workflow suite that addresses the whole of securities finance, rather than just securities lending.
Olly Smith: Short selling disclosures, as required by European Securities and Markets Authority (ESMA) regulations, are publically available, so our customers can access all of it themselves. But that will mean looking at dozens of EU member state websites, downloading the information, putting into a database, and then trying to make sense of it all.
We have made that a lot easier, because we want to help with the workflow and put it all into a single place, which can be viewed alongside the OTC securities lending data we receive from lenders and borrowers in the market. A number of other recent enhancements reflect this theme.
What other enhancements has Markit made to the platform?
Smith: At Markit Securities Finance, we’re probably best known for our work around performance analytics and benchmarking, and with the latest release, we’ve combined that functionality into a single platform, consolidated to meet client workflow.
Our customers don’t want to use 15 different systems to achieve a single goal. They want a single system that does everything they need it to, and hopefully more because securities finance doesn’t work in a vacuum. It is affected by a number of different factors that we are working to capture.
Khemdoudi: We added new functionality in order to give customers a holistic view of securities finance. We have begun to integrate triparty repo data, which we announced at the beginning of the year. This is our first endeavour in the repo market, which is moving closer and closer to securities lending. Additionally, in the same spirit, in September we partnered with Pirum to offer customers greater data delivery options and access to more timely pending trade data.
In essence, our strategy is all about broadening the securities finance offering and allowing our customers to exploit this data in an easier and more intuitive way.
Why is the short selling data important to clients in particular?
Smith: There’s always interest in the public disclosures to see which people are shorting. One of our clients, for example, is quite interested in aggregating its own disclosures. Also, some of our prime broker clients want to see what shorting is going on.
On top of this, one of our functions as a global securities lending information provider is that we’re always seen as a good proxy. The inclusion of the public information shows that we’re a very good proxy for short selling, although the correlation between the public information and our own isn’t perfect.
ESMA’s regulations deal with any short position in a European listed company above 0.5 percent of shares outstanding, so it doesn’t deal with everything. It’s not perfectly correlated because the public information is limited.
Khemdoudi: We can also offer enhanced analytics thanks to this data, because the European set is more granular than what has been available previously. We hope that our customers will be able to monitor the trends being applied in shorting.
Using our tools, customers can also go above just the securities analysis to see an aggregated country or sector view. They will be able to assess selling dynamics in action, because historic data will also be available. It is always interesting to see the present in the context of the past, particularly since the inception of public disclosures.
Is expanding your services a reaction to an expansion in securities finance?
Khemdoudi: Our product is a reflection of what the market is doing. We gather information from our customers, so if the market structure is changing, as we have seen in repo and securities lending, then the data for each is moving closer together and lines are becoming blurred.
Our customers are reorganising their activities in order to have a broader outlook across all of securities finance. It’s natural on our side that we evolve the same way.
Smith: We want to ensure that we’re relevant to all our customers, which is why we do a quarterly release cycle and in this current cycle we’re hopefully meeting requirements across the spectrum of our clients.
We’ve not only done work around benchmarking and reporting, we’ve also enhanced the analytics and charting, pending and intra-day levels, as well as the short selling disclosures. We’re trying to touch all the bases.
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