What trends are you currently seeing in the industry? Is it all regulation?
On the European side, most of the trends have been related to regulation from the Securities Financing Transactions Regulation (SFTR), to the refining of the second Markets in Financial Instruments Directive (MiFID II) requirements or processes.
Although some on the US side have to adhere to the rules of SFTR and MiFID II, one of the regulations we’re still hearing about is Rule 204. There are still several firms that aren’t in compliance with it, or they outsourced their compliance and they’re still having issues with it.
We have geared our Helix applications to help manage the Rule 204 processes.
Another trend is equity for equity trading, this has grown over the past couple of years. We have geared HelixSL to handle the trading and tracking of “e for e” transactions, as well as added risk-based controls for monitoring balances and collateral schedules/types per client.
How has HelixSL gone since its launch? What have been the most significant challenges and successes?
It’s gone very well. We began the development of the product about five years ago. It’s been marketed for around four years and its growth has been progressive.
Anytime you introduce a new product in to a mature product space, especially a product space that’s been around for 30 years, you need to have a solid core group of development and support, which Helix has.
We also have great stock loan experts and we have more than twenty years’ experience in the securities lending space. We started out with one customer and now we have a large customer base, both in the US and Canada—we provide a lot of value for our customers.
Where are you finding the most appetite for your systems coming from?
We see it within the entire range of potential customers. HelixSL has been getting a lot of traction with small-mid size broker-dealers. That’s typically the size of client that we generally look for.
How competitive is the technology space around securities finance?
It’s extremely competitive. But it creates an interesting opportunity for new vendors, because your large vendors want to do everything for you, but they don’t necessarily do everything well. When you’re a new vendor, you don’t necessarily need to be the master of everything out there, you can pick and choose what you’re going to provide in terms of automation and what portions of the office you will cover, for example, front, middle, or back.
What vendors can offer today has come into this space. You get to focus on just being a trading platform, or solely concentrating on regulatory needs. Your customers have such a wide choice of service providers to choose from.
Everyone works well together in this space, meaning if we need to integrate with another platform, people are usually very receptive to that. It’s really an interesting time to be in securities finance, especially on the vendor side. As more people get introduced to it, it can only become a better opportunity for the customer.
Where do you see the future of securities finance heading with so much talk around AI, robotics and blockchain?
Well, 2017 to 2018 was the year of blockchain hype. There was a mad dash to become the first company to build a platform and to utilise the technology, even though there wasn’t really a need.
I’ve been in this business for 22 years, since 1996, and when I first heard of blockchain, I thought there would be a five to 10-year integration, just because that’s the way technologies work in finance, especially on the post-trade side.
It’s apparent on the post-trade side because you must deal with legacy system integrations and, like everything else, this takes time and that’s why regulators want to have a say in that.
The blockchain integration craze blew me away because it happened almost overnight. I don’t know if I see this same level of blockchain integration within trading. It could be used more within the realms of regulatory compliance, such as improving audit trails, for example.
Now the two topics, robotics and artificial intelligence (AI), are going to heavily play into securities finance in the near future. I know when I say “robotics” you’re thinking robots, however robotics in finance refers to robotic process automation (RPA). This will replace a lot of repetitive and user-error prone tasks in the near future, which will not necessarily reduce the workforce but allow it to concentrate on tasks that can reduce loss and increase profit.
AI is another hot topic. AI is something I went to school for. RPA will require some AI, but I see the real tasks AI being applied to are automation for traders, examples of this are automation to identify opportunities or optimise collateral with counterparties.
Everyone loves to throw around the term ‘AI’, but the definition of AI is the simulation of the human brain by artificial neural networks. That’s not what anyone is building here, I guarantee it. What they’re referring to is integration of machine learning and data science in to existing platforms. And that’s what we’ll see developing.
What’s next for HelixSL?
We are currently focusing on our North American rollout, although we can support international securities lending desks at this time. We prefer these relationships develop organically by either word of mouth or sales leads from a current customer. However, in saying that we plan to start marketing to European firms later next year.
As we continue to grow, we’re still going to maintain our values of great customer service, excellent technology, and always listening to the needs of our customers. We feel these three attributes will carry HelixSL into the future.
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Texel Finance
Alan Ball
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