Please say a few words about the formation of the company. What does this bring to the market?
Wematch was created in 2017 by six experienced markets professionals from a variety of backgrounds within the finance industry. As the fintech revolution started to gather pace, the founders, with their years of experience, saw a strong opportunity and created Wematch.live with the purpose of connecting market participants and accelerating digital efficiency.
We were selected to be part of the fintech incubator programmes at our investors’ institutions and this gave us a great start as a business. At inception, we saw a gap in the securities finance space, and specifically in the dealer-to-dealer arena, that needed transformation. Through Wematch’s technology, we help our clients to find liquidity, negotiate, trade, optimise and manage the lifecycle of their portfolios of assets and trade structures from total return swap (TRS), secured funding and securities lending.
One of our strongest values as a company is to promote collaboration, both within the company and also with our clients. We listen diligently to feedback and, through our agile and nimble technology, we deliver bespoke and tailored solutions. Technology requests that would normally take financial institutions months, if not years, to deliver, Wematch can turn around in a matter of days and weeks. Wematch is not only a platform for market evolution but, as we grow, we are becoming integral to our clients’ daily workflow.
Which major factors motivated the formation of the Wematch Securities Financing platform in 2017?
For many years the trading process in some areas of the securities finance industry was conducted through non-digital channels such as voice, email and messaging. The industry was, and still is, very inefficient in the way it conducts transactions.
In 2017, WeMatch’s co-founders decided it was time for change. To clarify, though, Wematch is a multi-asset platform. We have an interest rate derivatives platform, a delta one platform, an equity derivatives platform, but it started life in the one area that was screaming out for digitalisation, the total return swap market. Through Wematch’s innovative technology, trades that were taking hours and sometimes days to complete could be negotiated, traded, and booked in a matter of minutes.
What were the primary landmarks and defining moments that have shaped your development as a company?
The company’s progress since inception has been spectacular, but this has involved hard work and many late nights for the team. However, there is a passion about what we are trying to achieve which is both refreshing and rewarding. I would like to take all of the credit for this success but, given that I only joined in February, it would be remiss of me to do so. So, I will only take 90%!
In all seriousness, David’s ambition, and the collective drive of the team, has been the cornerstone. This is still clearly evident and is a major reason for the continued success of the company. But, most importantly, it is also a primary reason why the industry is embracing a young start-up fintech company that is trying to digitalise the securities financing space through improving execution, liquidity and efficient work flow.
We are innovative as a team and our CEO Joseph Seroussi has a dynamic vision of how our industry needs to change. We have a large number of creative ideas, including plans for refinements to sales-to-trader workflow, internal communication workflow and data.
In terms of major landmarks, we launched our securities financing platform in February 2017, followed by our delta 1 equity derivatives platform in October 2018, and then our interest rates derivatives platform in June 2019. We then launched our TRS offer in the US in October 2020. Our ambition is to roll out our cross-asset product offering on a global scale.
Balances on the Wematch platform hit new highs in June, at $93bn, more than a 4-fold increase from $20bn last July. How does this growth rate align with your expectations for 2020-21?
Yes, ongoing balances on the platform are now at all time highs, which is pleasing, but we have a lot more work to do. We are only at the tip of the iceberg. We have over 75 entities now signed up to the platform and close to a thousand traders onboarded across all our asset classes.
There are two main drivers of this extraordinary growth over the last 12 months. One is the evolution of our own business model from being just a matching platform to now offering a large choice of auxiliary products such as optimisation and lifecycle management. We are soon to release a “client optimiser” module which will allow traders to manage their TRS balances efficiently with buy-side clients, taking into account all bespoke rules, including UCITs, ADVs and so on.
We also went live in the US in Oct 2020, which has driven a significant portion of our growth. Over the past six months we have seen real success in the secured funding space. We have now over 25 structures quoted in our live data daily. This liquidity and unique data set is gathering a huge amount of momentum. Our clients in the delta one space have also become more active and our ability to trade single stock futures, total return futures and dividend futures is attracting a lot of attention, especially from a wider client account base.
Our expectations and aspirations remain extremely bullish for the remaining part of the year and for the future. The securities finance industry is a behemoth, but from a technology perspective it is concentrated within a few players. As we continue to demonstrate our capabilities to our clients and as we look to innovate, I am confident that we will continue to win market share, extend our collaboration with partners and attract new clients.
I anticipate that our balances will grow much further, but we are keeping our feet on the ground. We know we have a large amount to do and we are only starting out. But we will hopefully celebrate milestones in the future.
What is next in your development pipeline?
The pipeline is the most rewarding part of working at a young startup. I wanted to explore the entrepreneurial world and Wematch is delivering on all fronts in terms of offering an exciting range of business developments we wish to explore. I didn’t join just so that I don’t need to wear suits anymore!
Specifically, we have a wide array of new initiatives such as cash flow management and enhancements to managing data and metadata. We have just launched our new initiative “Securities Lending 2.0”. This is a project very close to my heart. After spending 23 years in the equity finance industry at Deutsche Bank and JP Morgan, the securities lending industry has been the backbone of my career. The securities lending business is one of the last bastions of finance that needs to make further progress from a technology perspective.
Wematch listened to what the market was requesting, as we did in the TRS space, and we are delivering a new securities lending platform that brings further digitalisation to the marketplace. It has frustrated me for years that some of the key functions, such as sourcing hard to borrow liquidity, takes traders hours to achieve. With pressure on resources across the industry, and with traders forced to operate within tighter parameters — including the need to make most efficient use of their risk weighted assets (RWA) — the business has become more complex but the technology has failed to evolve at the same pace as the industry.
Hedge funds are the dominant driver of borrower demand and they have become much more sophisticated in their trading protocols over the past few years. However, the securities lending industry hasn’t caught up and we are trying dynamically to change that — for example, through faster negotiation protocols, new sources of liquidity and innovative ideas and solutions to help the industry as it faces unprecedented challenges such as the Central Securities Depository Regulation (CSDR).
On the TRS front, we are continuing to deliver new content, sales-to-trader workflows and internal communication flows which allow different parts of the institution that are closely aligned to transact and manage trading activity internally.
We realise there is demand for our technology — and use cases for which this is well suited — but nothing stands still in this industry. Consequently, it is essential to adapt quickly to new requirements. We are working to enhance our product offering to cover market developments in distributed ledger technology. We are also working closely with vendors to explore tokenisation of assets in the repo and securities financing space.
After launching your platform in EMEA, you have invested in building your client book in the US and Asia-Pacific. Please expand on your strategies for these regions and where you identify key opportunities.
You are correct that we have invested heavily in our US offering. It was an heroic effort by the team to launch the US platform successfully in October 2020 in light of the pandemic. The ongoing balances are growing steadily and we are making progress but there are specific intricacies that we are learning through our clients as we develop our offering.
The growth of our platform in the US is a key priority for us as a company. We expect to have a team on the ground team later in 2021, so we keep our fingers crossed that travel will open up soon. But we will continue to push ahead even if this does not happen. Currently, we are live in the US only for synthetic products, but we will expand to other product solutions within the securities finance space, and across other asset classes, imminently.
Our clients have global franchises and Wematch will be no different. We have not slowed down since Covid and we are energised by the challenge this has presented. When we are live on the ground in the US, we will look to the East and bring our fintech knowledge and market leading technology to the financial community in this region. We have already had conversations with firms locally and I have been pleased with the dialogue so far. With Wematch.live, we aim to establish ourselves as the preferred technology partner for our clients’ and traders’ desks!
What does the next 12 months offer in terms of the direction of securities financing markets? How is Wematch helping clients to thrive in this evolving marketplace?
The Covid-19 pandemic has shown that technology is revolutionising the world. Previously, I was never a believer in the work from home concept. On the contrary, the thought of it used to frustrate me, to the disappointment of many team members and colleagues in the past.
It has been proven over the past 18 months that traders and sales traders can perform well when working remotely and the business can run successfully — and in some instances it can thrive. Technology has enabled this to happen. Technology is the driver of dynamic and successful businesses and I strongly feel that the securities finance industry, and finance in general, needs to retain this focus. Financial firms are now embracing the importance of technology more than ever before.
The next 12 months will see a form of hybrid working environment, with an emphasis on work life balance, and therefore fintech needs to help traders to navigate communication, trading and portfolio management more effectively. Regulations across the financial market have had a major impact since 2008 and these regulations force us to have a clear strategy regarding how to manage change.
Following implementation of the Securities Financing Transactions Regulation (SFTR), CSDR is now the main focus of the securities finance industry. We understand that the market is concentrating on the post-trade world, ensuring that standing settlement instructions (SSIs) are accurate and that operations teams become more effective, working more closely with post-trade vendors. At Wematch, we have developed new front office protocols to help our clients manage their exposure and to meet these regulatory requirements. In the TRS space, for example, we have engaged with established partners to build algorithms focusing on ESG (environmental, social and governance) rankings — a hot topic in financial markets currently. Wematch.live will help our clients adapt to the new world we live in, through a targeted process that will allow them to embrace new regulation and to respond promptly to changing market conditions.
← Previous interview
abrdn
Matthew Chessum
Next interview →
Standard Chartered
Madeleine Senior
Image: Shane Martin 
