Stock loan falls short for buy side as liquidity source
25 July 2017 London
Image: Shutterstock
Securities lending was voted the least popular source of liquidity in a survey of European buy-side heads of operations.
In a joint survey by InvestOps and SimCorp, 14 percent of 100 respondents highlighted securities lending as their most popular source of liquidity.
The survey did not detail respondents’ reasons for neglecting securities lending as a liquidity source or expand on whether heads of operations simply considered the practice as a back-up option.
North American firms did show a preference for securities lending over derivatives, which were the second-most popular choice for European firms.
“Securities lending has more efficiency and greatly increases the chances of finding liquidity”, but “in the current volatile and uncertain macro environment, private debt is the ideal form to attract investors”, according to the survey report.
Martin Engdal, director of global product marketing at SimCorp, said: “With private debt coming in as the top ranked source of liquidity, it is clear that an investment management firm needs to have an architecture in place that goes beyond cash, equity and fixed income.”
“Responding quickly to any future asset trends, be it the newest over-the-counter instruments or the latest form of alternative investing, should be a priority.”
He added: “Only firms that can rapidly adapt to new forms of investments will be able to successfully capture and retain institutional clients.”
Collateral management and margining were among the least popular investment areas for the buy side, while front-office technology attracts the most capital expenditure.
“Front-office technology dominates as the most popular investment area, as competition between buy-side firms tightens and increasing data volumes continue to disrupt the front office,” the survey report said.
In a joint survey by InvestOps and SimCorp, 14 percent of 100 respondents highlighted securities lending as their most popular source of liquidity.
The survey did not detail respondents’ reasons for neglecting securities lending as a liquidity source or expand on whether heads of operations simply considered the practice as a back-up option.
North American firms did show a preference for securities lending over derivatives, which were the second-most popular choice for European firms.
“Securities lending has more efficiency and greatly increases the chances of finding liquidity”, but “in the current volatile and uncertain macro environment, private debt is the ideal form to attract investors”, according to the survey report.
Martin Engdal, director of global product marketing at SimCorp, said: “With private debt coming in as the top ranked source of liquidity, it is clear that an investment management firm needs to have an architecture in place that goes beyond cash, equity and fixed income.”
“Responding quickly to any future asset trends, be it the newest over-the-counter instruments or the latest form of alternative investing, should be a priority.”
He added: “Only firms that can rapidly adapt to new forms of investments will be able to successfully capture and retain institutional clients.”
Collateral management and margining were among the least popular investment areas for the buy side, while front-office technology attracts the most capital expenditure.
“Front-office technology dominates as the most popular investment area, as competition between buy-side firms tightens and increasing data volumes continue to disrupt the front office,” the survey report said.
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