Levels of automation continue to increase, says Don D’Eramo
23 January 2019 Toronto
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Levels of automation are continuing to increase as both borrowers and agent lenders look to streamline flows, according to Don D’Eramo, global head of securities lending at RBC Investor and Treasury Services (I&TS).
Discussing current trends in North America, D’Eramo explained that there have been ongoing efforts to utilise the latest auto-borrowing technology to actively manage inventory to borrowers thereby minimising the back and forth communication on both sides.
In North America, there is a continued shift in the behaviour of borrowers towards demands for automation as well as a continued emphasis on balance sheet optimisation and collateral management.
Additionally, there is also an overall shift towards further non-cash collateral, D’Eramo revealed.
Meanwhile, at RBC I&TS over 75 percent of connectivity with counterparts is automated, which allows an increased focus on optimising high-value lending by their global desk.
Secondly, D’Eramo cited, the demand to borrow high-quality liquid assets continues to be significant in North America.
He said: “Global financial institutions continue to optimise balance sheet requirements as the focus on regulatory driven liquidity coverage remains a significant mandatory necessity in a post-financial crisis environment.”
“Additionally, collateral optimisation in itself is increasingly important as the cost of financing remains top-of-mind. These two drivers of demand persistently shape the changing demand landscape towards increasing fixed income on loan balances and especially towards term lending trades.”
He continued: "Lastly, a common trend in the North American space this year, which is expected to continue, is an increasing shift to non-cash collateral. Borrowers are constantly looking for lenders to expand their non-cash collateral offerings to include the acceptance of exchange-traded funds (ETFs), American depositary receipts, additional equity indices and non-investment grade corps."
D’Eramo advised: “It is imperative that agent lenders engage with beneficial owners and
continue the education on collateral flexibility, trends and expansion.”
Click here to read the full interview in the latest issue of Securities Lending Times. Make sure you subscribe to receive the latest news, features and analysis.
Discussing current trends in North America, D’Eramo explained that there have been ongoing efforts to utilise the latest auto-borrowing technology to actively manage inventory to borrowers thereby minimising the back and forth communication on both sides.
In North America, there is a continued shift in the behaviour of borrowers towards demands for automation as well as a continued emphasis on balance sheet optimisation and collateral management.
Additionally, there is also an overall shift towards further non-cash collateral, D’Eramo revealed.
Meanwhile, at RBC I&TS over 75 percent of connectivity with counterparts is automated, which allows an increased focus on optimising high-value lending by their global desk.
Secondly, D’Eramo cited, the demand to borrow high-quality liquid assets continues to be significant in North America.
He said: “Global financial institutions continue to optimise balance sheet requirements as the focus on regulatory driven liquidity coverage remains a significant mandatory necessity in a post-financial crisis environment.”
“Additionally, collateral optimisation in itself is increasingly important as the cost of financing remains top-of-mind. These two drivers of demand persistently shape the changing demand landscape towards increasing fixed income on loan balances and especially towards term lending trades.”
He continued: "Lastly, a common trend in the North American space this year, which is expected to continue, is an increasing shift to non-cash collateral. Borrowers are constantly looking for lenders to expand their non-cash collateral offerings to include the acceptance of exchange-traded funds (ETFs), American depositary receipts, additional equity indices and non-investment grade corps."
D’Eramo advised: “It is imperative that agent lenders engage with beneficial owners and
continue the education on collateral flexibility, trends and expansion.”
Click here to read the full interview in the latest issue of Securities Lending Times. Make sure you subscribe to receive the latest news, features and analysis.
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