IHS Markit: Progress towards SLPM solution is underway
24 January 2019 New York
Image: Shutterstock
Progress towards a solution for beneficial owners is underway, Sam Pierson, director of securities finance, IHS Markit revealed.
The goal of the securities lending performance measurement (SLPM) is to clarify trade-offs in programme specification and to provide a meaningful performance framework for beneficial owners.
This follows feedback received from IHS Markits’s clients both within agency lending as well as the beneficial owner community for the next generation of securities finance management.
The key features that IHS Markit are focused on as they develop the framework for securities finance performance measurement include clarity of inputs and size of the peer group, as well as an updated collateral specification.
Another development of focus is the additional dimensions for specifying programme preferences.
Securities lending revenues for last year were the highest they have been since 2008, and this growth is expected to continue.
Accordingly, Pierson noted that IHS Markit is taking a fresh look at the measurement of securities lending returns and how they are reported to beneficial owners.
He noted that there is a lack of clarity of what a peer group contains, along with a necessary look at return drivers, which standard peer group filters lack the flexibility to capture.
In 2003, IHS Markit securities finance, then known as Data Explores, pioneered the concept and paved the way for transparency in the securities finance industry, Pierson cited.
Pierson highlighted that since then, the use of data within the industry has greatly increased and is now used not only used for performance measurement but is also embedded in the trading processes from automated programmes to the management of re-rates and intraday spot checks.
Despite the increasing use of the dataset across the industry, there is more ground to cover regarding the analysis of securities lending returns, Pierson explained.
He said: “There have been developments and new functionality, but in the decade following the global financial crisis, this has not necessarily kept pace with the substantial change to the industry and the structure of programmes.”
“Even the term benchmark, with respect to securities finance, may be somewhat misleading and given the focus and reforms across financial market benchmarks, a more fitting description which we will use henceforth is SLPM.”
Pierson added: “Sixteen years on from those early beginnings, the time is right for an industry-wide focus on the issues that drive these outcomes to establish a global standard so that the industry as a whole—its observers and its participants—can have the confidence that there is one global agreed upon methodology.”
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.
The goal of the securities lending performance measurement (SLPM) is to clarify trade-offs in programme specification and to provide a meaningful performance framework for beneficial owners.
This follows feedback received from IHS Markits’s clients both within agency lending as well as the beneficial owner community for the next generation of securities finance management.
The key features that IHS Markit are focused on as they develop the framework for securities finance performance measurement include clarity of inputs and size of the peer group, as well as an updated collateral specification.
Another development of focus is the additional dimensions for specifying programme preferences.
Securities lending revenues for last year were the highest they have been since 2008, and this growth is expected to continue.
Accordingly, Pierson noted that IHS Markit is taking a fresh look at the measurement of securities lending returns and how they are reported to beneficial owners.
He noted that there is a lack of clarity of what a peer group contains, along with a necessary look at return drivers, which standard peer group filters lack the flexibility to capture.
In 2003, IHS Markit securities finance, then known as Data Explores, pioneered the concept and paved the way for transparency in the securities finance industry, Pierson cited.
Pierson highlighted that since then, the use of data within the industry has greatly increased and is now used not only used for performance measurement but is also embedded in the trading processes from automated programmes to the management of re-rates and intraday spot checks.
Despite the increasing use of the dataset across the industry, there is more ground to cover regarding the analysis of securities lending returns, Pierson explained.
He said: “There have been developments and new functionality, but in the decade following the global financial crisis, this has not necessarily kept pace with the substantial change to the industry and the structure of programmes.”
“Even the term benchmark, with respect to securities finance, may be somewhat misleading and given the focus and reforms across financial market benchmarks, a more fitting description which we will use henceforth is SLPM.”
Pierson added: “Sixteen years on from those early beginnings, the time is right for an industry-wide focus on the issues that drive these outcomes to establish a global standard so that the industry as a whole—its observers and its participants—can have the confidence that there is one global agreed upon methodology.”
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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