In other news, Citi embraces a new HKEX platform, Fiserv joins Swift Partner Program, Wolters Kluwer targets Basel rules & State Street fills top post in India.
Securities Finance Industry Revenue Hit $2.65B in Q3
With the onset of T+1 shorter settlement, securities lending has come under a lot of scrutiny, but one aspect of the global securities finance industry appears to have an upside: revenue for this sector is rising.
“The global securities finance industry generated $2.65 billion in revenue for lenders in the third quarter of 2023,” declares DataLend, the market data service arm of fintech vendor EquiLend. “The figure represents a 1 percent increase from the $2.63 billion generated in Q3 2022.”
The global revenue is keeping pace with Asia-Pacific equity markets, which are heating up just as U.S. specials are “cooling toward the end of Q3,” according to DataLend.
“Global broker-to-broker activity, where broker-dealers lend and borrow securities from each other, generated an additional $680 million in revenue during Q3, a 6 percent decrease year-over-year,” DataLend says.
This is in contrast to “strong lending revenue in the APAC region, up 27 percent from Q3 2022,” a boost that “offset dips in both North America (3 percent decline) and EMEA (12 percent decline) in the quarter,” according to DataLend.
“While global equity performance ticked down 1 percent, fixed income securities brought in a 7 percent increase in revenue. This improvement was fueled by continued growth in corporate bonds, up 24 percent in Q3 year-over-year,” DataLend says.
Overall, last month, the global securities finance industry “generated $767 million in revenue for lenders. The figure represents a 6 percent decrease year-over-year from the $814 million generated in September 2022. Broker-to-broker activity totaled an additional $204 million in revenue in September, a 7 percent decrease year-over-year.”
The drop in September revenue was driven by “a cooling U.S. equity lending market, where fees declined 43 percent month-over-month and 21 percent year-over-year. As a result, revenue generated from U.S. specials dropped to $166 million from the $362 million generated in August,” according to DataLend.
EquiLend offers trading, post-trade, data and analytics, regtech, and platform solutions for the securities finance industry.
Citi Settles First Trades via HKEX Synapse Platform
Citi Securities Services reports that it has had a “successful settlement of trades” for China Asset Management via the Hong Kong Exchanges and Clearing Ltd. (HKEX) Synapse platform.
The Citi transaction “was among the first trades executed and settled on the newly launched Synapse platform,” which recently went live for trade settlement, officials say.
“Synapse is HKEX’s new integrated settlement acceleration platform designed to complement the existing Northbound Stock Connect post-trade infrastructure,” officials say. “Launched in 2014, Stock Connect is a landmark mutual market access program connecting the equity markets of Mainland China and Hong Kong, paving the way for Hong Kong and international investors to access the China A Share market.”
Citi officials say that the firm has been working closely with HKEX “since being invited to participate in the Synapse pilot project in 2019, to develop and bring online a fully automated [application programming interface] API-powered Synapse connectivity solution. Citi is the first and only bank in Hong Kong to offer this capability and in the process has fully aligned its custody platform to offer the complete benefits of Synapse to its clients.”
“This new integrated settlement acceleration platform for Stock Connect will enhance operational efficiencies and help support the development of a more robust and interconnected market ecosystem. Citi is the first participant to fully integrate its custody platform with Synapse, enabling seamless execution of trades from Day 1,” says Glenda So, HKEX head of emerging business and FIC, in a prepared statement.
HKEX’s development of Synapse is “complementary to the global push toward settlement cycle reduction, as seen most recently in North America which is preparing to move to a T+1 settlement cycle around May 2024. The Synapse platform provides international and local investors with greater transparency and visibility over transaction statuses, which is important given the time zone differences that affect operating and processing hours,” officials say.
“We are delighted to be among the first group of asset managers to pilot the HKEX Synapse platform. This marks another significant win in optimizing the two-way flow of capital between Hong Kong and the Mainland,” says Tian Gan, CEO of ChinaAMC (HK), in a statement. “As a leading Chinese fund management company in Hong Kong, we are working diligently with our partners such as Citi as our custodian, to prepare for this rollout, as we connect China and the world.”
Stock Connect, which is used by international investors to access Mainland China securities, is an API solution that Citi designed and “is fully compatible with Synapse and will help address existing operational complexities,” says Caroline Chan, Hong Kong head of securities services at Citi, in a statement.
Fiserv Joins Swift Partner Program
Fiserv, Inc., a payments and financial services technology solutions provider, will be able to offer connectivity to Swift application programming interfaces (APIs) and bolster its support for the Swift Global Payments Initiative (GPI) by joining the Swift Partner Program as a platform partner, officials say.
Fiserv’s financial institution clients have been urging Fiserv to join the program as many financial institutions have “already committed to taking advantage of the enhanced speed and transparency of cross-border payments that Swift API connectivity will provide,” officials say.
“Our membership in the Swift Partner Program underscores our commitment to the strategic vision of leveraging APIs to facilitate access to Swift services,” says Rossana Thomas, vice president and head of enterprise payments platform at Fiserv in EMEA.
Wolters Kluwer Debuts ‘OneSumX for Basel’
Wolters Kluwer officials showcased the Capital Requirements Regulation (CRR) III and Basel IV requirements capabilities of the new OneSumX for Basel offering at its annual Finance, Risk & Regulatory (FRR) Client Conference, held in Sitges, Spain, Oct. 4 to 6.
OneSumX for Basel is the latest addition to the OneSumX for FRR suite of solutions and “allows users to manage the entire Basel reporting process from data integrity and lineage, through to finance and risk management, and into regulatory calculators and reporting,” officials say.
“The OneSumX for Basel solution specifically covers standardized and advanced approaches across all bank sizes and risk types — from credit to market risk, through to operational, settlement, credit valuation adjustment, and counterparty credit risk,” officials say.
“OneSumX for Basel enables banks to be compliant with the complex Basel regulations with an integrated solution, utilizing our unique Regulatory Update Service,” says Claudio Salinardi, executive vice president and general manager, Wolters Kluwer FRR, in a prepared statement.
Wolters Kluwer Finance, Risk & Regulatory Reporting is part of Wolters Kluwer’s Corporate Performance and ESG (CP & ESG) division, officials say. Wolters Kluwer established its CP & ESG division in March 2023 to meet the demand from corporations and banks for integrated financial, operational, and ESG performance management and reporting solutions.
State Street Taps Wells Fargo for Top Post in India
Arindam Banerrji
Arindam Banerrji is State Street Corp.’s new country head for India, and he joins from Wells Fargo, officials say.
Based in Bengaluru, Banerrji will lead the “growth and transformation” of State Street’s operations in the country, officials say. Banerrji will report to Lou Maiuri, president, chief operating officer (COO), and head of investment services.
At Wells Fargo, Banerrji served as the executive vice president and managing director for that firm’s operating centers in India and the Philippines, officials say. Before Wells Fargo, Banerrji held positions at Ernst & Young India, Deutsche Bank, JPMorgan, Larsen & Toubro, and Price Waterhouse, officials say.
State Street, which established its presence in India in 2004, has operations in Bengaluru, Chennai, Coimbatore, Hyderabad, Mumbai, Pune and Vijayawada, officials say.
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