SFTS: the digital marketplace requires shared solutions
05 November 2021 UK
Image: Ilya/adobe.stock.com
The securities lending industry has seen 鈥渁 huge amount of innovation鈥� in technology over the past few years, affirms one panellist at the 麻豆传媒 Finance Times Symposium.
They add that the value of innovation is only realised if the component parts of the industry鈥檚 ecosystem take the time to build connections to one another and adopt the same inventions.
The panel, 鈥楧igital markets for securities finance鈥�, featured Ken DeGiglio, chief information officer at EquiLend; Matthew Phillips, head of delivery at Trading Apps; David Shone, director of market infrastructure and technology at ISLA; Andy Wiblin, chief product officer at GLMX; and Matthew Wolfe, executive director of securities lending at OCC.
Discussions began as one panellist defined the digital marketplace as a huge entity encompassing transactions, activity, app stores, online advertisements, cryptocurrencies, media streaming and more.
In the context of securities finance, the panellist describes that the current web 3.0 model means that all devices are connected and based on data, where meanings are derived from the semantic web.
Compared to the web 2.0 model from several years ago 鈥� where data was centralised and the power to utilise data lay in the hands of individuals 鈥� there is now a transition to a more democratised, trust-based web, in which platforms exist to provide connectivity and to allow transactions to take place, essentially creating 鈥渆conomies in code鈥�, they add.
Another panellist defines distributed ledger technology (DLT) as an immutable record of transactions and positions that is shared and distributed from a network perspective, with the intention to establish a standard method of representing trades.
The need for shared solutions in the securities lending industry was discussed in more detail in the panel, with one speaker advocating the use of a central bank digital currency (CBDC) to provide the market with a clearer indication of the perspective of regulators on crypto and digital markets.
They note that this would help to drive common single networks closer together, since a digital coin could be moved immediately between markets, thereby eliminating the risk of having to wait until the next day for finality of settlement.
Another panellist promoted the adoption of the Common Domain Model (CDM) across vendor products and in-house systems to provide market participants with a wider degree of choice in terms of what, when, and how they use products.
Other panellists affirmed the potential value that CDM offers in supporting digitisation through standardising the terms of a transaction in electronic format. . More broadly, panellists highlighted the industry鈥檚 need to find a single source of truth through interoperability and DLT. This is critical in minimising operational inefficiencies, noted one participant.
Examining the challenges currently facing the industry in terms of digital evolution, one panellist identifies fragmentation of processes and data as a key issue. This arises as the marketplace experiences organic growth over time, which often results in different solutions, data representations and interpretations that need to be 鈥渞enormalised鈥� 鈥� standardised and centralised to deliver scale and efficiency.
Another panellist points to legacy systems as a significant obstacle, as these are often unable to adapt and evolve with new emerging standards 鈥� 鈥渓ike an anchor dragging down the industry and stifling innovation鈥�, he describes.
In the concluding comments, one speaker named cyber crime and risk management as the final significant challenges confronting the industry. In response, organisations need to have on-premise hybrid cloud computing, and to invest time and resources in threat detection and due diligence, in order to adequately support this digital evolution.
They add that the value of innovation is only realised if the component parts of the industry鈥檚 ecosystem take the time to build connections to one another and adopt the same inventions.
The panel, 鈥楧igital markets for securities finance鈥�, featured Ken DeGiglio, chief information officer at EquiLend; Matthew Phillips, head of delivery at Trading Apps; David Shone, director of market infrastructure and technology at ISLA; Andy Wiblin, chief product officer at GLMX; and Matthew Wolfe, executive director of securities lending at OCC.
Discussions began as one panellist defined the digital marketplace as a huge entity encompassing transactions, activity, app stores, online advertisements, cryptocurrencies, media streaming and more.
In the context of securities finance, the panellist describes that the current web 3.0 model means that all devices are connected and based on data, where meanings are derived from the semantic web.
Compared to the web 2.0 model from several years ago 鈥� where data was centralised and the power to utilise data lay in the hands of individuals 鈥� there is now a transition to a more democratised, trust-based web, in which platforms exist to provide connectivity and to allow transactions to take place, essentially creating 鈥渆conomies in code鈥�, they add.
Another panellist defines distributed ledger technology (DLT) as an immutable record of transactions and positions that is shared and distributed from a network perspective, with the intention to establish a standard method of representing trades.
The need for shared solutions in the securities lending industry was discussed in more detail in the panel, with one speaker advocating the use of a central bank digital currency (CBDC) to provide the market with a clearer indication of the perspective of regulators on crypto and digital markets.
They note that this would help to drive common single networks closer together, since a digital coin could be moved immediately between markets, thereby eliminating the risk of having to wait until the next day for finality of settlement.
Another panellist promoted the adoption of the Common Domain Model (CDM) across vendor products and in-house systems to provide market participants with a wider degree of choice in terms of what, when, and how they use products.
Other panellists affirmed the potential value that CDM offers in supporting digitisation through standardising the terms of a transaction in electronic format. . More broadly, panellists highlighted the industry鈥檚 need to find a single source of truth through interoperability and DLT. This is critical in minimising operational inefficiencies, noted one participant.
Examining the challenges currently facing the industry in terms of digital evolution, one panellist identifies fragmentation of processes and data as a key issue. This arises as the marketplace experiences organic growth over time, which often results in different solutions, data representations and interpretations that need to be 鈥渞enormalised鈥� 鈥� standardised and centralised to deliver scale and efficiency.
Another panellist points to legacy systems as a significant obstacle, as these are often unable to adapt and evolve with new emerging standards 鈥� 鈥渓ike an anchor dragging down the industry and stifling innovation鈥�, he describes.
In the concluding comments, one speaker named cyber crime and risk management as the final significant challenges confronting the industry. In response, organisations need to have on-premise hybrid cloud computing, and to invest time and resources in threat detection and due diligence, in order to adequately support this digital evolution.
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SFTS: Liquidity access continues to strengthen within securities finance markets
SFTS: Liquidity access continues to strengthen within securities finance markets
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