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Pierpoint Perspective: Securities Lending Routes to Market

Updated: Jul 17, 2020

From the desk of Raymond Blokland,

Benelux Consulting Lead, Pierpoint Financial Consulting

With great interest I have looked at the agenda of the upcoming IMN 24th Annual European Beneficial Owners' Securities Finance & Collateral Management Conference in London on the 25th and 26th of September. My colleague, Roy Zimmerhansl will moderate the first panel discussion “Securities Finance Industry Outlook” with an excellent panel of senior industry individuals. Also, the rest of the agenda looks impressive and, in my view, covers in full all of the challenges and opportunities that are relevant to the Beneficial Owner community as active participants in the current securities lending and collateral market.

As a frequent attendee of industry events like this over many years, I cannot help but notice that many subjects are recurring each year. That is unavoidable, since every year we want to discuss new markets, new regulations, the legal framework under which we operate, tax changes, the latest technical solutions and so on.

And although it might seem that the agenda more or less looks the same each year, over time some subjects have disappeared almost unnoticed. One of these was always the wonderful discussion subject of “route to market”. I have sat numerous times on panels and round-table discussions where this was the main subject. I represented in those days a direct lending asset management company in contrast to many of the panel members, who were more from the agent lender community. These were always lively sessions which typically concluded that both models had clear and obvious pros and cons.

Pierpoint helps investors choose the best route(s) to market

The agent lender, often also the custodian of the assets that could be used for lending, had the advantage of being in control of the accounts where the assets were actually held and therefore was able to build a robust operational environment around its programme. The direct lender had the advantage of being in control of the assets in the funds which were approved for lending. Working in close relation with the actual Portfolio and Risk Managers, it created opportunities such as collateral correlation trades, core holding term trades with extreme duration and often first-mover advantage in new markets through the usage of OTC derivatives (an often already existing discretion in the toolbox of the PM).

Where the agents are the champions is that their programmes bring very substantial holdings together, both in quantity and quality, and of course their willingness to invest substantially in infrastructure and people, to provide borrowers easy and efficient access to their lending pool.

The direct lenders have a considerable natural advantage when it comes down to trading and flexibility, and are in principle able to adapt themselves more easily to the ever-changing needs of the borrower community.

The reality is that there is not one ideal route to market. A mature lending programme should have both models in place in order to maximise returns. At Pierpoint our aim is to work with you in finding that optimal combination of all routes to market which are available in today’s marketplace. If you are interested in having that discussion with us as a truly independent Securities Finance Consultant, please feel free to contact us via or by visiting our website


If you would like to attend the IMN conference, take advantage of a 20% discount for Pierpoint clients and followers. Please go to and enter “PFC20” in the “Enter Discount Code” box to benefit from this offer. If you are a qualifying Beneficial Owner, let us know you are interested in attending and we can help you obtain a Complimentary Pass.

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