Securities Lending: Topic, Technology, and Trends

November 20, 2006

Abstract

New York, NY, USA November 20, 2006

Technology focused on increasing transparency will be a boon to the securities lending market.

In a new report, , Celent reviews the technology landscape of securities lending. Securities lending was initially a back office function handled by large banks and broker-dealers. It is now a major front office department that occupies a prominent position in many broker and custodian offices. The securities lending market is expected to increase annually at a rate of 5% in the US and 10% for Europe. The lending market on loan refers to securities that are currently being lent through securities lending transactions.

Securities lending has been growing over the past five years due in part to technology innovations. There has been a significant increase in automated capability for securities lending. As a result, the market is more efficient, and trading has increased. This has been supported by demand from leading securities lending institutions that sought a variety of technology applications to support almost all aspects of securities lending. The different technology solutions have been grouped in the following categories: Trading and Auctions, Books and Records, Operations, and Performance Measurement.

"The advances in technology support the growth of the securities lending industry and more recently have supported regulations impacting the industry. There is clear opportunity for technology to continue to have a positive impact on securities lending," says Stephanie Gilmartin, analyst at Celent and author of the report.

The report begins with a definition of Securities Lending. A review of technology solutions available to the Securities Lending industry and an explanation of their roles in the market follows. Also included in the report is a case study analysis, which demonstrates how the relationship between EquiLend and Headstrong, a Securities Lending platform and securities focused technology services firm, have impacted the technology landscape of Securities Lending.

The 29-page report contains four figures and one table. A table of contents is available online.

 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

New York, NY, USA November 20, 2006

Executive Summary 3
Topic: Securities Lending 5
  Background 5
  Managing Growth and Complexity 8
Technology: Solutions 10
  Trading and Auction 11
  Books and Records 13
  Operations 15
  Performance Reporting 16
Trends: Overview 20
Technology: Case Study EquiLend

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