The only constant is change: evolving priorities for securities finance

Contributor: Jane Milner

It is a shame Greek philosopher Heraclitus is unable to see and comment on today’s rapidly evolving financial industry. Despite the hundreds of years between his life and present day, Heraclitus’s famous quote, “the only constant is change,” still rings true. And today we are seeing this all around us from a securities finance perspective.

For the securities finance world in particular, the task at hand is laying the framework to address our changing environment. Amidst this whirlwind of change, I see three key concerns for our industry:

• Redefinition: The aftermath of crisis is changing the dynamics within the securities finance market; redefining the role of market players, affecting organizational structures are resulting in changes to business processes along with supporting systems. For instance, we are seeing traditional institutional ‘long’ funds going short and hedge funds sitting long. Do you see opportunities to capitalize on change here?
• Regulation: New regulations are undoubtedly top-of-mind for firms in every area of the financial market. For securities finance, the impact is not yet fully defined. Increased transparency, greater risk monitoring and controls will certainly be needed to meet these challenges. Will your firm be ready for new regulation?
• Risk mitigation: In response to increased investor scrutiny as well as impending regulation, there is a mounting need for enterprise-wide views of risk, providing greater transparency for both clients and regulators. Innovative approaches to risk and collateral management are emerging; both for risk mitigation and enhanced asset utilisation in response to increasing Balance Sheet pressures. Are you well positioned to manage collateral on an enterprise-wide basis?

We will be delving into these topics further at SunGard’s upcoming Frankfurt City Day on 11 May. I hope to see you there to discuss the ways in which securities finance can capitalize on change. If you are finding today that Heraclitus was right – that the only constant is change – register here to join us in Frankfurt for this timely event.

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