eSecLending is an independent third party agent.
As an independent third party agent, eSecLending delivers tailored securities lending solutions which produce higher returns with greater transparency and superior client service when compared to the securities lending programs offered by traditional lending agents.
eSecLending’s philosophy brings investment management disciplines and practices to what has historically been a back office process, and provides institutional investors with a compelling alternative to traditional lending models.
eSecLending typically implements both agency exclusive and discretionary lending strategies to optimize returns for our clients.
eSecLending provides clients multiple routes-to-market to maximize securities lending program performance. We manage individual programs for each of our clients built around their unique needs and goals, which differs from the pooled structures offered by other lending agents in the market.
eSecLending typically implements both agency exclusive and discretionary lending strategies to optimize returns for our clients. Using our proprietary auction process, we solicit guaranteed bids from potential borrowers to determine the optimal route-to-market combination of exclusive and discretionary strategies. In addition to being a trading tool, the auction process provides lenders with price transparency, enhanced risk management, and proof statements for fund boards and auditors alike.
It is important to note that with either trading strategy, because eSecLending does not pool its clients’ portfolios, we avoid potential conflicts where attractive client portfolios might end up subsidizing the returns of other less attractive client portfolios.
The auction provides clients with premium returns by exploiting the inefficiency of borrower pricing on lending transactions.
eSecLending is widely recognized as the leading provider of securities lending auctions in the industry, bringing the only transparent, disciplined and repeatable process to the trading function. Since inception, eSecLending has held over 200 securities lending auctions for its clients, auctioning assets totaling over $3.5 trillion. The auction is a price discovery tool that delivers greater returns and facilitates informed decision making on the lending execution strategy that is best for each portfolio or subset of a portfolio. The lending execution strategies chosen post-auction therefore represent the optimal combination of agency exclusive and discretionary lending awards based upon the actual auction results. The results create an audit friendly proof statement for management and boards of directors to substantiate why lending decisions were made in the best interest of beneficiaries.
eSecLending shares all internal risk management reports, analysis and analytics with our clients.
eSecLending manages separate and distinct lending programs for each client, and we tailor all aspects of a program to each client’s unique risk parameters and goals. As part of eSecLending’s commitment to transparency, we share risk reporting which includes detailed analysis on client-specific value-at-risk (VaR) exposures as well as stress testing to demonstrate how securities lending programs perform during heightened periods of market stress. In the event of a counterparty insolvency, eSecLending provides indemnification supported by an insurance policy issued by highly rated, independent insurance companies.
Collateral management is used to mitigate counterparty risk and improve program performance by adapting to regulatory-driven, borrower demand.
eSecLending provides individually managed, segregated client lending programs. This philosophy extends to our collateral management practices for both cash and non-cash collateral, which are always held in segregated accounts in the individual lender’s name. This enables clients to customize their collateral schedule to support their specific risk management tolerances.
eSecLending accepts a wide range of non-cash collateral instruments across a variety of indices, with non-cash collateral held both bilaterally and with industry recognized tri-party agents. With increasing focus on the regulatory cost of business, collateral flexibility is a valuable tool in enabling lenders to react to borrower demand and enhance program performance.
Cash collateral is managed in segregated accounts, with investment strategies and guidelines tailored to the risk management profile of each lender’s individual securities lending program. eSecLending takes a flexible approach to cash management, by either managing cash on behalf of our clients or by providing full administrative support to lenders that manage cash in-house or engage with an independent third party cash manager.
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