The Risk Management Association’s Financial Technology & Automation Committee has published a new thought leadership paper, “The New Normal | Digital Asset Corporate Actions.” Through the paper, RMA aims to prompt discussion of emerging technologies that help transform securities lending’s end-to-end workflow. The Committee’s approach to tackling this subject included conducting a case study of events around Overstock.com’s recent digital dividend and the actions taken by market participants.
“Digital assets are poised to transform not only securities lending, but finance more broadly,” said Nick Delikaris, Global Head of Trading and Algorithmic Strategies at State Street Global Markets and Co-Chair of RMA’s Financial Technology & Automation Committee. “This paper outlines a step down this path, but also highlights the hurdles that will make adoption slower than anticipated. With more events like this, participants will get more comfortable handling and integrating these new workflows,” Delikaris said.
The Committee said it had polled leading market participants to better understand how the digital dividend impacted the securities lending industry, and the results of the polling are summarized in the white paper.
“RMA’s Financial Technology and Automation Committee found that 54% of agent lenders who owned Overstock.com shares decided to recall outstanding loans and restrict lending,” said Fran Garritt, RMA’s Director of Credit Risk, Global Markets Risk, and Securities Lending. “Clearly, Overstock.com’s recent digital dividend alerted the securities lending industry of the need for an infrastructure that is properly prepared for innovations and emerging technologies,” Garritt said, adding that the new RMA paper “will help ensure a strategic and consistent solution for individuals, institutions, and the industry.
“Beginning with this Digital Asset Corporate Action whitepaper as well as other thought leadership pieces, RMA and its Financial Technology & Automation Committee are taking bold steps to transform and digitize the future of the Securities Lending Industry,” said Charles Post, Head of US Consulting Services – Delivery & Sales at JDX Consulting and Co-Chair of RMA’s Financial Technology & Automation Committee.
To read the paper, click here.