CASLA: The role of data in securities finance has fundamentally changed
03 June 2025 Canada
Image: SFT
It is no longer about having access to data, but about how quickly and intelligently firms can act on that data, according to Sasha Sitsker, senior associate at EquiLend.
The comments were made at this year’s Canadian Securities Lending Association (CASLA) conference in Toronto.
The ‘Data, Demand & Disruption: Positioning For The Future’ session began with Lou Carvajal, director of securities finance at S&P Global Market Intelligence, who provided a recap on securities lending performance in Q1 2025.
Securities lending revenue generated US$2.9 billion for this period, which showed a five per cent year-on-year increase. The main drivers of this revenue were listed as APAC equities, ETFs, and corporate bonds.
“With valuations rising, we’re seeing increased pressure on shorts. In our dataset, we're seeing that around 70 percent of open shorts are out of money,” adds Carvajal.
“On the bright side of this, if the Bank of Canada continues to lower rates, and inflation continues to decrease, we see that this could be a potential driver for specials in the Canadian market.”
From an EquiLend perspective, Sitsker revealed that fixed income has continued to be a clear area of strength and growth globally for the securities lending market over the past 12 months.
Providing the bigger picture, Sitsker explained that with inflation having been “sticker than anticipated”, expected rate cuts have seen delays around the globe, particularly in the US.
He highlighted how the growing concerns around elevated deficit and the growing deficit, compounded by some of the recent tax legislation, is continuing to fuel volatility in the bond market.
“In the Canadian bond market, across all categories, with the exception of local and provincial debt, we're actually seeing revenue declines,” he continued.
“Canadian fixed income, being such an interesting outlier, might highlight some of the unique dynamics in the Canadian bond market. And I think that's one of the areas that we'd love to hear some insight on.”
In her review of the past year, Lisa Tomada, vice president, global securities lending at CIBC Mellon, noted how the “elimination of discounted DRIPS” had significantly impacted revenue of Canadian beneficial owners, as they are the majority holders of those Canadian securities.
Tomada also found that collateral flexibility is “more important now than ever”. In these uncertain times, with borrowers and market participants changing demands, clients that can accept all types of collateral are benefiting from more revenues from their securities lending programmes.
Similarly, David Mak, executive director at Wealthsimple, agreed that the expansion of collateral schedules, as well as the flexibility and fungibility of collateral is “so important these days”. He added that there is now a grey area in terms of what is considered acceptable collateral and what is not.
While 10 years ago this was “very defined”, the current era shows that this has changed.
Moving the session forward, Mak said the impact of data is changing the way firms do business, and asked speakers what they are learning from this.
Sitsker began: “The role of data in securities finance has fundamentally changed over the past few years. Edge is no longer coming from access to data. Edge comes from the recency of the data, speed of the data transfer, and the depth of the insights that you're getting.”
To that end, he noted the “big push” across the board towards more automation, as well as shorter cycles between trade execution and data consumption. He added that several years ago, the majority of the market may have relied on yesterday's trade data to provide a foundation for today's trade decisions.
He added: “We're increasingly seeing clients push towards ingesting real-time data systematically multiple times a day.”
Sitsker noted that securities lending desks are going beyond primary securities lending data and drilling into secondary market metrics such as sentiment analysis and short squeeze scores to make lending and borrowing decisions.
Additionally, alternative business lines are utilising securities lending data for different purposes, including equity and fixed income cash, portfolio management, research and derivatives desks.
As a step forward, firms are going beyond just post-trade statistics, post-trade analytics, and getting into some of these pre-trade data points.
“The binding constraint is not access to data anymore,” Kunal Shah, director on the equity finance desk at RBC Capital Markets, stated.
He continued: “It's dev resources and talent on your desk, and resources on your desk that can actually drive the development of tools and trading strategies to leverage all the data points – this is where AI can be transformative.”
Sitsker concluded: “AI is like a high speed train coming at you, it’s scary, but once you jump on, you’re going the same speed as the train now. People need to jump on it.”
The comments were made at this year’s Canadian Securities Lending Association (CASLA) conference in Toronto.
The ‘Data, Demand & Disruption: Positioning For The Future’ session began with Lou Carvajal, director of securities finance at S&P Global Market Intelligence, who provided a recap on securities lending performance in Q1 2025.
Securities lending revenue generated US$2.9 billion for this period, which showed a five per cent year-on-year increase. The main drivers of this revenue were listed as APAC equities, ETFs, and corporate bonds.
“With valuations rising, we’re seeing increased pressure on shorts. In our dataset, we're seeing that around 70 percent of open shorts are out of money,” adds Carvajal.
“On the bright side of this, if the Bank of Canada continues to lower rates, and inflation continues to decrease, we see that this could be a potential driver for specials in the Canadian market.”
From an EquiLend perspective, Sitsker revealed that fixed income has continued to be a clear area of strength and growth globally for the securities lending market over the past 12 months.
Providing the bigger picture, Sitsker explained that with inflation having been “sticker than anticipated”, expected rate cuts have seen delays around the globe, particularly in the US.
He highlighted how the growing concerns around elevated deficit and the growing deficit, compounded by some of the recent tax legislation, is continuing to fuel volatility in the bond market.
“In the Canadian bond market, across all categories, with the exception of local and provincial debt, we're actually seeing revenue declines,” he continued.
“Canadian fixed income, being such an interesting outlier, might highlight some of the unique dynamics in the Canadian bond market. And I think that's one of the areas that we'd love to hear some insight on.”
In her review of the past year, Lisa Tomada, vice president, global securities lending at CIBC Mellon, noted how the “elimination of discounted DRIPS” had significantly impacted revenue of Canadian beneficial owners, as they are the majority holders of those Canadian securities.
Tomada also found that collateral flexibility is “more important now than ever”. In these uncertain times, with borrowers and market participants changing demands, clients that can accept all types of collateral are benefiting from more revenues from their securities lending programmes.
Similarly, David Mak, executive director at Wealthsimple, agreed that the expansion of collateral schedules, as well as the flexibility and fungibility of collateral is “so important these days”. He added that there is now a grey area in terms of what is considered acceptable collateral and what is not.
While 10 years ago this was “very defined”, the current era shows that this has changed.
Moving the session forward, Mak said the impact of data is changing the way firms do business, and asked speakers what they are learning from this.
Sitsker began: “The role of data in securities finance has fundamentally changed over the past few years. Edge is no longer coming from access to data. Edge comes from the recency of the data, speed of the data transfer, and the depth of the insights that you're getting.”
To that end, he noted the “big push” across the board towards more automation, as well as shorter cycles between trade execution and data consumption. He added that several years ago, the majority of the market may have relied on yesterday's trade data to provide a foundation for today's trade decisions.
He added: “We're increasingly seeing clients push towards ingesting real-time data systematically multiple times a day.”
Sitsker noted that securities lending desks are going beyond primary securities lending data and drilling into secondary market metrics such as sentiment analysis and short squeeze scores to make lending and borrowing decisions.
Additionally, alternative business lines are utilising securities lending data for different purposes, including equity and fixed income cash, portfolio management, research and derivatives desks.
As a step forward, firms are going beyond just post-trade statistics, post-trade analytics, and getting into some of these pre-trade data points.
“The binding constraint is not access to data anymore,” Kunal Shah, director on the equity finance desk at RBC Capital Markets, stated.
He continued: “It's dev resources and talent on your desk, and resources on your desk that can actually drive the development of tools and trading strategies to leverage all the data points – this is where AI can be transformative.”
Sitsker concluded: “AI is like a high speed train coming at you, it’s scary, but once you jump on, you’re going the same speed as the train now. People need to jump on it.”
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