Fidelity Investments has launched its first agency lending product for asset managers and other institutions.
The US financial services firm will operate its lending programmes with a new platform that offers a digital toolkit offering artificial intelligence (AI)-powered loan decision functionality and “unique benchmarking and transparency” functions.
Fidelity has operated a proprietary lending programme for its mutual funds since 2019 and is currently responsible for more than $2 trillion in assets available to lend.
The launch of Fidelity Agency Lending marks this product expansion to external asset owners.
The new platform will offer infrastructure, technology, and experience to improve returns and programme customisation and transparency, Fidelity says.
Fidelity Agency Lending promises to provide a sophisticated automated lending platform that features AI functionality to help maximise opportunities and provide efficient distribution of assets.
It also boasts unique benchmarking and transparency tools designed to improve investment
decisions, corporate governance, and programme oversight, as well as the ability to fully customise lending programme parameters in an automated fashion, Fidelity states.
In addition, the platform offers real-time connectivity and automated reconciliations with many of the world’s largest global custodians, as well as access to Fidelity’s proprietary risk models to monitor counterparty risk and exposure.
The agency lending product expands on Fidelity’s established financing capabilities, which
includes more than 20 years of servicing institutions and investors through its capital markets group with Fidelity Prime Services, Fully Paid Lending, and PB Optimize.
Fidelity Agency Lending is led by Justin Aldridge and supported by a team of more than 90 people across technology, operations and sales. Most recently, Fidelity gained James Curtis from State Street who joined as an equity trader in April.
A spokesperson for Fidelity says it is currently in negotiations with prospective clients and the team has capacity to service external clients in addition to maintaining the proprietary programme.
“Current market dynamics are compelling institutions to take a more active role in their securities lending programmes to find a competitive advantage,” says Justin Aldridge, head of Fidelity Agency Lending. “We believe firms are looking for an agent lender with both new technology and the proven ability to serve large, complex institutions, and we’re excited to offer that to the marketplace.”
David Lane, head of global equity trading at Fidelity’s Asset Management division, adds: “While we take a conservative approach to securities lending, we’re proud that our lending programme could meaningfully improve the overall returns that we deliver to our fund shareholders.”
