Beneficial owner-run, peer-to-peer securities lending network GPFA has weathered the pandemic and come out the other side to celebrate its one-year anniversary. Rob Goobie, GPFA chair and AVP, collateral management, Healthcare of Ontario Pension Plan (HOOPP) looks back on the Association’s successes and where it’s headed as the world returns to normal
The benefits of sticking together and picking the brains of those in different but adjacent silos are clear. And thanks to telecommunications technologies, it’s never been easier to connect with and learn from peers who face similar challenges and opportunities.
The GPFA, the Global Peer Financing Association, a club composed of global beneficial owners engaged in the securities finance industry, is taking stock after its first year in action. The Association’s aim is to boost peer-to-peer securities finance trading through a dynamic and transparent marketplace, liquidity management and collateral management.
From humble beginnings with four founding members — California Public Employees’ Retirement System (CalPERS), Healthcare of Ontario Pension Plan (HOOPP), State of Wisconsin Investment Board (SWIB) and Ohio Public Employee Retirement System (OPERS), and with assets of just under $1tn — the Association has now grown to almost 20 members, with assets approaching $7tn.
The GPFA, which recently welcomed US-based insurance company Pacific Life as its newest member, has members based in North America, Europe, Asia, and Australia and beneficial owners across the globe are lining up to join.
Last year, the GPFA welcomed three new members, including its first Australian pension fund. The California State Teachers’ Retirement System, Australian Super — Australia’s largest superannuation and pension fund — and Thrivent Financial, a Fortune 500 not-for-profit organisation, were the first new members since the group formed in July 2020.
AustralianSuper associate portfolio manager, FICC, Michael Fitzsimmons said GPFA membership has afforded Australia’s largest superannuation and pension fund an invaluable opportunity to regularly engage with large, sophisticated global peers. “Given our geographic location, this is challenging at the best of times, and impossible in the light of current travel restrictions,” Fitzsimmons said.
According to Fitzsimmons, the GPFA has facilitated “detailed and collaborative forums” covering topics relevant to asset owners, such as the design and best practices of securities financing programmes, management of globally implemented regulations like UMR and LIBOR and peer-to-peer financing capabilities.
Critical Mass
In a letter commemorating the one-year anniversary of the Association, GPFA chair Robert Goobie says he is “encouraged” by members who have expressed enthusiasm for the platform and its opportunities for “learning and growth”.
“The importance of this has never been greater, especially amongst beneficial owners who are relatively new to financing and liquidity management,” Goobie said. With interest rates expected to stay low for the foreseeable future, “it is all the more critical that we help organisations grow their financing business and bring these functions to the heart of their portfolio construction process”.
Outside of the beneficial owner community, GPFA says it has filled an “important need” for many market participants such as agent lenders and other industry associations, with benefits of membership seen across the sector.
Through regular sub-group meetings, the Association has provided a forum for the exchange of information, ideas and best practices on a diverse range of topics, including technology, collateral, trading and other buy-side issues, with input from over 60 individuals pitching in remotely across the world.
Goobie told SFT that GPFA “aims to be the global voice and forum for beneficial owners engaged in securities finance”, and that while peer-to-peer trading and education is a core reason GPFA was founded, “our members are quickly realising the broader application of having a group of like-minded asset owners to discuss many other topics related to both securities finance and other investment disciplines”.
Bright future
Looking ahead, GPFA anticipates an increasing focus on education, discussions and development of best practices and industry advocacy for issues important to beneficial owners. “Our approach is to use existing market infrastructure while taking a lead in shaping our environment and industry,” said a GPFA spokesperson.
Another priority is to deepen the relationships among the membership. Growth is not just about increasing the number of members, notes the Association, it is also about becoming increasingly useful to those members.
“We are focused on formalising how we operate and are developing policies and procedures to support the Association’s work with members.” Being a new organisation run by volunteers with day jobs, Goobie said, “we are also working to find ways to manage the administrative portion of GPFA so that our communications and structure continue to meet the needs of our expanding membership”.
The focus in expanding the organisation will be to extend membership among engaged buy-side market participants, while remaining committed to why the Association was formed: to deliver value to its beneficial owner membership.
Even more important, it says, are the steps to foster organic communication and sharing of best practice across its members — discussions are member-led and engage with real-time challenges and opportunities confronting its member organisations.
Regarding the pandemic, Goobie said the GPFA was “delighted to find ways to connect with new members virtually” and to establish a strong rapport with one another. Just how “fluidly the group has grown and connected with one another — especially across all major time zones” was impressive, he commented. Nonetheless, the Association is looking forward to gathering in person at its annual member meeting in 2022.
