Pirum
Rob Frost
20 June 2024
Pirum has consistently played a significant role in the securities finance marketplace by delivering automation, operational efficiency and connectivity. Rob Frost, global head of product, discusses Pirum’s achievements, particularly focusing on their innovative post-trade solutions
Image: Rob Frost
Pirum has been a significant player in the securities finance industry for nearly 25 years. How do you define Pirum’s role and evolution in this space?
Pirum’s mission has always been to streamline and automate processes in securities finance. Our role is to eliminate inefficiencies, reduce settlement fails, connect industry participants and minimise manual touchpoints in workflows. We have built a robust end-to-end platform that supports the entire post-trade lifecycles within stock loan, repo, margin and collateral management, achieving an industry benchmark with straight-through processing (STP) rates above 99 per cent across various transaction types.
What have been some key milestones in Pirum’s growth, particularly with respect to regulatory changes and new product introductions?
One significant milestone was the introduction of our Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR) solution, in collaboration with S&P Global Market Intelligence Cappitech, now part of our RegConnect suite. This service has been adopted by over 150 institutions worldwide, ensuring compliance and enhancing operational transparency. We recently also announced that the solution will be expanded to cover the incoming SEC 10c-1a regulatory reporting requirements.
Another notable landmark was the launch of Trade Risk Manager in November 2021. This front-desk solution helps clients manage settlement risks and penalties under the Central Íø±¬³Ô¹Ï Depositories Regulation (CSDR), offering real-time trade status updates and counterparty exposure indicators.
We have also seen remarkable success with CollateralConnect, providing an integrated view of collateral across global activities, and Recalls Manager, automating loan recall processes and navigating T+1 challenges. Our continuous product innovation, driven by client needs and regulatory demands, has been crucial in maintaining our industry leadership across the securities finance post-trade lifecycles.
Focusing on the repo market, what solutions has Pirum developed to address challenges in this area?
The repo market is critical for liquidity management, and we recognised the need for enhanced automation and efficiency here. In February 2022, we launched RepoConnect, a comprehensive solution designed to streamline the entire lifecycle of repo transactions. RepoConnect supports real-time matching and affirmation of trades, automating downstream processes like pair offs and block allocations, as well as standard processes such as re-rates, partials and re-prices.
Can you elaborate on the features and benefits of RepoConnect?
RepoConnect offers several features that make it a powerful tool for repo market participants. It provides real-time trade matching and affirmation, comprehensive workflow tools for break resolution, pair-off netting and block allocations, and advanced management information systems (MIS) for insights into matching efficiency. By automating these processes, RepoConnect helps to reduce fail rates and settlement fines, ensuring accurate risk and position management. One of the key USPs is the 100 per cent counterparty coverage via Pirum’s unique one-sided matching service which enables subscribers of the platform to match trades with any counterparty.
Additionally, RepoConnect also supports triparty, and buy/sell back trades, providing comprehensive coverage for all financing activities. One of the most popular features is the entirely automated Pair-Off netting solution. Coincidentally, soon after we released it, the International Capital Market Association (ICMA) published the European Repo and Collateral Council’s (ERCC) best practice proposals for pair offs — and we were delighted to see how RepoConnect solved these issues, validating how our teams had designed the solution.
This broad functionality ensures that clients can manage all aspects of their repo transactions efficiently and effectively through a single platform.
How has Pirum integrated emerging technologies, such as distributed ledger technology, into its solutions?
We have been actively exploring the integration of distributed ledger technology (DLT) to enhance our post-trade solutions further. Recently, we successfully tested a DLT extension for securities lending and repo transactions, providing an immutable and transparent golden record of trades. This innovation builds on our existing real-time data integrations, ensuring that clients can benefit from advanced technology without significant disruption or investment.
Our approach with DLT is pragmatic. We aim to offer optionality to our clients, allowing them to leverage DLT for enhanced security and transparency while continuing to benefit from our established post-trade automation solutions. This hybrid approach ensures that we can meet the diverse needs of our clients in a rapidly evolving technological landscape.
With the recent shift to T+1 settlement cycles in North America, how did Pirum prepare its clients for this change?
The transition to T+1 settlement cycles presented both challenges and opportunities. Our Recalls Manager solution, adopted by clients like eSecLending and Brown Brothers Harriman, automates loan recall management, reducing risks and resource overheads. This automation is crucial in meeting the demands of shorter settlement cycles and ensuring market stability. We also listened to our North American clients and have made the system interoperable with FIS in the US domestic market.
We also focused on enhancing our clients’ operational efficiencies through increased processing automation. By directly communicating with investment managers and leveraging tools like Recalls Manager, our clients could better navigate the complexities of T+1 — and even T0 — settlement and maintain seamless operations.
How does Pirum maintain its competitive edge in a crowded vendor segment?
Our competitive edge lies in our specialisation and client-focused approach. We do not aim to be active in every segment of the securities finance transaction lifecycle. Instead, we concentrate on delivering exceptional post-trade solutions that meet our clients’ specific needs. This focus allows us to innovate continuously and provide a white-glove service across the most manual post-trade processes, which increases efficiency, opens opportunities from increased connectivity, and reduces operational risks and costs.
Our nimbleness as a service provider enables us to respond quickly to market demands and regulatory changes. We have built a trusted client base that covers the securities finance industry globally through consistent delivery of high-quality solutions, and our client feedback loops ensure that we remain aligned with their evolving needs. This strategy has been instrumental in sustaining and propelling our growth and industry position.
What are Pirum’s future plans for expanding its market presence and product offerings?
We are investing heavily in expanding our presence in North America, strengthening our New York office with key appointments like Frank Seibold, who will drive commercial development in the Americas. Additionally, we are focused on extending our product coverage geographically to support our clients’ international activities through a global end-to-end post-trade platform.
We are also launching a Customer Success function this year, which will help clients to maximise the benefits of our product suite. This team will provide consultative support, helping clients optimise their operational processes and achieve the industry-leading STP rates that we offer. Our goal is to ensure that our clients can fully leverage our solutions to enhance efficiency, increase connectivity and reduce costs.
On the product side we continue to explore upcoming challenges with our clients to provide solutions to their evolving needs, from CCP connectivity to SSI matching. We have made significant strides in automating and optimising post-trade processes in the securities finance industry. With innovative solutions like RepoConnect and CollateralConnect, and a commitment to integrating emerging technologies, Pirum continues to lead the way in upgrading the entire industry’s post-trade flows. The company’s focus on client-centric development and continuous innovation positions us as a formidable leader in the global securities finance industry.
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