Democratising securities lending
13 September 2022
Sharegain鈥檚 deputy CEO and chief of staff Keren Halperin speaks to Bob Currie about democratising share ownership rights, how to scale a fintech and lessons that yoga and surfing can offer to solutions development
Image: Keren Halperin
鈥淭he evolution of democracy is not possible if we are not prepared to hear the other side,鈥� said political philosopher and activist Mohandas K. Gandhi, speaking in 1917 in the early days of his campaigning for India鈥檚 self-rule.
Close to a century later, this spirit of inclusivity and consociation has come to play an important role in guiding effective technology development and fintech innovation, shaping a dialogue between business and product experts, developers and the customer that is integral to iterative and collaborative project management methodologies such as Agile.
Sharegain has campaigned energetically since its inception around the requirement to democratise the securities lending industry. Explaining its rationale, Halperin observes that an established group of institutional investors has long engaged in securities lending 鈥� but, beyond this, a large community of financial institutions, including retail-facing wealth managers, online brokers and private banks, currently do not lend securities for a mixture of technical, operational or cultural reasons 鈥� in many cases because they do not appreciate the benefits or they do not have the necessary pipework.
Sharegain has made it its mission to offer an end-to-end solution that encourages wider participation, providing organisations with all that they need to lend their securities.
One fundamental step in bridging this gap is to meet the technology requirement 鈥� and Sharegain has adopted a creative approach to technology delivery through a microservices-based turnkey lending infrastructure and a cloud-based -as-a-service solution developed through its Israel-based technology team.
Beyond this, there is a fundamental knowledge gap 鈥� recognising that there is a large untapped pool of lendable assets held with institutions that have never engaged in securities lending and are not yet convinced this is right for them. This has demanded a proactive approach 鈥� knocking on the door of prospective lenders to explain the benefits of lending and their most effective routes to market.
In providing for this under-represented market segment, Halperin believes that the Covid pandemic has altered the landscape for many financial intermediaries, triggering wider private investor participation in capital markets and prompting service providers to explore new ways of working and new delivery models.
This has resulted in a steepening of the sales pipeline, particularly among retail-facing intermediaries such as wealth managers and private brokers, but also other prospect clients such as medium and small-sized custodians that do not have their own securities lending trading capability and require access to a lending infrastructure before they can support lending activity.
To meet this need, Sharegain has developed a 网爆吃瓜 Lending as a Service (SLaaS) solution, through which Sharegain provides a cloud-based lending solution to direct clients, removing the need for these users to have their own on-premise lending infrastructure.
It also offers a 网爆吃瓜 Lending Technology (SLTech) solution, through which it provides lending technology to financial intermediaries. The company鈥檚 partnership with Citi, launched in March 2021, has exemplified this approach, offering an automated securities lending solution to wealth management firms for Citi鈥檚 clients.
The joint venture was born from the shared vision of Sharegain鈥檚 CEO and founder, Boaz Yaari, and Stuart Jarvis, EMEA head of agency securities lending at Citi. The implementation for this automated securities lending solution was a partnership between Sharegain and Citi鈥檚 D10XSM programme, a strategic growth initiative that invests in fintech and business innovation.
Sharegain鈥檚 securities lending services are offered on a revenue-share basis, whereby users pay a fee as a percentage of the lending revenue generated via the Sharegain solution, enabling users to establish lending services based on variable rather than fixed cost.
Legacy free
In providing for an industry that can be held back by ageing technology, Keren Helperin believes it has been an advantage for Sharegain to be starting from a blank canvas, unimpaired by legacy technology. 鈥淭his minimised the constraints that we faced in terms of how we could build the system,鈥� she says. 鈥淭he goal was to democratise the lending markets and, to do so, it was essential that we could offer flexibility.鈥�
Since then, the release pipeline has been constant, says Halperin, in catering for the needs of both borrower and lender. This is driven by close dialogue with users, with the product and developer teams evaluating client feedback and integrating this, when appropriate, into Sharegain鈥檚 solutions development.
This strategy underpins the values that Sharegain aims to promote as a company. 鈥淭ransparency runs hand-in-hand with democratisation and we aim to build transparency into our business culture at all levels,鈥� says Halperin. The full Sharegain team meets each week to review major developments from the week just passed and to map out the company鈥檚 objectives for the period ahead. Each staff member, from new entrants to the chief executive, is encouraged to share their opinion on how a project or process can be run most effectively. This aligns with the emphasis on participation and engagement highlighted earlier in this article.
A second fundamental principle is proactivity. Identifying itself as a frontrunner in this space, Sharegain believes it has a responsibility to push the market forward and to challenge outmoded or suboptimal ways of working.
Positivity underpins each of these constitutional foundations. This is embedded in a constant drive to improve customer outcomes and to build better solutions. 鈥淭his approach demands a lack of ego,鈥� says Halperin: 鈥淭o hear the views of all participants, to learn from their viewpoint, this requires that we approach the dialogue with a positive mindset鈥�.
On top of this, we should not understate the value of hard work. As a surf enthusiast, Halperin explains that it is important to enjoy the paddling since time travelling out to meet the surf far outweighs that spent riding a wave into the beach. So too, behind every product release there is likely to be multiple iterations of design, build, test and refine 鈥� with input from key stakeholders 鈥� that make up the fundamental building blocks of the Agile development cycle.
When applied effectively, this method can deliver impressive results. Sharegain cites an example where a client with over US$50 billion in assets under custody was seeking to extend securities lending services to its clients as an additional source of revenue. For the company, this presented a dilemma 鈥� whether to outsource to a global custodian programme or to build a securities lending offering themselves.
In the event, they chose a third route offered by Sharegain 鈥� to source an integrated end-to-end lending solution. The mandate from the client was to deliver an automated, scalable securities lending offering, with no back-office, no overheads and full flexibility to offer different terms to its various client types. 鈥淲ithin 14 weeks, we had established a scalable securities lending programme with no expenses on their side,鈥� says Halperin.
Fundraising
In February 2022, Sharegain confirmed that it has raised US$64 million in a series B funding round led by WestCap and supported by Citi, EJF Capital LLC and Optiver PSI, with further participation from existing investors including Maverick Ventures Israel, Blumberg Capital, the Kessler Family Office, Rhodium and SixThirty. Sharegain indicates that this is the largest series B funding round to have been completed to date for the securities lending industry.
The shareholders, she confirms, are playing a key role in Sharegain鈥檚 growth, with many of these investors having a detailed understanding of the securities lending industry and experience in building enterprise fintech solutions. Following the funding round, WestCap partner Scott Ganeles has taken a seat on the Sharegain board.
Halperin likens scaling a fintech company to a headstand in yoga. While the head and the legs are important, the key to success is establishing a strong core 鈥� and Sharegain鈥檚 ongoing development strategy is focused on building its core strength. This requires a leadership group that has deep knowledge of securities lending markets and can inspire and motivate their co-workers, enabling the company to grow without losing the creativity, agility and pioneering spirit that it embraced as a start-up.
In meeting this requirement, Sharegain has strengthened its team in key areas 鈥� including the recent appointment of Sam Tuliebitz as head of business development and Alex Panaite Fornari鈥檚 appointment as Sharegain general counsel in late 2021, with more senior appointments to be announced soon.
In sourcing new talent, Sharegain appointed a summer class of university graduates, recruited in London and Israel, during the summer of 2022, boosting its staff complement to more than 70. The company鈥檚 senior management continues to take a hands-on approach to the appointment process, with Halperin or chief executive Boaz Yaari, involved in the interview process for each new joiner.
Life skills
From our conversation, it is evident that Halperin鈥檚 education and career experience have been important in delivering skills that align closely with Sharegain鈥檚 approach to the business. Having built strong foundations in science and mathematics during her schooling, Halperin served in a technology role in the Israeli intelligence force during her period of military service.
On securing a teaching certificate, Halperin then spent a period teaching robotics to 8th-grade students prior to studying law and economics at university.
Combining this expertise with an enthusiasm for trading and capital markets, she joined one of the first algo-trading companies, Final, back in 2005, and straight after took a position in the legal division at the Tel Aviv Stock Exchange, working for seven years as part of a team that defined the execution venue鈥檚 market governance and trading rulebook. At a time when relatively few women held senior roles in global capital markets infrastructure, the Tel Aviv Stock Exchange was noteworthy for having strong female representation at executive level, with Ester Levanon as chief executive, and women also leading the bourse鈥檚 finance department and legal services teams.
鈥淲ith this background and experience, my decision to join Sharegain in 2018 as deputy chief executive and chief of staff felt like the pieces in a jigsaw puzzle coming together,鈥� says Halperin. The company was much smaller at that time, requiring that each staff member wore multiple hats and applied their skills to a multiplicity of roles. In the early days, much time was spent knocking on clients鈥� doors and sharing the message of democratising securities lending markets.
As the company has grown, the parallel challenges of client onboarding and solutions delivery have become increasingly important, alongside client acquisition, in keeping pace with this pipeline of new business.
In building for the future, Halperin says that Sharegain鈥檚 target market lies in retail-facing financial institutions, which is central to promoting a democratisation of the securities lending business. But, in principle, the company is able to offer a securities lending infrastructure to financial institutions of all shapes and sizes.
To extend its regional coverage, Sharegain opened a New York office in June, providing a launch pad for its expansion to the US and its ability to extend securities lending out to a wider community of lenders and borrowers.
Looking beyond its securities lending solutions, Sharegain also announced in May that it had become the first company globally to offer SWIFT messaging connectivity via public cloud, reducing messaging infrastructure overheads for existing SWIFT users and lowering barriers to entry for new users by enabling them to use cloud-based messaging. Previously users needed to maintain messaging hardware in-house within their own data centres, or they would need to outsource this requirement to a SWIFT service bureau 鈥� and Sharegain played a key role in partnering with SWIFT to develop this cloud connectivity.
According to Sharegain, the collaboration illustrates what can be achieved when top tier global players and trailblazing fintechs collaborate for the wider benefit of all market participants. In creating this Alliance Connect Virtual product, SWIFT has established public cloud connectivity in partnership with major cloud services providers Amazon Web Services, Google Cloud and Microsoft Azure, streamlining the way that financial institutions can connect to the SWIFT financial messaging service.
In September, Sharegain will co-host the latest meeting of Women in 网爆吃瓜 Finance. Continuing the momentum established by the group, this meeting will aim to encourage new and younger joiners to become part of the initiative. In addition to expanding participation, the meeting will tackle questions that many in the past have wanted to discuss but were uncomfortable to raise. 鈥淕iven our commitment to transparency and proactivity, we recognise that it is sometimes necessary to rock the boat and to become more direct in our discussion content,鈥� she says. The industry requires more diversity in many areas 鈥� and young women who have excelled in maths and science subjects at school are often not continuing into science and computing pathways or capital markets, at university or in their employment. 鈥淲e have a commitment to proactively address this shortfall 鈥� creating opportunity and confidence for women to excel in these parts of the industry.鈥�
For Halperin, this event provides another example of how Sharegain鈥檚 ambitions have expanded beyond securities lending technology and expertise. 鈥淲e are working, with our clients, partners, investors, and other stakeholders, to reimagine how the industry as a whole can be made more transparent, efficient and open, as well as how ownership rights 鈥� like being able to lend what you own 鈥� can be democratised across wider capital markets,鈥� she concludes.
Close to a century later, this spirit of inclusivity and consociation has come to play an important role in guiding effective technology development and fintech innovation, shaping a dialogue between business and product experts, developers and the customer that is integral to iterative and collaborative project management methodologies such as Agile.
Sharegain has campaigned energetically since its inception around the requirement to democratise the securities lending industry. Explaining its rationale, Halperin observes that an established group of institutional investors has long engaged in securities lending 鈥� but, beyond this, a large community of financial institutions, including retail-facing wealth managers, online brokers and private banks, currently do not lend securities for a mixture of technical, operational or cultural reasons 鈥� in many cases because they do not appreciate the benefits or they do not have the necessary pipework.
Sharegain has made it its mission to offer an end-to-end solution that encourages wider participation, providing organisations with all that they need to lend their securities.
One fundamental step in bridging this gap is to meet the technology requirement 鈥� and Sharegain has adopted a creative approach to technology delivery through a microservices-based turnkey lending infrastructure and a cloud-based -as-a-service solution developed through its Israel-based technology team.
Beyond this, there is a fundamental knowledge gap 鈥� recognising that there is a large untapped pool of lendable assets held with institutions that have never engaged in securities lending and are not yet convinced this is right for them. This has demanded a proactive approach 鈥� knocking on the door of prospective lenders to explain the benefits of lending and their most effective routes to market.
In providing for this under-represented market segment, Halperin believes that the Covid pandemic has altered the landscape for many financial intermediaries, triggering wider private investor participation in capital markets and prompting service providers to explore new ways of working and new delivery models.
This has resulted in a steepening of the sales pipeline, particularly among retail-facing intermediaries such as wealth managers and private brokers, but also other prospect clients such as medium and small-sized custodians that do not have their own securities lending trading capability and require access to a lending infrastructure before they can support lending activity.
To meet this need, Sharegain has developed a 网爆吃瓜 Lending as a Service (SLaaS) solution, through which Sharegain provides a cloud-based lending solution to direct clients, removing the need for these users to have their own on-premise lending infrastructure.
It also offers a 网爆吃瓜 Lending Technology (SLTech) solution, through which it provides lending technology to financial intermediaries. The company鈥檚 partnership with Citi, launched in March 2021, has exemplified this approach, offering an automated securities lending solution to wealth management firms for Citi鈥檚 clients.
The joint venture was born from the shared vision of Sharegain鈥檚 CEO and founder, Boaz Yaari, and Stuart Jarvis, EMEA head of agency securities lending at Citi. The implementation for this automated securities lending solution was a partnership between Sharegain and Citi鈥檚 D10XSM programme, a strategic growth initiative that invests in fintech and business innovation.
Sharegain鈥檚 securities lending services are offered on a revenue-share basis, whereby users pay a fee as a percentage of the lending revenue generated via the Sharegain solution, enabling users to establish lending services based on variable rather than fixed cost.
Legacy free
In providing for an industry that can be held back by ageing technology, Keren Helperin believes it has been an advantage for Sharegain to be starting from a blank canvas, unimpaired by legacy technology. 鈥淭his minimised the constraints that we faced in terms of how we could build the system,鈥� she says. 鈥淭he goal was to democratise the lending markets and, to do so, it was essential that we could offer flexibility.鈥�
Since then, the release pipeline has been constant, says Halperin, in catering for the needs of both borrower and lender. This is driven by close dialogue with users, with the product and developer teams evaluating client feedback and integrating this, when appropriate, into Sharegain鈥檚 solutions development.
This strategy underpins the values that Sharegain aims to promote as a company. 鈥淭ransparency runs hand-in-hand with democratisation and we aim to build transparency into our business culture at all levels,鈥� says Halperin. The full Sharegain team meets each week to review major developments from the week just passed and to map out the company鈥檚 objectives for the period ahead. Each staff member, from new entrants to the chief executive, is encouraged to share their opinion on how a project or process can be run most effectively. This aligns with the emphasis on participation and engagement highlighted earlier in this article.
A second fundamental principle is proactivity. Identifying itself as a frontrunner in this space, Sharegain believes it has a responsibility to push the market forward and to challenge outmoded or suboptimal ways of working.
Positivity underpins each of these constitutional foundations. This is embedded in a constant drive to improve customer outcomes and to build better solutions. 鈥淭his approach demands a lack of ego,鈥� says Halperin: 鈥淭o hear the views of all participants, to learn from their viewpoint, this requires that we approach the dialogue with a positive mindset鈥�.
On top of this, we should not understate the value of hard work. As a surf enthusiast, Halperin explains that it is important to enjoy the paddling since time travelling out to meet the surf far outweighs that spent riding a wave into the beach. So too, behind every product release there is likely to be multiple iterations of design, build, test and refine 鈥� with input from key stakeholders 鈥� that make up the fundamental building blocks of the Agile development cycle.
When applied effectively, this method can deliver impressive results. Sharegain cites an example where a client with over US$50 billion in assets under custody was seeking to extend securities lending services to its clients as an additional source of revenue. For the company, this presented a dilemma 鈥� whether to outsource to a global custodian programme or to build a securities lending offering themselves.
In the event, they chose a third route offered by Sharegain 鈥� to source an integrated end-to-end lending solution. The mandate from the client was to deliver an automated, scalable securities lending offering, with no back-office, no overheads and full flexibility to offer different terms to its various client types. 鈥淲ithin 14 weeks, we had established a scalable securities lending programme with no expenses on their side,鈥� says Halperin.
Fundraising
In February 2022, Sharegain confirmed that it has raised US$64 million in a series B funding round led by WestCap and supported by Citi, EJF Capital LLC and Optiver PSI, with further participation from existing investors including Maverick Ventures Israel, Blumberg Capital, the Kessler Family Office, Rhodium and SixThirty. Sharegain indicates that this is the largest series B funding round to have been completed to date for the securities lending industry.
The shareholders, she confirms, are playing a key role in Sharegain鈥檚 growth, with many of these investors having a detailed understanding of the securities lending industry and experience in building enterprise fintech solutions. Following the funding round, WestCap partner Scott Ganeles has taken a seat on the Sharegain board.
Halperin likens scaling a fintech company to a headstand in yoga. While the head and the legs are important, the key to success is establishing a strong core 鈥� and Sharegain鈥檚 ongoing development strategy is focused on building its core strength. This requires a leadership group that has deep knowledge of securities lending markets and can inspire and motivate their co-workers, enabling the company to grow without losing the creativity, agility and pioneering spirit that it embraced as a start-up.
In meeting this requirement, Sharegain has strengthened its team in key areas 鈥� including the recent appointment of Sam Tuliebitz as head of business development and Alex Panaite Fornari鈥檚 appointment as Sharegain general counsel in late 2021, with more senior appointments to be announced soon.
In sourcing new talent, Sharegain appointed a summer class of university graduates, recruited in London and Israel, during the summer of 2022, boosting its staff complement to more than 70. The company鈥檚 senior management continues to take a hands-on approach to the appointment process, with Halperin or chief executive Boaz Yaari, involved in the interview process for each new joiner.
Life skills
From our conversation, it is evident that Halperin鈥檚 education and career experience have been important in delivering skills that align closely with Sharegain鈥檚 approach to the business. Having built strong foundations in science and mathematics during her schooling, Halperin served in a technology role in the Israeli intelligence force during her period of military service.
On securing a teaching certificate, Halperin then spent a period teaching robotics to 8th-grade students prior to studying law and economics at university.
Combining this expertise with an enthusiasm for trading and capital markets, she joined one of the first algo-trading companies, Final, back in 2005, and straight after took a position in the legal division at the Tel Aviv Stock Exchange, working for seven years as part of a team that defined the execution venue鈥檚 market governance and trading rulebook. At a time when relatively few women held senior roles in global capital markets infrastructure, the Tel Aviv Stock Exchange was noteworthy for having strong female representation at executive level, with Ester Levanon as chief executive, and women also leading the bourse鈥檚 finance department and legal services teams.
鈥淲ith this background and experience, my decision to join Sharegain in 2018 as deputy chief executive and chief of staff felt like the pieces in a jigsaw puzzle coming together,鈥� says Halperin. The company was much smaller at that time, requiring that each staff member wore multiple hats and applied their skills to a multiplicity of roles. In the early days, much time was spent knocking on clients鈥� doors and sharing the message of democratising securities lending markets.
As the company has grown, the parallel challenges of client onboarding and solutions delivery have become increasingly important, alongside client acquisition, in keeping pace with this pipeline of new business.
In building for the future, Halperin says that Sharegain鈥檚 target market lies in retail-facing financial institutions, which is central to promoting a democratisation of the securities lending business. But, in principle, the company is able to offer a securities lending infrastructure to financial institutions of all shapes and sizes.
To extend its regional coverage, Sharegain opened a New York office in June, providing a launch pad for its expansion to the US and its ability to extend securities lending out to a wider community of lenders and borrowers.
Looking beyond its securities lending solutions, Sharegain also announced in May that it had become the first company globally to offer SWIFT messaging connectivity via public cloud, reducing messaging infrastructure overheads for existing SWIFT users and lowering barriers to entry for new users by enabling them to use cloud-based messaging. Previously users needed to maintain messaging hardware in-house within their own data centres, or they would need to outsource this requirement to a SWIFT service bureau 鈥� and Sharegain played a key role in partnering with SWIFT to develop this cloud connectivity.
According to Sharegain, the collaboration illustrates what can be achieved when top tier global players and trailblazing fintechs collaborate for the wider benefit of all market participants. In creating this Alliance Connect Virtual product, SWIFT has established public cloud connectivity in partnership with major cloud services providers Amazon Web Services, Google Cloud and Microsoft Azure, streamlining the way that financial institutions can connect to the SWIFT financial messaging service.
In September, Sharegain will co-host the latest meeting of Women in 网爆吃瓜 Finance. Continuing the momentum established by the group, this meeting will aim to encourage new and younger joiners to become part of the initiative. In addition to expanding participation, the meeting will tackle questions that many in the past have wanted to discuss but were uncomfortable to raise. 鈥淕iven our commitment to transparency and proactivity, we recognise that it is sometimes necessary to rock the boat and to become more direct in our discussion content,鈥� she says. The industry requires more diversity in many areas 鈥� and young women who have excelled in maths and science subjects at school are often not continuing into science and computing pathways or capital markets, at university or in their employment. 鈥淲e have a commitment to proactively address this shortfall 鈥� creating opportunity and confidence for women to excel in these parts of the industry.鈥�
For Halperin, this event provides another example of how Sharegain鈥檚 ambitions have expanded beyond securities lending technology and expertise. 鈥淲e are working, with our clients, partners, investors, and other stakeholders, to reimagine how the industry as a whole can be made more transparent, efficient and open, as well as how ownership rights 鈥� like being able to lend what you own 鈥� can be democratised across wider capital markets,鈥� she concludes.
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