The Global Investor/ISF 2018 Beneficial Owners survey - supported by DataLend - polled some of the world’s main beneficial owners on the performance of their key securities lending suppliers, comprising both lending services provided by their custody clients and agent lenders.

Click here to download a PDF version of the results complete with methodology and details on survey respondents. 

State Street

State Street was the top-ranked lender across all categories in the weighted division. The US firm scored 6.86, which was enough to beat its main rivals GSAL and J.P. Morgan into second and third spots, according to the respondents to the Global Investor/ ISF survey. This reversed last year’s results when State Street (6.60) was narrowly beaten into third by J.P. Morgan (6.73) and GSAL (6.65).

State Street amassed in 2018 a global total score of 20.59 and was ranked top-weighted supplier in the Americas, second in Asia-Pacific behind J.P. Morgan and third in Europe behind Deutsche Bank ASL and Citi.

State Street also returned impressive results by function. The US group was top-ranked in the weighted category for almost every custody function: collateral management; engagement on corporate actions; income generated; lending programme management; market coverage; programme customisation; market and regulatory updates; relationship management; risk management; and settlement and responsiveness.

Among the custody suppliers, State Street also performed well. It was topranked globally and was the top pick in the Americas, a close second to Citi in Europe and not far behind J.P. Morgan in Asia-Pacific.

The beneficial owners were unsurprisingly complimentary about the performance of State Street. One respondent said: “State Street provides a very good level of customer service from securities lending relationship managers and operations contacts.”

Another respondent said in their notes: “We are very satisfied with the State Street offering. Their services are very reliable and high quality. I feel enthusiastic, energetic and positive behaviour from them.”

One respondent was particularly positive about State Street’s performance in its home market. The individual said: “State Street provides excellent returns in US government and US equity lending.” State Street was comfortably ranked top US provider in every weighted category, according to the Global Investor/ ISF 2018 survey.

The US financial services giant was also highly ranked in terms of innovation. One respondent said: “State Street has been proactive to come-up with innovative ways to increase security lending income from our account.” Another firm went further, saying: “We launched a fund that uses a credit facility funded by cash collateral from securities lending.”

Goldman Sachs Agency Lending

Goldman Sachs Agency Lending (GSAL) was top in the unweighted category with 6.68, above eSecLending at 6.53, State Street at 6.52, Deutsche Bank ASL at 6.51 and J.P. Morgan at 6.45. The unweighted win follows the same result last year when GSAL scored 6.77 in the unweighted category, topping eSecLending with 6.67, J.P. Morgan with 6.57 and State Street with 6.56. In the weighted group, GSAL received an overall score of 6.38, narrowly behind State Street with 6.86 and J.P. Morgan’s 6.63.

Regionally, GSAL was ranked first in the Americas in the unweighted category and second behind Deutsche Bank (ASL) in Europe.

In the weighted section, GSAL was second behind State Street for lending services in the Americas. In 2018, the agency lender also scored well in the individual service categories. GSAL was top among its unweighted peer group in nine of the 12 functional categories: engagement on corporate actions; market coverage in developed markets; market coverage for collateral management; emerging markets; programme customisation; market and regulatory updates; relationship management; reporting transparency; and risk management.

When compared to other agent lenders, GSAL also fared well. The business was the highest overall scorer in both the weighted and unweighted lists, top in the Americas and second to Deutsche in Europe by both measures.

Ranked against the other agency lenders, GSAL was top-rated for every individual service in the unweighted list except income generated, and settlement and responsiveness (both Deutsche Bank ASL) and lending programme parameter management (eSecLending).

In the weighted section, GSAL swept the board, taking top rating in every one of the 12 categories. Those beneficial owners that provided comment were glowing in their praise. One said: “GSAL consistently delivers top notch customer service and is a true leader in the industry. As a firm, we rely heavily on GSAL for guidance on regulatory changes and industry insights. They are instrumental in our board reporting process and are thought of highly by our board as a result of their experience with GSAL.”

Another owner commented: “GSAL is pro-active and shows good market access on equities and government bonds. GSAL has a high level of customisation and flexibility on the lending program to facilitate the lender needs.” One said: “Overall excellent relationship management. Very constructive in trying to solver operational issues that popped up.” Another added: “Excellent communication and client service.” GSAL was also highly-rated on its approach to innovation.

“They provide outstanding service, are great problem solvers and have excellent communication across organisations,” said one respondent. Another said: “Goldman Sachs Agency Lending consistently delivers performance and customisation at the levels we require to conduct business in the lending space.” “They provide outstanding service, are great problem solvers and have excellent communications across organisations,” said another.

The unit was particularly rated for the work it has done to ensure clients are up-to-speed with the many and vast regulatory reforms in play at the moment. “GSAL have been very proactive in keeping up with regulatory reform and engaging with clients to develop appropriate reporting,” said one respondent. Another added: “Key collaborator, understanding our data needs, for Securities and Exchange Commission Data Reporting Modernisation.”

The results are based on a global survey of 101 beneficial owners, including large asset managers, pension funds, central banks, insurers and corporations.

J.P. Morgan

The US banking giant had another strong year, following from its success in  2017 when it was ranked top among the weighted lending suppliers and third in the unweighted. Last year, it had a weighted ranking of 6.73, beating GSAL with 6.65 and State Street with 6.60. In 2018, J.P. Morgan was second in the weighted league with 6.63, narrowly behind the winner State Street with 6.86.

The US bank was fifth in the hotly  contested unweighted category, scoring 6.45. This left JP behind GSAL (6.68), eSecLending (6.53), State Street (6.52) and Deutsche Bank ASL (6.51).

J.P. Morgan also scored well in the regional rankings. It was top for the weighted and unweighted categories for Asia-Pacific, beating State Street in second and Citi in third. It was also narrowly behind State Street in the global totals, with 19.90 weighted (compared to State Street’s 20.59) and 19.34 unweighted (versus State Street’s 19.56).

The US firm also came a close second to State Street in most of the weighted rankings by function, including: collateral management; engagement on corporate actions; lending programme management; market coverage; programme customisation; market and regulatory updates; relationship management; risk management; and settlement and responsiveness.

J.P. Morgan was the only lender to beat State Street in one of the weighted functional rakings, outscoring its rival with 8.75 for reporting transparency, compared to State Street’s 8.63.

Among the custodial lenders, J.P. Morgan again pushed State Street close on most categories or surpassed its rival. It was top in this group in Asia-Pacific for both weighted and unweighted. It was also second in Europe, the Middle East and Africa in the unweighted list and second in the Americas when weighted.

JP was also the top lender for collateral management, relationship management and reporting transparency in the unweighted group, according to respondents.

Reflecting the high ratings they gave to the bank, the beneficial owner respondents to the survey had good things to say about J.P. Morgan’s lending programme.

One said: “J.P. Morgan has made numerous improvements to their securities lending reporting suite over
the last few years. We’re pleased with the reporting capabilities and transparency this provides into the program. We also receive a high-level of customer service from securities lending relationship managers and operations contacts.”

Another owner said: “Excellent relationship management and very nimble intrinsic value lending agent. Always thinking of clients’ risk profile, forward thinking and taking necessary steps to prevent any regulatory issues prior to changes taking effect.” A third participant said simply: “First class offering, delivered by a first class team.”

The US bank also scored high in terms of innovation: “One participant said: “Their reporting suite is excellent as well as communication and updates on the markets.” Another beneficial owner said JP was “proactive in expanding revenue opportunities” with “kind and excellent personnel”. The personal aspect was emphasised by another participant who said: “Because they offer a complete service, everything is thought of and covered.”

Deutsche Bank Agency Securities Lending

Deutsche Bank Agency Securities Lending repeated in 2018 its performance from last year when it came fifth in the weighted listed of all securities lending providers. This year Deutsche scored 5.95, narrowly behind Citi’s 6.04 and the top three of State Street, J.P.  Morgan and GSAL.

Deutsche Bank ASL is very strong in Europe. The German bank’s lending arm was ranked top for Europe, the Middle East and Africa in the weighted list, where it scored an impressive 6.94, and the unweighted section with 6.80. Deutsche, unlike some of its peers, does not offer all of the functions listed in the survey but it excels in some of those it does offer. The German lender was listed top for income generated, and settlement and responsiveness, in the unweighted list.

It was second among its peers in the unweighted list for relationship management and risk management, and third for reporting transparency.

Among the list of agent lenders, Deutsche Bank ASL was again preeminent in Europe in both the weighted and unweighted list. It was also top among its unweighted agent lending peers for income generated, and settlement and responsiveness, and second for collateral management, programme customisation and reporting transparency.

One participant said: “We very much appreciate the high quality of the securities lending services and the flexibility with regard to the programme parameters and reporting that Deutsche Bank Agency Securities Lending provides to us.”

Another lender said: “Our agent lender responds very quickly to any questions or issues we may have at any given time. The agent client and  relationship services works very well with our portfolio investment and securities settlement function. Our agent lender has been extremely helpful in when involved in communications with our fiscal operations, internal audit and external audit.”

One lender said: “Overall we are very satisfied with the services provided by Deutsche Bank.” Another added: “We are very pleased with the results of our lending program.”

Speaking on Deutsche Bank ASL’s ability to innovate, one lender said: “Through periodic calls, this provider has indicated the status of fixed income lending and the various classes of securities. They had the most innovative response to an RFP for securities lending last summer. The Request-For-Proposal (RFP) we published was very different from the last one 10 years ago. Mostly due to changes in portfolio composition.”

Another respondent commented on Deutsche’s lending arm: “Forward looking handling of German equity transactions.” A lender said: “Our experience is that Deutsche Agency Lending has assisted in finding innovative ways to meet our needs.”

Citi

The US banking giant consolidated on its solid performance in 2017, when it finished fourth in the weighted list of lenders, by running State Street, J.P. Morgan and GSAL close again in 2018.

Citi Agency Securities Lending was fourth this time round with a weighted score of 6.04. Citi’s universal approach was seen to pay-off also as the firm was ranked by beneficial owners on weighted basis as the second best lender in Europe, the fourth best in the Americas and third in Asia-Pacific.

By function the US investment bank’s securities lending service also ranked highly. It was fourth among its unweighted peer group in terms of collateral management, third to GSAL and State Street for engagement on corporate actions and third to Deutsche Bank Agency Securities Lending and GSAL on settlement and responsiveness.

In the weighted list, Citi was fourth to J.P. Morgan, GSAL and State Street for relationship management and risk management, and third to State Street and J.P. Morgan for settlement and responsiveness.

Among the custodial lenders, Citi was third overall in the weighted group behind State Street and J.P. Morgan. The owner respondents ranked Citi first among its custodial peers in Europe, the Middle East and Africa, and third behind State Street and J.P. Morgan in the Americas and Asia-Pacific.

Compared to its custodial peers, Citi was in the unweighted category first for settlement and responsiveness, narrowly beating State Street in second, and second to State Street for engagement on corporate actions.

Citi finished in the weighted group third to State Street and J.P. Morgan in most functional categories: collateral management; engagement on corporate actions; income generated; lending programme parameter management; market coverage in developed markets; market coverage for emerging markets; programme customisation; market and regulatory updates; relationship management; reporting transparency; risk management; and settlement and responsiveness.

One beneficial owner said: “Citi is a very flexible and accessible partner, and they consistently look for opportunities to maximise income within a string risk framework.”

Another said: “Citi is very responsive to our reporting needs, maintaining our parameters and the recall process.” Another respondent told the survey: “great operation and client relationships teams. They have made our daily business processes seamless and easy.”

Another said simply: “Again the best performing agent this year.”

In terms of innovation, one lender said: “They keep us up-to-date with regulations that affect our program. They have come up with new technology and various programs so we can benefit more from our securities lending program.” Another added: “They have a willingness to open new markets particularly in Asia.”

eSecLending

The securities lending firm was ranked by its beneficial owner clients second (6.53) compared to its major rivals in the unweighted list, behind outright winner GSAL (6.68), and sixth in the weighted list.

By region, eSecLending was narrowly second in the Americas to GSAL in the unweighted category and fifth in Europe, the Middle East and Africa. In the weighted group, eSecLending was fifth in the Americas and sixth in EMEA.

The firm scored particularly well in the weighted section for the various  functions that comprise the holistic securities lending service. eSecLending was ranked number one by the beneficial owners for unweighted lending programme parameter management. It was second for income generated (behind Deutsche Bank ASL), developed market coverage (behind GSAL) and programme customisation (also GSAL).

The lending firm was rated third for emerging market coverage and provision of market and regulatory updates, and fourth for engagement in corporate actions and reporting transparency.

eSecLending was second overall behind GSAL when compared to pure agency lenders on an unweighted basis and second in the Americas.

Against the other agency lenders, eSecLending was again first on an unweighted basis for lending programme parameter management and second in: engagement on corporate actions; income generated; developed market coverage; emerging market coverage; provision of market and regulatory updates; and relationship management.

On a weighted basis, it was second for: engagement on corporate actions; lending programme parameter management; developed market coverage; emerging market coverage; provision of market and regulatory updates; and relationship management.

A respondent to the survey commented: “eSecLending is engaged and actively seeks to be best of breed  in the market place - a truly innovative organisation.”

Another said: “eSecLending is constantly looking for new and different opportunities for my program and is very focused on accessing new markets as well as bringing forward innovative peer-to-peer trading opportunities. eSecLending’s commitment to performance and service makes them a valued and trusted partner for our securities lending activities.”

In terms of innovation, eSecLending was also commended. One owner said: “eSeclending has responded to all of our initiates with support for new innovative products.”

Another commented: “They continue to think about what they can offer me as a client by understanding my requirements. They are expanding into new markets and developing unique solutions to make sec lending available to more beneficial owners.

One respondent said: “We have entered into a number of new markets and we have had a number of bespoke reports built for us to help with our Securities Financing Transactions Regulation requirements.”

RBC Investor & Treasury Services

The Canadian bank’s securities lending arm scored well in the unweighted categories in the 2018 Beneficial Owners survey, largely because RBC I&TS has lots of medium and smaller sized clients which have their ratings diluted by the weighting process.

RBC Investor & Treasury Services was particularly highly rated in collateral management where the business was ranked third compared to all entrants in the unweighted list for collateral management and programme customisation.

The Canadian business was also fourth on an unweighted basis for emerging market coverage and fifth for income generated and developed market coverage. Compared with its custody securities lending peers, RBC I&TS fared even better, coming second on an unweighted basis for income generated and
programme customisation.

One respondent to the survey said of the RBC I&TS service: “We are very happy with the current program, as RBC is both proactive and transparent as well as provides excellent risk management.” The owner added: “We continue to be totally satisfied with the service we receive from RBC I&TS.”

RBC Investor & Treasury Services also received plaudits for its approach to innovation. One owner said: “RBC is engaged with industry data and technology providers, offers proactive solution for regulatory changes and  ensures continuous development of the program.”

Another commented: “RBC I&TS is always curious and creative in making additional security lending income. They are proactive in bringing enhanced lending deals/specials to our attention.” “RBC I&TS proactively offers solution for regulatory requirements. In the past year there was an increased focus on technology,” the owner added.

Another client said: “They have continuous revenue optimisation proposals and increased their use of technology and new platforms resulting in growing balances.”