By Mark Dugdale, Securities Lending Times
October 11, 2012
Hedge funds have switched their equity trading programs to “defensive mode” as far as capital is concerned, while beneficial owners are demanding more information and transparency from their agent lenders.
The Risk Management Association’s (RMA’s) 29th Annual Conference on Securities Lending featured a panel on global demand trends in equity trading.
Frederick Nadd-Aubert of Credit Suisse, Peter Abric of Wells Fargo Securities, James Gerspach of J.P. Morgan, Carey Chamberlain of HSBC, and Mark Payson of Brown Brothers Harriman analysed key trends from the past few years.
Nadd-Aubert said that hedge funds are going into “defensive mode” as far as capital is concerned, while the rest of the panel identified other trends.
One trend that Chamberlain has observed is that credit diversification has become a big focus. He has also seen US money managers change the way that they operate.
He said: “A lot of US money managers have pulled money out of Europe and are possibly putting it back into their home market, which is fair enough.”
Another trend is that beneficial owners are “more demanding about being informed about opportunities and emerging markets,” according to Gerspach.
Chamberlain added: “There’s been a shift in how trading desks, lenders and hedge funds look at stock lending.”
Clients want research-based products as their emphases on transparency and information have increased, according to Chamberlain. Gerspach agreed, adding: “That demand has certainly taken off and multiplied in the last few years.”
The main change that Payson has identified is how clients view his firm. The firm now acts “as an advisor”, providing information and transparency on a regular basis and before trading is initiated.