Industry Expert Jonathan Hodder Joins Transcend to Expand EMEA Business

New York, NY; June 22, 2022 – Transcend, a leading provider of liquidity, funding, and collateral optimisation solutions has appointed Jonathan Hodder as Director of EMEA Sales. In this role, Hodder will focus on growing Transcend’s global footprint, particularly expanding the Company’s physical presence in Europe and penetrating the Asian markets.

“Transcend has seen tremendous growth over the last few years, which can be largely attributed to the addition of high-quality industry professionals like Jonathan,” said BJ Marcoullier, Head of Sales & Business Development at Transcend. “As we look to scale this momentum, Jonathan will play an instrumental role in helping us address regional-specific challenges and continue to deliver a best-in-class solution suite and client experience.”

Hodder brings more than 20 years of securities finance expertise to Transcend. Most recently, he led European Sales for FIS, focusing on securities finance and collateral management. Prior to joining FIS, Hodder spent nearly a decade as Global Head of Sales and Marketing for EquiLend. Earlier in his career, Hodder worked with the publishing team at Euromoney (ISF), overseeing the direction of ISF Magazine for 10 years.

“I’m looking forward to building on Transcend’s success driving efficiency and innovation in the collateral optimisation space,” explained Hodder. “As we accelerate our impact in Europe and make inroads into Asia, I look forward to being a part of the Company’s continued evolution as a critical enterprise solution for collateralised businesses.”

“Jonathan is coming on board during a time when the securities finance space is experiencing a great deal of change, with a greater focus on optimisation due to rising collateral, margin and operational demands. Jonathan’s expertise will be a great asset as we continue to enhance our product offering to address burgeoning challenges,” said Bimal Kadikar, Founder and CEO of Transcend. “It is an exciting time for Jonathan to be joining our team to not only help us expand our presence into new regions, but also bring a fresh set of ideas to one of the capital market industry’s fastest-evolving areas.”

In recent months, Transcend has been steadily building its team, growing by nearly 50% over the last year. Hodder will play a key role in building Transcend’s sales, business development and engineering teams within the EMEA region as the Company looks to onboard many new European-based clients in the months ahead.

ABOUT TRANSCEND

Transcend is on a mission to help global market participants achieve next-level performance results through innovative solutions that enhance liquidity, funding, and collateral decisions. With a growing roster of world-class banks, broker-dealers, asset managers and custodians as clients, the firm is quickly becoming the gold standard for inventory analytics, optimisation, and automation within a business-line or across the enterprise.

Led by a team of 140+ domain experts, Transcend addresses an array of complex financial, operational and regulatory concerns challenging the capital markets industry. For more information, visit transcendstreet.com and follow us on LinkedIn and Twitter.

The Asset Manager’s Dilemma: Optimizing Cash and Liquidity in Today’s Environment

Cash and liquidity management is becoming an increasingly critical function for asset managers. However, with rising interest rates, and the move toward t+1 settlement for traditional securities and intraday settlement for digital/tokenized assets, it will become even more difficult to maximize liquidity, minimize operational risk and achieve optimal returns or borrowing costs. For example, T+1 will impact intraday liquidity by shortening the windows to optimally manage funding, margin and collateral requirements. As a result of these trends, cash management and forecasting efforts will soon be much more challenging.   

The current environment is creating significant stress on fragmented legacy systems, infrastructure and processes. As a result, many asset managers are on the search to find or develop new solutions that address these challenges. 

The Dilemma 

For many asset managers, an inability to easily optimize cash usage coupled with the historically low interest rate environment has led to the de-prioritization of investments in cash management solutions. As a result, these firms maintain significant cash buffers to ensure they have sufficient liquidity to meet cash demands. In a zero-rate environment, the impact of these decisions is lower. However, with rising interest rates and the increased need to manage cash intraday, the cost of maintaining large cash buffers is becoming more substantial, with greater “drag” on the portfolio. Additionally, there is a tangible opportunity cost of not investing the extra cash. Lastly, rising rates are increasing the cost of intra-day borrowing, another added expense. Without the right tools, many asset managers have no choice but to make suboptimal investment and borrowing decisions. 

The Challenge 

Cash management teams work extremely hard to manage their intraday cash balances, often through spreadsheets or legacy technology systems. However, these current capabilities seem to be reaching an operational tipping point; we hear many of the same themes regarding infrastructure challenges including:

  • Difficulty achieving real-time connectivity and seamless integration of cash data from internal and external sources
  • Disconnected data inhibiting the use of analytics, alerts, and workflow tools at a firm-wide, regional, desk, or fund level
  • Lack of alignment between investing, trading, margining activity regarding the impact on cash positions
  • Fragmented, non-scalable cash management platforms and processes
  • Limited transparency into potential investment and borrowing opportunities 
  • No structured, optimization framework to help guide investment and borrowing decisions

As a result, these challenges have made it very difficult to maintain current cash management processes in today’s environment. 

Architecting a Solution 

There are several critical capabilities asset managers require to address current cash management challenges and also plan for future needs. 

Real-time Integrations: Cash management platforms require innovative tools to aggregate current and projected settlement, inventory and margin data in real-time. While not all data providers supply information in real-time, their capabilities are improving, and as a result, cash management platforms must be able to assimilate to these requirements. With cryptocurrency and tokens becoming more prevalent, real-time data integration and access will soon be critical. 

Holistic Data: Intraday cash management requires both an internal (e.g. OMS data) and external (e.g. custodian data) view in order to forecast accurately and make the most informed business decisions. One view without the other significantly increases the probability of suboptimal or even incorrect investment and borrowing decisions. Furthermore, a solid data foundation is crucial for analyzing inventory and forecasting future settlements. As a result, firms require the harmonization of current and historical data for enhanced decision-making. Lastly, optimally managing cash globally necessitates the storage of granular data attributes regarding accounts for various custodians and paying agents. For example, firms must know what times the accounts are available for cash activity and when they close in order to fully systematize cash management.    

Powerful Analytics: Managing cash activity intraday requires user-friendly dashboards, configurable alerts and workflow tools in order to identify and address cash balance anomalies. Without clear and proactive information, it is much more difficult for firms to mitigate inefficiencies or risks in their accounts.   

End-to-End Capabilities: The most powerful cash management capabilities facilitate an end-to-end workflow. However, to achieve this, firms need full transparency into various investment and lending options with associated return, cost, risk data in order for an optimization engine to generate recommended allocations. To complete the process, there must also be intelligent integrations that can translate cash optimization recommendations to booking instructions that automatically execute the requests with the appropriate OMS/EMS/Fund Investment platform. 

Introducing Transcend 

Transcend’s team has decades of experience solving cash and collateral management challenges for both sell-side and buy-side clients. With a state-of-the-art, modular platform, Transcend’s clients can quickly gain critical cash and collateral management capabilities to address the challenges of today’s borrowing and investing environment. To learn more, click here to get in touch with the Transcend team. 

Rising Interest Rates: New Hurdle or Considerable Opportunity?

To combat inflation and a potential overheating economy, the Federal Reserve has begun communicating plans to aggressively raise interest rates throughout 2022 and 2023. The Fed began with a modest increase of .25%, however market professionals are estimating as many as six additional rate increases in 2022 to move monetary policy toward a more neutral rate environment. Similar interest rate increases have occurred in other industrialized economies as inflation continues to grow globally. Market participants are now increasingly looking for new financing and trading efficiencies to get ahead of additional funding costs and the risk of stunting profitability and growth. While collateral optimization has always helped minimize funding and liquidity costs, the new rate environment is creating even greater urgency for optimization to drive P&L benefits.

The Impact on Financing Collateral

The first impact of potential changes in the rate environment are increases in absolute interest rates and the overall costs to finance collateral. Simply put, the cost of borrowing cash will be more expensive than it’s been in years and will increase the overall costs to support certain trading and customer financing strategies. Banks and broker dealers have enjoyed a period of relative calm for balance sheets; however, as central banks step away from asset purchases, there will be new supply that needs to be financed in the market. As a result, firms that are inefficiently utilizing their collateral and unsecured funding risk impacting their P&L.

In addition to increases in absolute rates, the new environment can mean it will be more costly to support long-term funding and financing lower-quality collateral. While there are various projections for future funding costs as a result of rate increases, the premia for longer term funding could increase over time. Additionally, funding spreads for lower quality collateral could increase and create a more punitive environment for financing non-government collateral. Volatility of certain asset classes, including corporate bonds, may act as an accelerant for credit spread widening. These potential changes to term premia and spreads would impact certain portfolios and trading strategies, impacting the funding costs and P&L of those businesses.

Finally, rising interest rates can also influence firms’ risk tolerance and subsequently their investment choices, ultimately causing certain sources of funding to be less attractive, less stable and harder to manage.

An Opportunity for Optimization

With increasing absolute rates, spreads and term premia, the cost of financing businesses is set to be higher and more volatile. The goal of an effective collateral optimization strategy is to help market participants extract the greatest value from their financial resources; as such, there is a large opportunity for collateral optimization to maintain and increase profitability. By evaluating the costs of financing various collateral types with differing qualities, an optimization strategy will help firms more strategically select the collateral that meets a counterparty’s eligibility requirements while minimizing liquidity and funding costs to the business. With higher costs to consider, the potential savings from a collateral optimization strategy will materially increase.

Optimization Potential in Practice

Transcend has seen firms realize significant benefits from implementing collateral optimization across their financing and margining activity. By strategically implementing end-to-end solutions that incorporate funding /capital costs, collateral eligibility and operational costs into their optimization solutions, firms have been able to automate the allocation of preferred collateral to these exposures and obtain millions in annualized saving across financial, efficiency and risk factors.

In an environment of increasing absolute rates, wider spreads and higher costs of unsecured funding, these firms are poised for even greater cost savings. Transcend’s research and analysis team found that based on conservative rate assumptions, potential savings from optimization could increase an additional 16% to 250%. 

The Importance of Technology

The value of being able to optimize vertically or horizontally across collateral silos under new a rate environment is clear. However, achieving collateral optimization can be difficult without the right partners and tools. While developing a cross-product collateral optimization solution in house can take several years, market participants need to implement an optimization solution now before rate increases impact profitability. As a result, more firms are looking to partner with companies like Transcend to more quickly mitigate the impact of a new rate environment.

However, not all optimization solutions are the same. With a holistic optimization platform built on enterprise inventory that considers multiple cost dimensions, market participants can more effectively understand and improve the utilization of collateral in totality, thus limiting unnecessary financing and liquidity costs. A single optimization solution for all asset classes, tri-party providers, and margin needs will deliver significantly higher returns, and ultimately will be a firm’s competitive financial edge. However, scalability is also crucial to ensuring both the immediate and long-term value of optimization results. By leveraging technology that can optimize decisions within a specific product or business-line first, with the opportunity to expand to multiple divisions over time, clients can realize a quicker time to value without limiting future potential.

Lastly, an effective optimization solution should enable straight-through-processing. Delivering the collateral that maximizes cost reduction could require complex collateral mobilization activities. As a result, any optimization solution needs to be able to automate and seamlessly execute movement recommendations in order to limit operational friction and roadblocks.

Introducing Transcend

The market evolution is creating real urgency for firms who have not yet invested in collateral optimization to implement tried-and-true solutions and stay ahead of the impact of incremental rate increases. Similar feedback from market participants has revealed the importance of solutions that can automatically adapt to fast-changing environments.

With a history of successes deploying cross-product and cross-business optimization solutions at some of the industry’s largest banks and broker dealers, Transcend is the solution of choice to address the urgent optimization requirements under the new rate environment. Transcend’s holistic data framework and powerful, yet configurable, optimization algorithm ensures that clients can achieve the greatest optimization results today, while scaling to address rate and market evolution in the future. With an integrated booking service, Transcend ensures it’s clients can execute their optimization strategy both quickly and efficiently.

With a team of 140+ seasoned industry professionals possessing decades of hands-on capital markets and technology expertise, Transcend partners with clients to design an implementation strategy that delivers results in months, not years. This means, new clients can achieve tangible optimization benefits before interest rates severely impact their firm’s growth and profitability.

This article was originally published in the Securities Finance Times Technology Annual 2022

Collateral Deluge: How collateral receivers can manage an increasingly complex collateral management process

Webinar Recording

Collateral Deluge: How collateral receivers can manage an increasingly complex collateral management process

As the number of firms that are subject to initial [and variation] margin grows, the ability to manually manage collateral throughout the trade and margin lifecycle becomes more overwhelming. Traditionally, there’s been a greater focus on addressing the challenges of the collateral pledgor, while the needs of the collateral receiver have been de-prioritized.

On Wednesday, April 27, speakers from Transcend, Acadia and Euroclear came together to discuss the trends, challenges, and solutions around the current collateral deluge

Transcend Launches “Eligibility Central” to Help Clients Accelerate Critical Enterprise Collateral Strategies

March 17, 2022 – Transcend, a leading provider of optimization solutions for funding, liquidity, and collateral has announced the launch of Eligibility Central, a unifying platform for collateral eligibility information and analytics. Transcend Eligibility Central empowers clients to accelerate critical collateral functionality such as optimization or mobilization.

“As the capital markets community increases focus on enterprise collateral management, optimization, and mobilization strategies, the need for harmonization of collateral eligibility schedules is clear,” explains BJ Marcoullier, Head of Business Development at Transcend. “However, because the collateral ecosystem is so large and bifurcated, we regularly hear it is taking industry players far too long to create an eligibility hub internally. Eligibility Central helps firms streamline complex collateral strategies and accelerate time-to-value timelines.”

End-to-end functionality of Eligibility Central includes:

  • A single, golden source of harmonized eligibility information: Out-of-the-box connectivity to tri-party agents, CCPs, and central banks; Integrations with clients’ internal systems for ISDA/CSA and bi-lateral finance (MRA/MSLA); An intuitive user interface that streamlines eligibility capture and modification as required.
  • Real-time eligibility analytics and dashboards: Ability to slice and dice granular eligibility criteria across clients’ portfolio of securities and compare against multiple destinations to confirm that they realize the greatest funding value from their assets.
  • Integration with optimization, validation and execution solutions: Ability to send eligibility information to other systems and processes to run an automated collateral management workflow.

“Connecting the collateral ecosystem across internal systems and external providers is a critical need in the marketplace,” explains Todd Hodgin, Transcend’s Global Head of Product Development. “Eligibility Central helps clients realize their financial performance goals by delivering a solution that supports better collateral utilization decisions.”

For clients looking to automate decision making, Transcend’s best-in-class Optimization Engine, Validation Service and Booking Service seamlessly integrate with Eligibility Central. Leveraging comprehensive cost models, constraints and scenario capabilities, Transcend’s Optimization produces the most economically efficient set of collateral movements. Delivered together with Eligibility Central, Transcend helps clients realize millions in cost savings every year.

About Transcend

Transcend is a leading provider of analytics, optimization, and automation solutions for collateralized businesses. With a growing r­oster of world-class banks and other financial institutions as clients, the firm is quickly becoming the gold standard for the real-time, firm-wide management of inventory, funding and liquidity. With more than 125 global employees possessing deep domain expertise in collateral, securities finance, derivatives, operations, and more, Transcend is uniquely positioned to strategically solve some of the industry’s greatest regulatory and capital challenges. For more information, visit transcendstreet.com.

State Street Collateral+ Symposium Recap: “How to Provide Collateral Solutions of the Future”

On Tuesday, March 8th, Transcend’s CEO, Bimal Kadikar, participated in the State Street Collateral+ Symposium. The panel, which also included Chris Watts of Margin Tonic, Elisa Poutanen of HQLA-x, Tony Ashraf of Blackrock and Alan Divers of UBS, discussed the challenges and best practices of developing scalable and innovative collateral solutions.

The challenges of collateral today:

  1. The Uncleared Margin Rules (UMR) are driving the velocity and need for high quality collateral: UMR is causing the ecosystem of firms required to pledge collateral to rapidly increase, especially within the buyside. As the network of participants in the collateral ecosystem grows, processes become more complex. Furthermore, UMR requires firms to maximize liquidity, causing HQLA to be scarce.
  2. Legacy collateral technology solutions often only address particular business areas and are not interoperable: this limits transparency and optimization potential – which is especially important with firms needing to better manage HQLA. However, it is difficult and often expensive to “rip and replace” an existing technology infrastructure.
  3. ESG considerations are beginning to move into the collateral management lifecycle: While the incorporation of ESG criteria in collateral preferences is still nascent, it will steadily involve greater complexity and sophistication in the coming years. As a result, firms should be thinking about scalable solutions that address basic ESG collateral needs today, but can also satisfy future complexity.

Best practices to consider when implementing collateral technology:

  1. Collateral should be seen as a strategic part of the trade lifecycle: as a result, firms need to enable enterprise-wide, real-time visibility across business departments, geographies, and legal entities. Holistic technology will allow firms eliminate the replication of processes and data across groups and will help firms make more informed decisions.
  2. Straight-through-processing (STP) is critical: Even if collateral optimization technology can identify the smartest collateral allocations and trades, without execution automation, firms may not be able to operationalize their optimization insights. As a result, all collateral technology should enable STP to drive efficiency and ensure the impact of technology is maximized.
  3. Technology systems should be interoperable: Today, any technology systems should be connected to legacy infrastructure across tri-party agents, custodians, customers, the buy-side and the sell-side. With the industry moving toward a holistic collateral function, interoperability is the key to reducing friction and easing the implementation of new solutions.

Some other key takeaways from the sessions include:

  1. DLT and tokenization will disrupt the collateral ecosystem and will drive the next level of efficiencies, but may also create new challenges for legacy workflows and systems.
  2. Analytics and optimization will need to evolve with new industry trends such as ESG and Digital Assets.
  3. Firms should look to maintain a single, golden source in order to drive mobilization and reduce friction.

A reoccurring theme throughout the panel was the need for an enterprise view of inventory in real-time – across eligibility information, counter-party obligations, and supply. Doing so will fuel optimization across tri-party, CCP, and bilateral obligations throughout businesses and regions. Automation is also needed to execute decisions without human touch. However, accomplishing this will require changes to legacy infrastructures. While this may seem daunting, there has been significant progress in the technology space, making it much easier to achieve holistic collateral management and optimization. For example, Transcend’s modular solutions seamlessly integrate with existing systems to help firms achieve goals without having to replace their entire infrastructure.

Transcend Launches Industry’s First Solution to Holistically Integrate ESG into the Collateral Management Ecosystem

February 8, 2022 – Transcend, a leading provider of analytics, optimization, and automation for collateral, liquidity, and funding, has announced the ability to seamlessly integrate ESG criteria into collateral decisions and analytics. This launch positions Transcend as the first technology vendor to systematically integrate ESG data into collateral management processes. 

Transcend’s ESG capabilities seamlessly allow clients to:

  • Centrally store ESG criteria alongside ESG performance metrics and collateral schedules for robust inventory management, rich portfolio analytics and seamless booking automation
  • Systematically run intraday or ad hoc validation and sufficiency testing to assess whether collateral received is in line with client and/or internal ESG requirements
  • Integrate ESG criteria into Transcend’s optimization engine for collateral recommendations that meet ESG requirements while improving performance.
  • Flexibly integrate with any preferred ESG data provider

“We understand how critical it is to stay ahead of the needs of our customers and partners and develop truly future-generation solutions,” said Bimal Kadikar, CEO, Transcend. “With ESG now impacting all aspects of the financial services ecosystem and becoming increasingly present in collateralized businesses, integrating ESG data into Transcend’s infrastructure was a natural next step in our innovation strategy.”

While the industry awaits greater standardization for ESG data and agreements, Transcend offers the flexibility to ingest ESG criteria in a variety of client-preferred formats including restriction lists, scores, and metrics. As a result, the Company provides market participants with a scalable infrastructure required to integrate disparate counterparty and client agreements and further automate collateral decisions.

“Our new ESG solutions deliver a configurable solution to integrate these criteria into the broader Transcend product suite,” explained Todd Hodgin, Transcends new Global Head of Product. “As with all Transcend products, we are proud to deliver the capabilities required to help our clients efficiently and effectively meet requirements today, while offering the flexibility needed to nimbly adapt to best practices as they evolve in the future.”

Transcend’s ESG capabilities demonstrate an ongoing commitment to innovation and R&D. Last year, Transcend launched CCP Central, the first platform of its kind to connect, optimize and automate enterprise-wide margin and collateral activities across a global network of Central Clearing Counterparties (CCPs).

ABOUT TRANSCEND

Transcend is a leading provider of optimization solutions for collateralized businesses. With a growing roster of world-class banks and other financial institutions as clients, the firm is quickly becoming the gold standard for the real-time, firm-wide management of inventory, funding and liquidity. With more than 125 employees globally, Transcend addresses an array of regulatory and capital challenges that are facing the industry with a user-friendly, SaaS-based or on-prem collateral and liquidity management platform. For more information, visit transcendstreet.com

Tom Garley Joins Transcend as Senior Product Specialist to Accelerate the Company’s Buy-side Focus

January 25, 2022 – Transcend, a leading provider of liquidity, funding, and collateral technology solutions, has named Tom Garley Senior Product Specialist. In this role, Tom will work with various buy-side infrastructure participants to identify and design product innovations that address the many challenges and inefficiencies in the collateral management space. As the market continues to see evolution driven by increased demand on collateral and funding obligations, the addition of Garley will help ensure participants across this complex ecosystem can eliminate frictions that limit the optimal usage of financial resources.

Garley has been a long-time advocate for greater automation throughout e-trading, post-trade and operations infrastructures. After various operations management positions, Garley pivoted to electronic trading when he joined the Tradeweb management team to launch the industry’s first multi-dealer fixed income platform. Throughout his tenure at Tradeweb, Garley contributed toward the firm’s e-trading expansion and the development of multiple solutions to bring greater automation to post-trade. After Tradeweb, Garley helped develop and launch numerous D2C trading platforms and a vast portfolio of post-trade solutions across firms such as Citi, State Street, Bloomberg, and BGC Partners. Before joining Transcend, Garley was most recently Product Manager for Integration Services and Post-Trade Solutions for new Dealer-to-Customer (D2C) e-trading platforms at the CME.

“As we continue to invest heavily in product innovation throughout the financial collateral ecosystem, I am thrilled to welcome Tom as the latest addition to Transcend’s product team,” said Todd Hodgin, Transcend’s Global Head of Product Management. “Tom’s experience championing new products across the funding and collateral markets aligns extremely well with our mission to design forward-looking solutions designed to reduce the costs associated with inefficient liquidity, funding and collateral decisions.”

Transcend takes a unique approach to collateral management by complementing existing solutions and processes with products that seamlessly integrate with a client’s infrastructure to quickly unlock a more effective and holistic collateral management strategy. This approach has led to the firm’s growing success and industry-wide adoption.

“Over the course of my career, I’ve had the opportunity to work with both innovative technology companies as well as industry advocates to identify and provide solutions that achieve greater efficiencies around margin mandates and collateral management,” explains Garley. “Given Transcend’s emergence as a clear leader in the collateral space, joining the team was a logical next chapter, and I look forward to contributing to the company’s continued success.”

Earlier this month, Transcend announced a formal partnership with Acadia to provide an automated, comprehensive and independent Collateral Validation Service that enables the buy-side and broker-dealers to confidently manage the growing complexity and volume of margin activity driven by Uncleared Margin Rules.

ABOUT TRANSCEND

Transcend is a leading provider of optimization solutions for collateralized businesses. With a growing roster of world-class banks and other financial institutions as clients, the firm is quickly becoming the gold standard for the real-time, firm-wide management of inventory, funding and liquidity. With more than 120 employees globally, Transcend addresses an array of regulatory and capital challenges that are facing the industry with a user-friendly, SaaS-based or on-prem collateral and liquidity management platform. For more information, visit transcendstreet.com.

Acadia and Transcend Form Joint Collateral Validation Service to Mitigate UMR Challenges for the Buy-Side and Broker-Dealers

January 11, 2022 – Transcend, a leading provider of collateral, liquidity, and funding solutions, and Acadia, a leading provider of integrated risk management services, have partnered to deliver an automated, comprehensive and independent Collateral Validation Service. This service allows the buy-side and broker-dealers to confidently manage the growing complexity and volume of margin activity driven by Uncleared Margin Rules (UMR). Transcend and Acadia’s Collateral Validation Service is designed to ensure that all end of day collateral balances held at third-party and tri-party custodians meet the required criteria, including collateral eligibility, sufficiency, concentration, and wrong-way risk according to the requirements defined in their related collateral agreements.

This service integrates Transcend’s tri-party and custodian connectivity and collateral validation analytics with Acadia’s margin, collateral, and agreement management products. Delivered together, the combination provides sophisticated validation capabilities in accordance with client agreements and transparently communicates results daily.

By ensuring clients’ collateral portfolios effectively mitigate their derivatives exposures, the Collateral Validation Service will help firms comply with UMR Phase 6 requirements and address  the manual challenges that clients in earlier phases of UMR are still looking to resolve. The service will be hosted on Acadia’s platform independent of a client’s existing collateral management workflow, ensuring flexibility.

“With increased pressure from UMR, asset managers and broker-dealers alike are challenged with creating efficient and scalable processes for new compliance requirements. Our Collateral Validation Service empowers firms to confidently and seamlessly respond to the new and existing margin requirements,” said Bimal Kadikar, CEO, Transcend. “As we formally extend Transcend’s offerings to the buy-side, we are excited for the many opportunities ahead with Acadia and look forward to expanding our capabilities in new, transformational ways.”

“Acadia provides a range of services that assist firms with their regulatory requirements. By partnering with Transcend, we continue to ensure that our clients benefit from a more streamlined and automated approach to UMR compliance,” says Mark Demo, Head of Business Development, Acadia. “Our overarching goal is to deliver value and reduce risk for our clients and we are excited by this partnership since it firmly delivers on this objective.”

The connectivity, interoperability, and automation powered by Transcend and Acadia’s joint Collateral Validation Service delivers a seamless validation workflow for buy-side and sell-side participants on a global-scale. As Transcend and Acadia kick off their partnership, the Companies are already exploring a number of other collaborative opportunities to meet increasing demand.

Transcend logo
ABOUT TRANSCEND
Transcend is a leading provider of analytics, optimization, and automation solutions for collateralized businesses. With a growing r­oster of world-class banks and other financial institutions as clients, the firm is quickly becoming the gold standard for the real-time, firm-wide management of inventory, funding and liquidity. With more than 120 global employees possessing deep domain expertise in collateral, securities finance, derivatives, operations, and more, Transcend is uniquely positioned to strategically solve some of the industry’s greatest regulatory and capital challenges. For more information, visit transcendstreet.com.
ABOUT ACADIA
Acadia is the leading industry provider of integrated risk management services for the derivatives community. Its central industry standard platform enables a network of banks and other derivatives firms to improve efficiency and mitigate costs across the entire trade life cycle.

Acadia’s suite of analytics solutions and services helps firms manage risk better, smarter and faster. Through an open-access model, Acadia brings together the top derivatives banks and asset managers, along with several market infrastructures and innovative vendors.

Backed by 16 major industry participants and market infrastructures, Acadia is used by a community of over 1600 firms exchanging more than $1 trillion of collateral on daily basis via its margin automation services. Acadia is headquartered in Norwell, MA and has offices in Boston, Dublin, Düsseldorf, London, New York, and Tokyo. Acadia® is a registered trademark of AcadiaSoft, Inc. For more information, visit acadia.inc. Follow us on Twitter and LinkedIn.

Acadia® is a registered trademark of AcadiaSoft, Inc.

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2022 Outlook from Todd Hodgin & BJ Marcoullier

What are your expectations for 2022?

Within the collateral markets, we expect to see an acceleration of electronification and automation. Regulatory drivers such as UMR are increasing demands on scarce collateral resources and, as a result, transparency of liquidity pools and operational efficiency are now critical competitive differentiators. While the equity and debt cash markets achieved scale through low touch execution years ago, the repo and securities lending markets are now facing a similar evolution via automated decision-making.

What trends are getting underway that people may not know about but will be important?

  1. ESG: While ESG has ballooned in the investing market, ESG considerations within the collateral markets are only beginning to gain momentum. Last year saw an increase in green repo transactions and ESG criteria governing which assets would be accepted as collateral. We expect these trends to accelerate in 2022, creating new operational challenges for both sell-side and buy-side firms.
  2. Cloud & SaaS Solutions: Although the consumer economy was quick to adopt cloud solutions, usage by banks and broker-dealers is only recently increasing. As a result, SaaS adoption is expanding in this market as firms gain confidence in providers being able to meet strict data security requirements.
  3. Digital Assets & Tokenization: Blockchain-enabled solutions are receiving a lot of attention throughout the financial services industry. Firms are investing in these solutions to reduce the frictions associated with transferring asset ownership and custody, increase liquidity with settlement cycle reductions, and reduce operational burdens. While these are long term initiatives that will take time for market adoption, these investments will continue.

What industry trends have been prominent but are now fading (or will soon fade)?

As collateralized products such as repo or securities lending grew, firms built standalone internal systems to support their trading and financing activities. However, as these markets matured, new vendors emerged, allowing firms to reduce maintenance costs, upgrade capabilities, and integrate with the broader market. As a result, technology is no longer an “either/or” build versus buy decision. Today, the firms that find the right balance of internal and external solutions will be the ones to create fully integrated, comprehensive, and end-to-end processes.

What are your customer’s pain points and how have they changed from one year ago?

In the last year, clients have experienced strain as a result of increased trading and margin volume due to volatility within increasingly complex markets. In particular, human capital and federated infrastructure are key pain points. More than ever, clients are looking to Transcend to improve risk-adjusted returns by integrating their collateral ecosystem, breaking down legacy siloed infrastructure and automating enhanced decision-making across collateralized businesses.

This article was originally published on Markets Media.

Transcend Appoints Todd Hodgin as Global Head of Product to Accelerate Platform Innovation

Transcend, a leading provider of liquidity, funding, and collateral technology, has named former Senior Advisor, Todd Hodgin, as Global Head of Product. In this new role, Hodgin will be responsible for driving Transcend’s product innovation and designing a best-in-class technology roadmap.

As Transcend accelerates growth, with solutions and customers significantly diversifying over the past year, it is essential to make investments in product that effectively scale with the Company’s maturation. Hodgin will lead the development of forward-looking solutions that proactively address the financial services industry’s greatest challenges and inefficiencies.

“As we continue to solidify our presence as a clear leader in the collateral management space, I look forward to expanding Transcend’s impact on the broader capital markets and financial services industry,” said Bimal Kadikar, Transcend’s CEO. “Todd’s contributions as a Senior Advisor in 2021 proved invaluable and I am confident that in this new capacity, Todd will help Transcend reach new and exciting milestones in 2022.”

Prior to joining Transcend, Hodgin led a 15+ year career at Wells Fargo, most recently serving as Executive Vice President of Enterprise Business Process Management & Operational Design. Hodgin has been called upon to lead multiple board and operating committee imperatives and successfully implemented transformational enterprise-level initiatives. During his tenure at Wells Fargo, he led a variety of risk management organizations and initiatives that addressed credit, operational, compliance, liquidity and market risk.

Todd Hodgin

“The market continues to evolve quickly with greater demands on collateral and funding as well as new sources of funding,” explained Todd Hodgin. “As Transcend’s new Head of Product, I am excited to help our clients succeed in this increasingly complex ecosystem by designing solutions that eliminate frictions that limit the optimal usage of financial resources.” 

Hodgin is one of many additions to Transcend’s leadership team in 2021. In addition to UK executives Rajen Patel and Patrick Tessier, Transcend recently onboarded veteran business specialists, including former JP Morgan Executive Director Jason Arboreen and former HSBC and Jefferies executive Steve Vena. In 2021, Transcend’s global staff grew by more than 35%

ABOUT TRANSCEND

Transcend is a leading provider of optimization solutions for collateralized businesses. With a growing roster of world-class banks and other financial institutions as clients, the firm is quickly becoming the gold standard for the real-time, firm-wide management of inventory, funding and liquidity. With more than 120 employees globally, Transcend addresses an array of regulatory and capital challenges that are facing the industry with a user-friendly, SaaS-based or on-prem collateral and liquidity management platform. For more information, visit transcendstreet.com.

Implementing and Expanding a Collateral Optimization Program

On November 30, ISDA hosted a virtual Collateral Optimization Showcase, bringing industry leaders together to discuss to the importance of collateral optimization. Transcend’s BJ Marcoullier participated in the event, discussing challenges and advice for implementing an optimization program. Alongside BJ, session participants included:

  • Josh Galper, Managing Principal, Finadium
  • Mike Bridger, Global Head of Collateral Optimization, Credit Suisse
  • Liam Huxley, CEO & Founder, Cassini Systems
  • Kevin Khokhar, Vice President, Derivatives & Multi Asset Trading Solutions, T. Rowe Price
  • Sagar Patel, Americas Head of Tri-party Product, J.P. Morgan

During the session, it was made clear that UMR has created a significant opportunity for firms to prioritize collateral optimization. While collateral historically was never treated as its own asset class, UMR has increased demand, underlining the potential of collateral as well as the resulting opportunity cost if not optimally utilized.

While the goal of collateral optimization is clear, the panelists discussed the many challenges of building a cross-product, centralized, and scalable collateral optimization program:

Strategic Planning

The first challenge of implementing a collateral optimization program centers on strategic organization. Stakeholders with varying goals must agree on important questions such as who will own the implementation project, whether or not the function will be centralized, the scope of the project, and what KPIs will be used to measure program effectiveness and success. This first step can take months, if not, years, to complete.

Data Framework

The second challenge of collateral optimization centers around data. Firms must figure out how collect, organize, normalize, and aggregate collateral data in a single golden-source. Firstly, connecting to external providers like CCPs or Tri-party agents can require a significant IT investment. Secondly, once the data connections are created, firms must create a taxonomy that normalizes the data, allowing it to be aggregated firm-wide. For example, with different teams often classifying varying products with different names in disparate systems (i.e. U.S. Government Treasury Bonds vs. UST), it can quickly become a time consuming task to normalize data across the enterprise.

Decision Making

A third challenge is getting stakeholders to agree what are the key opportunities and goals of optimization. While some teams may want to solve for liquidity and unsecured funding, other teams may care about haircut optimization while other teams care purely about regulatory risks. Creating an optimization program that satisfies the goals of each stakeholder and can easily pivot as needs change is typically not an easy feat.

Execution

The final primary challenge of implementing a collateral optimization program is all about execution. Not only must firms launch the program in a way that effectively scales, but they must also implement the program in a way that is operationally efficient. An optimization program is pointless if it suggests hundreds of moves and trades in order to book a single optimized collateral allocation that the firm ultimately does not have the bandwidth to support. Firms should figure out how to build an optimization program that is efficient, or better yet, achieves STP.

With the many challenges of implementing a collateral optimization program, panelists also gave showcase attendees some advice:

  1. Understand that you can’t accomplish all optimization goals on day one: Identify your short- and long-term goals and map out an implementation timeline that considers priorities, potential friction, and risks.
  2. Think big: Even if your initial optimization goals are focused on one product or challenge, plan for program resilience and cross-product optimization. The earlier future challenges and goals are considered, the easier it will be to maintain, sustain, and scale your collateral optimization program.
  3. The more the merrier: Include internal and external stakeholders across the front and back offices in the initial planning and strategy stages. If legal and operations do not understand the end goal of your optimization program from day one, it will be difficult to resource and execute when the plan is ready.
  4. Don’t let the UMR opportunity go to waste: UMR has created a very clear opportunity for firms to obtain budget for collateral optimization projects. Firms that only see UMR as a regulatory mandate that requires a box to be checked are leaving 5-15 bps in potential annualized savings on the table.
  5. Technology is not a binary buy vs. build question: Vendor technology has come a long way in being able to complement and accelerate a firm’s existing strategy. External technology providers are able to provide the connectivity or functionality that quickly fills in the gaps of existing capabilities, making it easier than ever for firms to drive a collateral optimization project from theory to measurable results.

Undertaking a collateral optimization project can seem daunting, but with the right mindset, partners, and solutions, firms can implement a collateral optimization program that delivers transformational results. With UMR still receiving a lot of attention, now is the time to incorporate collateral optimization into your strategy.

Transcend is proud to partner to help clients map out an optimization plan that quickly satisfies immediate goals and scales to address future aspirations. Learn more about our Collateral Optimization solution.