Transcend Achieves SOC2 Type II Certification

Transcend is excited to announce that it has successfully completed a System and Organization Control (SOC) 2 Type II audit. This certification demonstrates Transcend’s continued commitment to security & data integrity.

“Data security is a critical component to the services we offer to our clients. As cloud hosted solutions are becoming the norm in our industry, the SOC2 Type II certification makes it much easier for clients to leverage our hosted solution with confidence,” noted Manish Sharma, Chief Technology Officer.

Developed by The American Institute of Certified Public Accountants, System and Organization Controls (SOC) is a third-party verification certifying that a set of criteria ensuring a wide range of security controls are in place within a company including technical, corporate, legal and software development controls.

Having an independent assessment of their security safeguards is a cornerstone of trust, covering five total trust service principles (TSPs): security, availability, processing integrity, confidentiality, and privacy. Led by a team of 140+ domain experts, Transcend addresses an array of complex financial, operational and regulatory concerns challenging collateralized business in the capital markets industry. For more information, visit www.transcendstreet.com.

Rates & Repo Preview: Repo economics and Settlement venues

Globally, interest in repo CCPs is growing, to some extent because of regulatory actions. But how does it all fit together when considering both traditional and newly emerging business models? Ahead of our upcoming Rates and Repo conference, we speak with our panelist experts about exciting new prospects as repo modernizes, as well as warnings to manage expectations between buy- and sell-sides.

In the repo world, one major theme is the continued progression of trading models and a “mutually beneficial evolution” of values between the sell- and buy-sides. And that is moving the market beyond traditional uncleared repo in a dynamic economic backdrop, said Jeff Sowell, repo trading and product development for Financing and Collateral Solutions at State Street.

Sowell points to the success of FICC’s sponsored repo in the US as an example. State Street was among the first sponsors to join and remains one of the largest participants. With banks increasingly providing access, Sowell noted that the team differentiates by including as many jurisdictions and entity types as possible given appropriate governance; providing access to late-day liquidity, even after the Fed’s reverse repo facility closes, particularly for cash investors; and offering ancillary services beyond repo.

Given the increased workload on the front office, there’s a lot of value that banks can provide clients, Sowell said, listing services such as standardized legal agreements, access to multiple counterparties in one set of documents, reduced counterparty risk, electronic trading, straight-through processing on the back end, collateral management and regulatory reporting.

State Street has also been at the forefront of developing peer to peer repo, which he noted needs to be more than a trading only solution if it is going to grow into a scalable, self-sustaining, liquid marketplace: “In order for repo models to continue to progress, it requires a partnership between the buy-side and the sell-side to mutually drive these models forward. The sell side can’t create a solution in a vacuum, it has to work for the buy side, and the buy-side cannot just conceive demands and expect that the sell-side can accommodate it.”

Triparty’s unfinished business

The traditional business model of triparty is one area getting a significant shake-up from digitalization trends. Triparty has been a huge driver of efficiency in the financial system because it provided a collateralized construct without a lot of operational overhead, but the next level of evolution comes when clients can optimize collateral across multiple triparty agents and other venues, like CCPs, said Bimal Kadikar, CEO of Transcend.

Kadikar also noted that interoperability across triparty agents has been a huge client demand for a long time but has not happened yet due to a variety of factors. It’s not clear that these issues can be solved directly by triparty agents, and consequently clients still need to address them. That means newer entrants such as tech platforms or DLT-based players will be expected to address that gap, which could potentially impact business models.

Transcend is helping clients to optimize collateral across triparty agents using innovative optimization algorithms and directing movement of assets across agents through clients’ operational infrastructure to achieve enterprise level efficiencies.

Among triparty agents, there’s headway on how digitalization and related technologies will help, but the bottom line is that the level of data and technology integration or “cohesive ecosystem” required does not exist today amid an increasingly urgent need for sophisticated execution of cheapest to deliver collateral that incorporates many more advanced factors, such as: customer vs firm collateral and liquidity coverage and net stable funding ratios (LCR/NSFR), Kadikar said.

“(The) industry has been asking triparty agents to be interoperable for years. A lot of current discussions indicate that Blockchain and DLT will make it easier, but I am not convinced,” said Kadikar, adding that the interoperability problem is solved by clients today but somewhat inefficiently. Moreover, ESG integration can be expected to gradually become an important demand, and while there is an early response from triparty agents, it remains simplistically focused on exclusion lists.

At the same time, there’s yet unfinished business with more vanilla technology, such as APIs: “APIs continue to be a prominently important and critical topic, it just needs the right level of investment from each of the triparty agents for it to work to the right level. And it will be important whether you (have) traditional assets or tokenized assets.”

Integrated verticals and buy-side repo clearing

While triparty has seen a surge of interest from Uncleared Margin Rules, another major development gaining steam this year  is non-bank participants – pension funds, insurance companies, asset managers, hedge funds — trying to access centrally cleared repo markets in Europe, a trend that might be as much as a decade behind the US, said Frank Odendall, head of Securities Financing Product and Business Development at Eurex.

“All these different buy-side entities suddenly have shown strong interest to connect,” he said, identifying factors behind this such as interest rate volatility, economic shocks associated with energy markets and the Russia-Ukraine conflict, and inflationary pressures.

Eurex runs a repo trading venue, Eurex Repo, and central clearing facility, Eurex Clearing. In addition, Clearstream, the ICSD and settlement venue for Deutsche Börse, facilitates single ISIN repo, triparty repo as well collateral management for repo trading and margining. This integrated model has a lot of efficiency benefits, he said.

In July, Eurex extended the repo clearing service to leveraged funds, and now has 11 buy-side firms representing about $1 trillion in assets on its cleared repo model, called ISA Direct. FICC’s sponsored model has some 1,900 buy-side Legal Entities meanwhile and has been live since 2005 by comparison.

Some firms stay away from cleared repo because of haircuts and margin requirements. But that simplistic calculation does not take into account extra services like access to intraday liquidity management, a topic that is going to become more prominent as the US moves to T+1 settlement and firms become even more challenged to raise cash on a compressed settlement cycle, Odendall noted.

“We provide, through the integrated system of trading and clearing and interlinked with the settlement locations, a mechanism to address one of those key challenges,” Odendall said. “That feature [same day settlement] is used every day significantly to raise money or place money…we settle billions every day in 30 minutes.”

Guaranteeing repo across the pond

Earlier this year, Bloomberg, Euroclear and Sunthay announced an initiative to launch guaranteed repo in the US, which combines two ideas: bank balance sheet relief and an alternative to how US repo settlement works today. It can be compared to indemnification in a peer to peer model.

Shiv Rao, chair of Sunthay, said that the model was some six years in the making, with early versions arising during his time at Barclays and Wells Fargo. This latest guaranteed repo venture aims to “industrialize” the early structures that he previously innovated, explained Rao. He further noted that Bloomberg’s and Euroclear’s involvement are central to creating scalability for the model.

He is keen to note that the Securities and Exchange Commission’s proposed rule for mandated clearing does not extend to guaranteed repo. Rao believes that the model reduces systemwide leverage and addresses contagion and concentration risks through a market-developed global solution, and that public policy goals to enhance resilience are furthered by excluding guaranteed repo transactions from clearing mandates.

“Euroclear is offering a service that brings much of the functionality of triparty to the bilateral DVP settlement market. Guaranteed repo reduces systemwide intraday liquidity demands and cash and collateral movements, which reduces costs for everyone, but also offers an alternative to the concentration that happens in Bank of New York,” said Rao. “Additional solutions are good for the market.”

Shiv, Frank and Jeff will be joining colleagues from DTCC and BNY Mellon on the panel “Repo Economics and Settlement Venues” at Rates and Repo, when they will discuss these and other major market trends. Transcend’s Bimal will be joined by experts from BNY Mellon, J.P. Morgan and Pirum for a panel discussion on “Developing the Triparty Business Model“. Rates & Repo is a conference for cash investors, dealers, market intermediaries, technology firms and other service providers. 

For Original Publication: Finadium Rates and Repo 2022

Transcend featured among Global Custodian’s Best of the Best – The fintechs shaping the future of securities services

Transcend enables capital markets firms to optimize collateral, funding and liquidity through innovative technology.

Notable partners and collaborators: Wells Fargo

Global Custodian interviewed Transcend founder Bimal Kadikar in February this year and discovered the story behind the start-up establish in 2013. He explained how – during his time at Citi where he led an initiative called CLM [collateral, liquidity, and margin] – he came across an opportunity to do something entrepreneurial after spotting gaps in collateral processes and disconnections between teams. This was leaving potential savings on the table.

“As you know, at that time [2008/2009] liquidity was a very, very big deal for many of the large players,” he explained. “The work that we did on that with a relatively small budget and in a relatively short timeframe went all the way to the board. That was surprising, because in big banks, unless you’re spending a billion dollars on technology, the board doesn’t really see these things. Here we were spending less than $2 million and our work was going to the board. I knew then we were onto something and I guess the techie in me always wanted to do something entrepreneurial.

“With Transcend, we always knew we wanted to focus on this space, which was evolving rapidly. It was very confusing, everybody had different ideas about where it was going to go. That’s where I got excited, because it is complex, it’s difficult and it cuts across silos.”

Regulatory and economic factors post-financial crisis have imposed much stricter requirements for clearing as well as collateralising uncleared transactions to de-risk the financial system.

These drivers have resulted in convergence of collateralised businesses such as equity finance, fixed income repos, cleared (CCP) margin, uncleared (UMR) margin, and prime – to name a few – to coordinate with each other to drive efficiencies at the firm level.

While each of these businesses has an operating platform and set of systems, it is difficult for firms to holistically view collateral, liquidity and funding dimensions across all of them. As a result, valuable collateral may be trapped in silos resulting in significant real and opportunity costs for the firm.

Transcend says its own client experiences indicate that there is 10-15 bp of efficiencies that can be unlocked if firms can mobilise these assets for appropriate uses. The fintech looks to helps its clients by providing analytics, optimisation and automation solutions that can be applied at a business level and scaled across the enterprise.

“This space (intersection of margin, collateral, liquidity & funding) is undergoing a series of changes, from greater transparency and wider adoption of optimisation tools to a growing reliance on data and the emergence of ESG,” the firm tells Global Custodian. “Amidst all of these changes, Transcend has positioned itself at the centre, setting the industry-wide standard for optimising inventory, funding and liquidity decisions and delivering unparalleled innovation for both the buy and sell-side.

To accelerate and realise its mission, Transend has grown its team 35% over the past 12 months, including hires with backgrounds at Morgan Stanley, FIS and CME.

There have also been a number of launches such as the industry’s first optimisation solution that holistically and seamlessly integrates ESG criteria into collateral workflows and analytics and Eligibility Central, an end-to-end platform that delivers access to real-time collateral eligibility information and analytics that empowers clients to accelerate critical collateral functionality, such as optimisation and mobilisation.

Please refer the actual publication here: Global Custodian 2022

Transcend shortlisted for Collateral Management Solution of the Year 2022

After over 120 entries have been reviewed, the FOW International Awards shortlist has been released.  The winners will be unveiled at a Gala Dinner in London on 7 December.

For Original Publication , Click here: FOW Awards 2022

Transcend looks to meet its new buy side goals with its suite of products

Jeff Kidwell – Sales Director North America talks to Global Investor Magazine on Transcends Buy Side strategy for 2023. Helping clients gain better risk management and revenue production through Transcend’s tailored suite of products.

One of Transcend’s focal points for the next year will be to engage more with buy-side firms, the New Jersey-based firm has said.

Jeff Kidwell, director of sales for North America told Global Investor the securities finance space is more focussed than ever on collateral, funding and liquidity optimisation.

He said: “When it comes to Transcend priorities for 2023, first the company is going to be focusing on the penetration into the buy-side, and the aim is to help clients gain better risk management and revenue production through this greater visibility, better decision making and better execution with this tailored suite of Transcend technology products.”

The second aspect the firm will be concentrating on is aligning interoperability with the growing complexities and costs associated with collateral management and centralising decision-making capabilities for these clients.

“We want to move away from the traditional siloed decision-making, a trend that has been emerging lately, particularly on the buy-side,” said Kidwell.

“Transcend also aims to mitigate the growing complexities and costs that firms are facing, including the use of cash collateral and margin across various venues and rising triparty and central counterparty clearing house costs. This will help clients manage inflation, market volatility and all the regulatory challenges such as T+1 for greater portfolio returns,” he added.
The firm additionally intends to expand its global footprint in 2023 across many business lines, Kidwell said.

He said: “We intend to grow in Europe, Canada, and expand Asian customer base as well. There is a growing appetite for collateral optimisation tools in these markets so it’s a great opportunity for us to expand our business. I have joined Transcend amidst significant growth of both its client base and its team and there is heightening demand for its modular and customisable solution.”

Finally, in terms of environmental, social and governance (ESG) aspects, Transcend is one of the first companies to launch a solution that seamlessly incorporates ESG criteria into collateral workflows, according to Kidwell.

“Our highly flexible suite, which includes our eligibility product are able to incorporate ESG and this is something we will continue to build upon into 2023,” he concluded.

For Original Publication: Interview with Global Investor

Industry Expert Jeffrey Kidwell Joins Transcend to Expand Business

New York, NY; September 27, 2022 –

Transcend, a leading provider of optimization solutions for liquidity, funding, and collateral, has appointed Jeff Kidwell as Director of Sales for North America. Kidwell will focus on growing Transcend’s securities finance footprint in North America and will report to Transcend’s Head of Sales & Business Development BJ Marcoullier.

“Transcend has seen tremendous growth over the last few years, which is a result of our strategic investments in product, technology & people,” said Marcoullier. “As we look to scale this momentum, Jeff will help us continue our growth in the securities finance marketplace.”

Kidwell has been an active senior architect in the securities finance industry since 1982. From 1982 to 2004, he served as Executive Director of Morgan Stanley’s North American repo desk. In his career, he has held the roles of Co-Head of the Global Repo Desk and Managing Director for Cantor Fitzgerald.

Most recently, Kidwell was the Founder and Head of Direct Repo at AVM Inc, a registered broker-dealer in Florida, prior to running his own consulting firm Kidwell Consultants, LLC.

“I’m looking forward to building on Transcend’s success of driving efficiency and innovation in the collateral optimization space,” explained Kidwell. “It’s exciting to be a part of the Company’s continued growth as a critical enterprise solution for collateralized businesses.”

“Jeff is coming on board during a time when the securities finance space is more focussed than ever on collateral, funding & liquidity optimization. The demand for innovative solutions is driven by rising rates, regulation, and market complexity. Jeff’s 40+ years of expertise will be a great asset as we continue to grow our market presence and deliver solutions addressing these burgeoning challenges,” said Bimal Kadikar, Founder and CEO of Transcend.

Transcend has grown its service offering and its global team this year, most recently appointing Jonathan Hodder as Director of EMEA Sales.

 

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, optimization, 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.

 

DLT, data strategy in focus at Finadium’s NYC tech conference on Sept 13

Our Finadium technology conference in New York next week will examine how Data and digitization technologies are changing the securities finance and collateral markets. We speak with sponsors Transcend and EquiLend for a preview on what highlights attendees can expect.

Since the credit crisis, regulatory requirements have aimed to derisk financial markets as much as possible through clearing and collateralization and the consequences have been an integration across desks that used to be siloed, such as equity finance, repo and derivatives. This has caused a broad swathe of the market to seriously question what a data strategy for the new world looks like, said Bimal Kadikar, CEO at Transcend, who will be speaking on the “Data Strategy, Liquidity Management and Reporting” panel.

Typically, the information that’s needed are data points from trades, positions, reference data, legal entities, prices, accounts, among others, but what is different now is that they all need to be aggregated and harmonized across businesses, Kadikar explained. One way that is manifesting is in the need to understand how to prioritize securities across triparty agents and CCPs for optimal collateral allocations across these venues.

There is some cautious optimism that the financial services industry is at the tail end of implementing the most cumbersome regulations over the last decade, and now is the time to understand how to derive value and drive business benefits, he added.

“Getting it right will position you for significant savings and the funds that are going to be able to make the most efficient set up are going to have a fairly significant competitive advantage because they will be able to price more effectively and they will be able to drive profitability much better than people who don’t have that granular level of visibility and control,” Kadikar said.

Any competitive advantage is going to be underpinned by a collection of technologies that organizes both internal and external data in a firmwide approach, which he describes as a “network of connectivity in alignment” that boosts decision-makers’ capacities.

“That is easier said than done, but that is the challenge that needs to be solved,” said Kadikar. “In the current environment, especially rising rates environment, the value of this investment significantly increases too. What we are seeing across clients is that there is a lot more focus in getting this done and there’s a lot more urgency about the business benefit rather than just the regulatory compliance that we saw a year ago.”

A new DLT opportunity

Last fall, EquiLend convened a working group of ten firms from across the securities lending market to better understand how a digital strategy should be tackled. The overwhelming vote for a use case was to eliminate reconciliation, a major pain point in the industry, said Gary Klahr, director of Strategic Initiatives at EquiLend, who will be speaking on the “Next Evolution of Digitization” panel.

Ultimately, this led to EquiLend’s distributed ledger technology (DLT) initiative, 1Source, which is currently in a design phase to ensure that the technology is “fit for purpose” across lifecycle events, Klahr explained.

“We are focused initially on trade initiation, on rate changes, on pricing, settlement information, returns and recalls, and there are placeholders for a number of other lifecycle events in the future,” he said.

The promise of DLT is that contract details are always matched, as DLT distributes changes and updates counterparties to a trade in near real-time fashion, with a universal source of reference data. The expected benefits are a boost to trading desk productivity because the golden source data is consistent across counterparties and facilitating firms.

For the near term, EquiLend is looking at using smart contracts deployed on a distributed ledger, designed to be interoperable with blockchain and other initiatives, Klahr said, noting that having separate and disparate systems are the root cause of quite a number of the inefficiencies in the marketplace. “Shared data and collaboration is going to allow us to achieve things that we didn’t think of before,” he added.

Finadium’s upcoming conference is Finding New Frontiers: Data and Digitization in Securities Finance and Collateral Technology, taking place on September 13 in New York. Attendees across product development, technology, strategy and innovation teams can expect a content rich experience in addition to New York’s tradition of industry networking.