Securities finance fintech firm Pirum has had US-based clients for years but recent regulatory changes out of Washington are forcing US firms to employ scalable, efficient and transparent processes especially when engaging in intra-day collateral management.
Pirum built its name largely in Europe but the London-based firm is looking to expand aggressively into the world’s largest capital market and help firms in the Americas deal with the plethora of new challenges they face.
The firm has seen increased demand for its real-time services that include trade compare, marks, returns and exposure management.
This demand is not limited to the US however, as Pirum is also exploring opportunities in the Americas region more broadly, including Canada and Brazil.
Philip Morgan, who joined Pirum in late 2016 as its global head of business development from Nomura where he was a managing director of prime services, said the firm has responded to meet this increasing demand.
He said: “Pirum is working with its clients to assist further automation in the Americas after establishing a strong footprint in the international space. Pirum has made several strategic hires in order to establish a well rounded team in New York that boasts expertise from operations, middle and front offices as well as product development and senior executive level cover. “
Pirum made a strong statement of intent in April 2018 when it expanded its New York team with the addition of four experienced prime services and collateral experts.
Kristen Dove, former vice president of prime services at Itau BBA Securities, joined to headup Pirum’s business development across the Americas.
Dominique Rose, a former operations and middle office professional from Morgan Stanley and BNP Paribas, took charge of client services in the region, while Edward Sharpe moved from London to New York to develop Pirum’s product suite for the American market.
Sharpe, formerly of BlackRock and Merrill Lynch, has worked in client services and product development roles at Pirum’s UK office since 2014.
Additionally, Jim Malgieri, a former BNY Mellon senior executive, has joined Pirum as a strategic advisor.
Dove believes now is the right time to make a push to further expand in the Americas:
“Regulatory changes in the US market have resulted in a renewed focus on effective collateral management and cost reduction. The appetite of US clients to ensure post-trade STP between their counterparts and collateral venues has grown and we’re seeing US domestic entities wanting to match the level of automation already achieved by their international counterparts.”
Pirum aided by Sharpe has developed its core technology platform to handle some of the unique features of the US market, including a real-time gateway with DTCC connectivity allowing fully straight-through processing of security payment order (SPO) activity.
Sharpe said: “As we’ve seen over the last several years, fintech is becoming more relevant to the banking industry as a whole. Automation of post-trade processes not only reduces cost, operational risk and balance sheet management, it also enables more time to focus on different trading strategies and therefore boost revenue generation.”
He added: “Many firms are now looking to external providers to provide non differentiating services at significantly reduced costs vs internal builds and focusing internal efforts and expertise to building differentiating solutions giving them competitive advantage and generating alpha.”
The US is the main hub of Pirum’s new Americas team, but they are also looking further afield to Canada, Central and South America.
Canada, for example, is a significant player in the securities lending market, with over $800bn in assets available to lend, and as a AAA-rated country, demand for its government bonds is strong.
The increase of automation and transparency on a global scale, as well as increased use of non-cash collateral has brought more Canadian lenders to the market looking to generate revenue through securities lending programs.
Similarly, Pirum has had Brazilian clients for years, but the B3 Exchange (formerly BM&F Bovespa) deployed in August 2017 a standardised daily trade reporting module that provides a confirmation of securities finance transactions.
This presents an opportunity for Pirum to work with Brazilian clients to provide them with trade reconciliation between the output file and their own trade records.
Morgan said: “The securities lending industry is becoming increasingly global, not only from a market coverage perspective, but also within each respective institution. Naturally, firms are requiring increased transparency of deployed and available assets & collateral in a global, enterprise-wide view.”
He continued: “This enables traders to make the best decisions from both a revenue as well as a regulatory standpoint, which naturally breaks down product and regional silos. With the expansion into the Americas, Pirum has adapted to meet this global requirement.”
To find out more about what Pirum can do for your business, please contact Kristen Dove, Head of Business Development – Americas firstname.lastname@example.org, +1 917 341 5508