Northern Trust the $1.2trn asset manager with assets under custody/administration of $11.2trn, has developed a pricing 'engine' that uses machine learning and statistical techniques to better forecast the rate to loan securities in the securities lending market.
The solution seeks to reference data points from multiple asset classes and regions to project demand for equities in the lending market. Northern Trust lending traders are then able to use these projections along with other market intelligence to automatical generate lending rates for 34 global markets to borrowers in its network, increasing revenue opportunities for clients that are lenders.
Pete Cherecwich, president of Corporate and Institutional Services at Northern Trust, said: "Northern Trust continues to invest in emerging technologies to bring enhanced value to our clients. The use of machine learning in our global securities lending business enables greater pricing efficiency that helps clients improve revenue across portfolios. This enhances Northern Trust's broad suite of securities financing capabilities, providing borrowers with highly automated, low transaction cost trade execution solutions in this cost-conscious market."
Northern Trust said that as of the end of June this year, there were some $1.2trn in lendable assets for more than 450 clients globally.
Dane Fannin, head of global securities lending at Northern Trust, added: "With this latest advancement, we have created an infrastructure and analytical framework that can intelligently adapt to changing market conditions. Our technology assesses market demand across thousands of securities and allows our traders to extract better returns for our clients. The potential benefits from machine learning techniques extend beyond this initial application, and we will continue exploring and developing solutions that drive value for our clients."