2012 TOP INTERNATIONAL OPERATIONS EXECUTIVES:
Christopher Jaynes Cuts Out Custodians
December 20, 2011
If a fund manager could eliminate the custodian bank as agent when it lends securities to a broker overnight, would it earn more?
That was a pretty bold question back in 2000. At that time, pension and other plan sponsors simply relied on their fund managers to, in turn, depend on their custodian banks to lend their securities to borrowers. That is to say, brokers dealers. The presumption was that their custodian banks would get them the highest return for those assets.
“When we were trying to establish a securities lending program for portfolios managed by United Asset Management, we determined that securities lending should be treated as an investment management and trading discipline rather than an operational function as it was viewed at the time,” says Chris Jaynes, who was then senior vice president of that fund manager’s global securities lending unit and is now head of eSecLending, a startup in electronic services for securities lending.
Here's how Christopher Jaynes went about cutting out custodians, with electronic communications.
