Justin Thiron joining Pirum represents your first onshore North American presence. Why have you chosen now to establish an office in the US?
Phil Morgan: Until now, Pirum’s entire team has worked together based in London. That has enabled us to build our products in an efficient, agile manner in response to client demand giving us a record in delivering real business benefit through innovative post-trade services. These services, however, have traditionally been utilised for international securities finance business. With recent developments in our product suite driven by both client demand and expected changes in industry practices, these services are now as relevant to the Canadian/US market as much as our traditional International market.
We have been looking for the right person to join our team for some time, and feel we have found the right credentials in Justin. He has excellent market knowledge, having worked at institutions such as Northern Trust and J.P. Morgan, great industry connections, and in-depth knowledge of service provider offerings.
Can you elaborate on the products?
Morgan: We have developed a rich interface with DTCC enabling the automation of special payment order (SPO) charges and planning transparency of real-time trade lifecycle. SPOs are the result of key post-trade processes such as billing, mark to markets, income collection and the prepayment of cash for non-delivery versus payment trades. For the majority of market participants, the current SPO process is manually intensive and operationally risky. The product has been very well received.
We remain hopeful the proposed US SEC Rule 15c3-3 changes allowing use of equities as collateral will happen in the near future. This makes our exposure-related services as invaluable for US market participants as it has become for the rest of the world, particularly our triparty required value (RQV) service, which is a single solution that calculates, reconciles and processes RQVs across all counterparties (whether users of Pirum or not) and all triparty agents (BNY Mellon, Euroclear, J.P. Morgan and Clearstream). Clearly, the use of non-cash collateral is common practice in Canada so we have a ready-made solution for participants there.
While the Securities Financing Transactions Regulation (SFTR) is an EU regulation, its rules have significant extraterritorial effects. SFTR transaction reporting will apply to counterparties established in the EU, their branches outside the EU and to EU branches of third-country counterparties. Therefore, there will be a requirement for firms in North America to comply in terms of data. We believe that our joint solution with IHS Markit provides the most comprehensive solution for market participants to meet their regulatory obligations. We will continue with our automated connectivity hub philosophy, allowing our clients to seamlessly connect to the various infrastructure providers in the North America as well as internationally. This includes connectivity to new venues including Collex and Elixium, which will be actively trading in North American securities.
Will Justin be working alone?
Morgan: Rajen Sheth, Pirum’s CEO, and I will continue to be in New York on a monthly basis and clearly our first hire is for the business development role. This will soon be followed with client support and service delivery experts, and over time, with further relationship management hires and perhaps developer roles. We are extremely excited by the opportunities in North America and will resource sufficiently to assist our clients.
How will your connectivity hub aid the North American markets going forward?
Morgan: We will leverage the connectivity we have already built that would be applicable to markets on this side of the pond. For example, the trading venue connectivity will allow clients to trade US products once they are live at the venue. Connectivity to the triparty agents will support US forms of triparty as it evolves. The same can be said for regulatory reporting, central counterparties and indeed other connections in the pipeline.
Justin, you left a service provider six months ago. Why have you chosen to stay on that side of the market?
Thiron: Pirum has always been viewed as a global leader at the forefront of technology in the securities finance market. They are respected for their agility and foresight regarding the needs of the industry.
I was impressed with the clear vision of providing value added solutions to our clients, which includes rolling out new products and forming strategic partnerships with other complementary vendors. As I was weighing up options on new opportunities, I was incredibly impressed with the experienced talent at every level of the company.
Pirum is clearly on an accelerated path to grow their product and client base globally. This message and strategy is fully understood by all staff members and supported by the senior management team as well as many of its clients.
I am fortunate to be the first person on the ground in the US. My experience with an operations and project background, as well as a technology vendor, put me in a unique situation to understand the market needs and make an immediate impact at Pirum.
I have the opportunity to lead the growth of business in the US and Canada, as well as expanding the team in New York and beyond.
Pirum is fully committed to rolling out US-specific product solutions and has listened to its clients around the need to offer local service. Personally, I know it is a great entrepreneurial opportunity with the full backing of a successful company and a solid established client base.
It will be my role to work with our clients to ensure we complete Pirum’s evolution into a global connectivity and automation hub.
What industry trends are you seeing?
Thiron: There is increasingly a requirement to do more with less. Participants in the secured finance space are increasingly looking to automate and reduce manual intervention at all points in the value chain. Clients are becoming more comfortable in utilising service providers to resolve non-differentiating problems via technology.
Furthermore, the market is looking for one macro and consistent solution to their multi regional issues, with transparency and connectivity becoming paramount in their decision-making process
A trend that is consistent in US and Canada is the management and optimisation of non-cash collateral and overall financial resource management. The continuing rise of non-cash collateral, and potentially equity collateral, in the US will bring unique challenges for the post-trade and collateral management teams. Pirum’s offerings have always allowed for a single process globally, regardless of collateral type, which can provide an immediate solution for growing issues with non-cash mark to markets, triparty RQV, and other services.
Also while SFTR is viewed mainly as a European issue, it will affect banks and brokers globally that trade or have clients in those markets. It is widely believed that it will likely result in considerable changes to market practice and processes in the coming year. As a result, the industry welcomes comprehensive vendor solutions such as with Pirum and IHS Markit that simplifies the overall complexity of the problem.
In summary, there is much to do, however, I am hugely encouraged by Pirum’s ability to assist the market in gaining efficient and effective resolution of these challenges.