Tony Bisegna: Well, thank you, Patty and Gino, for joining today. Today we're going to talk a little bit about securities lending, particularly the agency lending program. Gino, maybe we'll start with you and talk a little bit about the strategy for the business and how technology is impacting it and where you think the current themes are and what's going to be changing as we go forward.
Gino Timperio: Yeah, sure. I mean, I'll talk about the IT process first. And so probably three key themes there. One would be giving the traders performance analytics just to understand what the market's doing, ship level data, just to be able to create alpha for the clients. Clients are really looking for alpha. GC used to be a phenomenon 10, 15 years ago. Yes, I've been in the business for a long time today. It's really warms and specials and what truly the intrinsic value of the assets are. The second point I would say, and I was a risk professional for a long time, so this is near and dear to my heart. But just ensuring that technology can create real time analytics for someone to manage counterparty risk, liquidity risk. This intraday exposure, especially as we run a 24-7 operating model. And the third piece that we're really excited abouzt is creating innovation for clients. So we launched a venture peer to peer program. What that really does is create a buy side empowerment where and think about an asset owner facing off with a sovereign wealth fund and so forth. That's really never happened before in scale. And so really what we're trying to do is from an overall strategy perspective, is leverage technology to differentiate us in a very fiercely competitive marketplace and so forth. But at the end of the day --
Tony Bisegna: There's a big theme now across global markets. We're seeing a lot of different asset classes and certainly in your business as well.
Gino Timperio: Yeah, exactly. I mean, if you think about it, you know, in the past a lot of this used to be centered around the sell side and so forth. So we're really trying to do with peer to peer network is to say that can be maintained, but there are incremental opportunities that the buy side could could basically be empowered to advance. Again, my example of an asset owner of sovereign wealth fund insurance company and so forth. So I think peer to peer is only here to stay. And the early origin of that concept.
Tony Bisegna: Patty you're here relatively new as well. And when you look at the agency lending business, what do you see the opportunities for growth? What do you think the key themes are with clients? What's really important to clients going forward and what are they focused on?
Patty Hostin: I think there's two main things that are reshaping the landscape for agency lending. One is market structure changes and the other is the evolution of technology. And to parlay off of Gino's point and the peer to peer space regulation is really reshaping how our trading counterparties are financing themselves and their clients. They're looking to optimize their business and face off against trading counterparties that can offer them a number of different financing solutions. So our direct access platform is a really, really good example of a market leading solution where our clients can trade with their peers, peer to peer in a fully scaled manner.
Tony Bisegna: So when you your background coming from the buy side and running securities, lending in a buy side shop. Now on the sell side, what do you think the benefits are of outsourcing that to the sell side versus the buy side doing it?
Patty Hostin: Outsourcing?
Tony Bisegna: The securities lending instead of doing it in-house within an investment manager, doing it themselves, outsourcing it to a sell side provider.
Patty Hostin: So the scale of operation, I would say, is the primary core strength of someone like a State Street can offer relative to someone doing it in house. Our electronic platform as an example, we price nearly 30,000 securities a day, real time across 35 trading markets with 150 trading counterparties, and that's across five global trading desks that are situated near our clients and our counterparties. The scale in which we operate, the flexibility of the program, separate accounts so that clients can choose their risk return profile is just second to none. The scale in which we're able to operate in the flexibility that we're able to give to clients.
Tony Bisegna: That's great. And Gino, as you look at Prime Services now and Agency Lending and even our repo business, how do you see all these businesses fitting together?
Gino Timperio: Yeah, at the end of the day, it's a good point, Tony. At the end of the day, the client wants to understand how do I create scale in my financing solutions? So the extent that we can offer an agency program, a principal program that goes to the end user and also offer repo capabilities on either side of the trade, maybe I would summarize it this way. The client should look at their portfolio of either securities or cash and think about how do I optimize this? And I think we differentiate us in the marketplace by the three products that you just highlighted there agency lending, principal lending and repo financing. A client can be they either pledge cash or pledge securities. And so we do that on scale. We just, you know, we just went through a whole spectrum of we deal with 30,000 securities a day and so forth. Our scale allows the client to basically entrust us as a trusted partner in that space.
Tony Bisegna: And a question for either one or both of you, when you look 2 or 3 years down the road, what do you think the business will look like? How? Do you think it will evolve or it will be the changes in it?
Patty Hostin: I think change will continue across the industry. There'll be a call for even further flexibility of offerings. So clients are evolving, just like just like we are. They're going to require further proxy voting, ESG, more restrictions and limitations in their program. So those are all things that we're going to be building in to the program. But on top of that, regulation will continue to change. It will continue to reshape the industry, and there will be a call to operate in a very flexible way with trading counterparties who are looking for solutions, providers. The breadth, depth and scale in which we operate in the market with our trading counterparties make us a one stop shop for solutions, providing financing solutions for our counterparties.
Tony Bisegna: I like the solutions angle here because you look across markets, that's been our biggest strength. Be able to partner with our clients, find solutions to solve problems for them and build that long term relationship with them. So I'm glad to hear you focusing on that.
Gino Timperio: And Tony, I'd add one thing. Maybe clients are going to be really sophisticated in terms of the risk adjusted return. So those providers that invest in technology and risk infrastructure are going to be the winners going forward and so forth. To your point, it's creating solutions for clients. At the end of the day, clients see us as a partner and you have to invest in risk and technology in my mind, to be able to partner with clients.
Tony Bisegna: Great. Well, thank you for this. It was very informative and thank you.
Gino Timperio: Thank you. Thank you.
