S.F.A. Podcast: Interview with Matthew Brunette, Darren Crowther, Nehal Mehra, Justin Lawson, Sohee Kim and Roy Zimmerhansl

But first, it is a pleasure to welcome back Matt Brunette from Norges, still the world's largest sovereign wealth fund.

Did I read that recently? Surpassing $2 trillion in assets? You read correctly, yes.

That is an insane number.

Now, just from a macro perspective, any recent trends that you're seeing or hearing about, less maybe about indemnifications, maybe a new subset of collateral, directed trades, balance sheet concerns, anything in vogue?

Yeah, I mean, I did coming into this reflect back on what we talked about one year ago at PASLA Macau, right? At the PASLA conference in Macau.

One top of the list would be the Dodgers are still world champions two years in a row.

Stick it right to me.

Got it.

I was also thinking we maybe need for the region here to go more of Asian sports analogies.

But then I also thought that the Dodgers wouldn't have done it without Shohei Otani.

Very heavy Asian presence.

Besides that, I think it's more continuations of themes that had... had already started well before even Macau.

And one of those is firms like ours or large lender institutions wanting to develop their products more, wanting to do a few more things themselves, expanding their toolkit into other products, from stock loan into TRS, bringing repo, all these things as different routes to market.

And I see that as a result of if we had visuals on, this is a podcast, so we can't see graphs, but if you look at your portfolio return or your yield from securities lending, that's crept downwards kind of to the bottom right-hand side if you're just passively lending your securities as you've always done.

So people in my place have to look at this has become a very competitive industry.

There's lots of supply.

How do I differentiate my strategy and my product? And you start adding other routes to market that maybe have a bit more value in certain places on top of agency lending.

And again, those being TRS, repo, maybe CCPs or some variants of those.

Yeah,

excellent

point.

Now, This is theoretical, of course, but the effects of APAC moving to T1, which is coming soon to EMEA, I assume to some degree it will constrict the supply in APAC when it happens.

As a majority of agent lenders will have to protect themselves against sell fails, meaning potentially they could reduce their inventory on the street.

Basically, less profit, more risk.

Is that how you look at it? I don't know if I can comment on the industry as a whole and how the average lender or even average agency lending program, but I can comment on our processes, of course.