GC Interview: Roy Zimmerhansl, Global Head of Securities Lending, HSBC Securities Services

Earlier this week, HSBC Securities Services relocated Roy Zimmerhansl, global head of Securities Lending, from London to Hong Kong. Regarded as a veteran of the custody industry and a GC Legend, his move signifies a huge shift in attitudes towards the securities lending market in Asia, particularly China. Global Custodian spoke to Zimmerhansl about his move, the motives for it and is coming up next.
By Joe Parsons(2147488729)
Earlier this week, HSBC Securities Services relocated Roy Zimmerhansl, global head of Securities Lending, from London to Hong Kong. Regarded as a veteran of the custody industry and a GC Legend, his move signifies a huge shift in attitudes towards the securities lending market in Asia, particularly China. Global Custodian spoke to Zimmerhansl about his move, the motives for it and is coming up next.

GC: With you moving to Hong Kong, what is the job now for the London team?

RZ: Effectively what we have been doing is building out the team that is going to take us forward on the development program. That is fully in place now, budgets have been secured and now the job for the team in Europe is getting on with it, i.e. implementing technology, adding new markets and new transactions structures. It is now about execution.

GC: Where do you see the securities lending market going? Is Asia now the main focus?

RZ: There are two things: one, from an investor point of view Asian institutions are the ones that are asset gathering the fastest. Whereas you have had a lot of large institutional investors in the securities lending market in Europe and North America for quite some time, it is only a fairly a very recent phenomenon in Asia whereby institutional investors are growing their asset pools. Asia is particularly well suited for HSBC. It is not only the investor-based that is growing here but we have deep relationships with these organizations.

Since the business itself is very much a secondary activity, it ties in to what’s happening in the market place. If you look at the Shanghai and Shenzhen markets, by market turnover they are two of the top 10 stock exchanges in the world. In China, securities lending is only allowed domestically right now, but we see that market evolving. Especially with the Shanghai-Hong Kong Stock Connect and opening of the Chinese market, we want to a part of that discussion to opening up securities lending there.

Europe, from a market and trading point of view, is still adapting to the changing regulatory environment, whereas Asia is about growth and expansion.

GC: Where do you see growth opportunities in the securities lending market?

RZ: Since Lehman, European securities lending volumes have been relatively static. But having said that, collateral transformation trades have grown really dramatically in response to regulatory changes. That is a market that is growing strongly and one we are working hard to be a part of and increase our market share.

GC: What future role could HSBC play in collateral management?

More business activities require collateral as part of the process. The challenge is to make certain the right collateral is in the right places at the right time. Typically investors are on the side of having good collateral, such as sovereign bonds, waiting to be borrowed, so they’ll have the supply and investment banks will be coming in to borrow from them as pieces of collateral. Increasingly clients are short of collateral and need to get it themselves, so part of the future will end up being a peer-to-peer type business where we have institutional investors that are long collateral, and others that are short collateral and HSBC will act as a match-maker for the two.

So the future of collateral management, whether that is in Europe or Asia, is really in its early days. There is no one single clear pathway, it is often client-dependent.

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