Pershing digs into its big data plate to find securities to lend

Custodian's “Lending Ball” tech tool finds matches for securities lending

Jun 17, 2014 @ 12:01 am

By Joyce Hanson

It looks like big data will soon arrive on Pershing's NetX360 platform for advisers and their clients.

A new tech tool from Pershing called “Lending Ball” — a play on words based on Michael Lewis' 2003 bestseller, Moneyball, about the Oakland Athletics baseball team's data-driven approach to hiring undervalued players — drills deeply into a client portfolio to locate hard-to-find securities that another client, such as a hedge fund, might want to borrow to use for a short position.

“This is a big data story. In the past, Pershing has made big data available to advisers, but it wasn't really usable,” said Joel Bruckenstein, co-founder of the T3 Technology Tools for Today conference. “In order for big data to be useful, it needs to be organized. Lending Ball shows how big data can be used when it's presented in a compelling fashion.”

Patrick Yip, Pershing's director of technology strategy and product management, said there has been a lot of talk lately in financial services about big data.

“Obviously, at Pershing we have a lot of data,” he said. “We're really focused on what we call decision science, which is taking the big data we have and applying advanced analytics on the data to come up with actionable business insights.”

Pershing uses Tableau Software's data visualization technology to find securities hard to borrow that offer an attractive return or borrowing rate, Mr. Yip said. The technology maps out the data using a variety of colored charts and graphs.

“We can search through all the accounts at Pershing and match them up. The adviser angle is that it's a way for them to actually help their clients generate more revenue based on an existing position they're holding,” he said. “Before they may have just been able to pick one or two fully paid lending securities and go through a lot of gyrating to find the right positions. But now we have the visualization that shows the opportunities.”

He added that Lending Ball has not yet been rolled out to individual advisers. Pershing is first working with broker-dealers, Mr. Yip said, and the plan is to roll it out to registered investment advisers and advisers affiliated with broker-dealers some time in 2015.

Ari Kaplan, president of baseball analytics firm AriBall, spoke at Pershing's INSITE 2014 conference earlier this month on “Applying the Power of Big Data and Decision Science to Your Business.” Mr. Kaplan, whose firm helps Major League Baseball teams evaluate performance and salaries using quantitative analytics, watched a demo of Lending Ball at the conference. He was impressed by the tool's interface, which allows users to determine what past investment behaviors might be optimized in the future.

“As a sports analyst, I identify information to make more wins in a game to optimize player payroll. In the Pershing sense, you're optimizing return on investment to allocate investments for getting the most money back,” Mr. Kaplan said.

Big data has recently emerged as a futuristic tech theme among financial services firms as they study how digital companies such as Amazon.com Inc. have collected data to learn about customer preferences. While custodians have been gathering account information for years, technological advances are allowing custodians to pinpoint big data's uses for advisers.

In addition to the Lending Ball tool, Pershing is now applying big data to asset flows, which will allow advisers to spot trends and see problem areas where large sums are being moved in and out of customer accounts. Further, Pershing is compiling data on digital clicks on NetXInvestor to give advisers insights into client behavior.

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