Fidelity Investments has launched its first agency loan product for asset managers and other institutions.
The U.S. financial services company will leverage its lending programs with a new platform that offers a digital toolkit featuring artificial intelligence (AI)-based lending decision functionality and “benchmarking and unique transparency”.
Fidelity has operated a proprietary lending program for its mutual funds since 2019 and is currently responsible for over $2 trillion in assets available to lend.
The launch of Fidelity Agency Lending marks this extension of the product to external asset owners.
The new platform will provide infrastructure, technology and experience to improve returns and program personalization and transparency, Fidelity said.
Fidelity Agency Lending promises to deliver a sophisticated automated lending platform that includes AI functionality to help maximize opportunities and provide efficient asset distribution.
It also has unique benchmarking and transparency tools designed to improve investment
decisions, corporate governance and program oversight, and the ability to fully customize loan program settings in an automated manner, says Fidelity.
Additionally, the platform offers real-time connectivity and automated reconciliations with many of the world’s largest custodians, as well as access to Fidelity’s proprietary risk models to monitor counterparty risk and exposure.
The agency loan product expands Fidelity’s established financing capabilities, which
includes over 20 years of serving institutions and investors through its capital markets group with Fidelity Prime Services, Fully Paid Lending and PB Optimize.
Fidelity Agency Lending is led by Justin Aldridge and supported by a team of over 90 people across technology, operations and sales. More recently, Fidelity won James Curtis of State Street who joined as a stock trader in April.
A Fidelity spokesperson said it is currently in negotiations with potential customers and the team has the capacity to service external customers in addition to maintaining the proprietary program.
“Current market dynamics require institutions to take a more active role in their securities lending programs in order to find a competitive edge,” said Justin Aldridge, head of Fidelity Agency Lending. “We believe businesses are looking for a lending agent with both new technology and the proven ability to serve large, complex institutions, and we’re excited to bring it to the market.”
David Lane, head of global equity trading in Fidelity’s Asset Management division, added: “While we take a conservative approach to securities lending, we are proud that our lending program can improve significantly. significantly the overall returns we deliver to our fund shareholders.”