At the same time, integrating artificial intelligence (AI) has become a focus for firms looking to do away with administrative tasks in favor of faster deliverables and better use of human time. Indeed, Citi CEO Jane Fraser wrote last year that AI “has the potential to revolutionize all functions across our bank and the industry — changing how we write code, onboard clients, service customers, detect fraud, develop market research and strengthen compliance and controls.” When looking at automation and AI side by side, should securities finance choose one over the other, and when should they work side by side?

The benefits of using strategic automation to reduce or eliminate manual tasks have centered on allowing people to use their time on more value-added activities. Priorities have included executing pre-defined tasks, for example parsing multiple data fields to trade General Collateral securities in real-time; exceptions-based management for post-trade processing to avoid analyzing every trade; and reducing opportunities for human error in data processing. This has been a winning formula for the industry.

AI on the other hand uses technology to learn from data and make decisions without the need for additional programming. This opens up an opportunity for what Mary Callahan Erdoes, CEO of Asset and Wealth Management at J.P. Morgan, calls getting rid of “no joy work”: “rote repeatable work, we are getting rid of it at every front and it’s really important. Some of the analysts have said already they get two to four hours back in their day, and we really haven’t even begun to get that out across all of the forces.” If automation eliminates repetitive tasks and frees people up to be more effective in operations and trading, then AI could be seen as helping people enjoy their work with more strategic and creative thinking.

Two paths to efficiency

Firms looking to create more time for their staff and reduce operational errors have turned to technology with successful results. Executives understand the business benefits behind the implementation of any new technology platforms into their environment and weigh factors such as time-to-market, implementation complexity and build vs buy as part of their decision making. Automation is a trusted method when the task is the same day after day with identical data structures. An API with ten fields, like those for settlement instructions, can be read by a computer and successfully processed into its component parts. Extending that idea, reading emails with trade information for data fields to populate an execution screen has proven to be highly useful to traders, moving market participants away from emails to electronic systems.

These types of automation track a history of data from start to finish: if anyone asks later, there can be an audit trail that allows a human to observe what was received, what happened in the data processing phase and what the end result was. This information can be conveyed to internal compliance and risk teams, and given to regulators on demand. Controls are embedded in the process.

So far, AI has been on the other end of the audit spectrum. While AI, machine learning and natural language processing are superior for managing unstructured data, backtracking what happened can get lost in the process. AI learns as it goes, hence there may be no way to know what it has learned and why it made certain decisions as a result. This is a deep concern for line managers, risk professionals and regulators, especially when large financial services firms have seen fines adding up to the billions in recent years related to data quality issues. Right now, most of the securities industry is using AI for analysis and text generation. Few firms have moved to the stage of data implementations and decision making, partly because there is a reluctance to trust a system for which the execution metrics are unknown, and partly because regulators have told them not to.

These opinions may change at some point and the technology will be ready if the market decides to adopt it. In Finadium’s 2023 survey of collateral technology vendors, 70% of vendors said that they had active AI or machine learning projects in production or development. Compared to prior years, more of these projects have gone live in the category of decision support. It appears that the technology will be ready for implementation shortly after humans become more comfortable with AI making the final decision, but there are good reasons for that to never happen.

The Trading Apps viewpoint

Trading Apps, a provider of automation tools that use a set of rules to drive securities finance decision making and processing functions, would seem to preference automation over AI for their clients. According to Ross Levin, head of product management at Trading Apps, “the clear benefit of automation is the ability for anyone to see what is happening in both real-time and after-the-fact, and backtrack in case of poor data or unexpected outcome.” The Trading Apps business is built around this priority with twelve applications now using rules-based engines for trading and operational efficiencies (see Exhibit 1).

Some of Trading Apps’ products use automation to a point where it could be mistaken for AI. The firm’s Lender App processes unstructured borrower requests from Bloomberg messages, emails with or without attachments, and other sources (FTP, manual) and parses them with a 99% accuracy rate, allowing for an automatic rapid response. The same rules-based approach is used in the Locates App, which can run unattended, as opposed to typically-used portal and manual approvals. But these products are based on rules-based algorithms, not processes that decide what data are right or wrong for the purpose at hand. Neither app has any hidden logic and all decisions are transparent to users.

Levin noted however that AI has a place in the application mix as well: “While rules-based tools perform their roles, there are things they can’t do, like parsing messages without identifiers; that’s where firms can take advantage of AI to improve user outcomes.” He added that Trading Apps will be utilizing AWS AI capabilities for data collation, report generation, and other suitable tasks across all three of their product sets: TA Link, a messaging service addressing the pre-trade segment of the market; GLASS for trade capture, lifecycle management and a set of modular front office automation applications; and their new offering, GlobeNet, a back-office processing engine. In these cases, the use of self-learning tools can assist users in efficiency management and analysis better than a rules-based engine.

Trading Apps CTO, Stefan Bates, who recently participated in the AWS Financial Symposium in London, said that with the help of AWS Generative AI applications such as Bedrock, Trading Apps could transform its products’ querying capabilities by providing end users with the ability to ask any natural language question on the dataset.

Both automation and AI have a role in the trading and operations framework of securities finance market participants, but only where there is an auditable, transparent process behind their activities. Going it alone with AI can lead to trouble; market professionals in securities finance already cite errors in their AI queries based on their own knowledge of trading rules and regulations. But rules-based automation has its limitations as well when it comes to unstructured text or data. The best approach is to combine the two depending on the need and circumstance. As AI becomes more auditable, it is likely to grow in popularity. Until then, automation based on transparent rules delivers an outcome of certainty.

By Josh Galper, originally published on Finadium.com

Stockholm, Sweden & London, UK – April 2, 2025

SEB, one of the leading Nordic corporate and investment banks, has partnered with Trading Apps, a specialist fintech firm focused on workflow and automation solutions for securities finance, to streamline securities finance communication with TA.Link integration.

This partnership marks a step forward in SEB’s commitment to technological innovation and efficiency in the securities finance space. By adopting TA.Link, SEB is now equipped to communicate seamlessly with counterparties via API, enabling automated, real-time message flows for both its borrowing and lending activity.

“We’re excited to be working with Trading Apps and to adopt TA.Link as part of our broader digitalization strategy,” said Dan Murphy, Head of Equity Finance at SEB. “The ability to interact with counterparties in a secure, scalable, and fully automated way is an enabler for our growth and operational efficiency across securities finance.”

TA.Link provides a standardized, yet flexible API-driven communication layer, allowing firms to send and receive key lifecycle messages—including availability, borrows, returns, recalls, and allocations.

“We’re thrilled to welcome SEB to the TA.Link network,” said Matthew Harrison, CEO at Trading Apps. “SEB’s decision to integrate both the messaging service and API capability demonstrates their forward-thinking approach to automation, and we’re proud to support their team as they streamline interaction with both borrowers and lenders.”

The TA.Link network continues to grow across the securities finance industry, connecting buy-side and sell-side firms with fast, reliable, and secure messaging infrastructure that enhances efficiency, reduces risk, and supports scale.

New York, US – March 28, 2025

With a strong emphasis on API functionality, TA.Link facilitates seamless scalability for its members. The platform’s upfront pricing model eliminates the constraints of transaction-based fees, empowering firms to operate without limits.

National Bank of Canada has integrated TA.Link into its proprietary technology ecosystem, leveraging API capabilities to enhance both borrowing and lending activities. This integration ensures a streamlined and efficient securities finance workflow, improving automation and operational flexibility.

“TA.Link is a secure, real-time messaging platform that connects global participants across the securities finance ecosystem,” said Matthew Harrison, CEO of Trading Apps. “It provides a foundation to streamline pre- and post-trade negotiated lifecycle events, including trade execution, rerates, recalls, and returns. With Common Domain Model (CDM) support, TA.Link is at the forefront of the evolution in securities finance, offering a powerful addition to the Trading Apps suite.”

James Bryce, Managing Director at National Bank of Canada, added: “National Bank is excited about the seamless onboarding experience with TA.Link. The platform’s scalability and automation capabilities align perfectly with our strategy to enhance efficiencies and support future growth in securities finance.”

About Trading Apps

Trading Apps is a pioneering fintech firm specializing in innovative software solutions for the securities finance industry. With over a decade of expertise, it provides cloud-based tools that automate securities lending and borrowing transactions, enabling clients to scale operations, increase trade volumes, and reduce costly errors. Its TA.Link platform facilitates pre- and post-trade lifecycle events, ensuring secure, reliable, and cost-effective communication for market participants.

As published in Securities Finance Times Technology Annual 2024.

Market participants are working to align and future-proof technology adoption, with methods to exchange message data also becoming ripe for change.

Unlike the repo world, securities lending has staunchly remained a bilateral business, and for good reason. Smaller deal size, lower volume, the complexity of sourcing from beneficial owners via agent lenders or directly, collateral requirements, buffers, the management of exposure to undisclosed beneficial owners, clearing membership costs… the list goes on.

As a consequence, the business still transacts either directly or via a few select platforms, with the dominant platform provider being a less economically viable option for lower volume participants. Indeed, there are some markets that still rely purely on direct borrower and lender relationships.

Similarly, while the deal capture and the books and records technology has kept pace to meet the evolution and geographical diversity of the business, platform and in-house books and records have remained, for the most part, on premise, with software-as-a-service (SaaS) installations being in the minority. Moreover, connections to platforms and post-trade service providers have required each user firm to build interfaces to the service provider.

The Tipping Point

A market served by limited infrastructure diversification was recently triggered into action, acknowledging the risks associated with the concentration of activity with a single provider. Indeed, lenders are revisiting in-house provision by increasing the sophistication of internal web-based distribution platforms and, more generally, there has been some exploration into possible collaborations and investment opportunities to assist new providers in accelerating their time to market.
Likewise, the community, through its trade associations, is gathering to align and future-proof technology adoption by the development of the Common Domain Model (CDM), championing features such as a shared vocabulary, a unified model, domain driven design and consistency, so that market participants and their technology have a unified approach to how they exchange data in the course of transacting business.

The method in which firms exchange message data is ripe for change too. In other use cases outside of the industry, SaaS message platforms are now commonplace, enabling organisations and individuals to connect to all other users via a trusted provider. These platforms outsource infrastructure to third party cloud computing providers, benefiting from resilience and top-tier security capabilities, so providers can focus on functionality. For software vendors and their customers, the need for servers and network infrastructure is eliminated, significantly reducing the hardware and maintenance overhead. In turn, software vendors pass those savings on to their business customers who then provide their end clients with reliable, cost-effective services.

“In other use cases outside of the industry, SaaS message platforms are now commonplace, enabling organisations and individuals to connect to all other users via a single provider.”
– Stefan Bates, Trading Apps

How could this approach apply to securities lending?

Securities lending requires the exchange of multiple message types (eg distribution of availability, borrow requests, trade negotiation, trade execution, re-rates, recalls and returns). These are exchanged via multiple transport types (eg email, chat applications, FTP). What if all of these could be exchanged via a single transport protocol irrespective of message type, with each participant only required to connect once to this transport mechanism. This is entirely possible with a bilateral messaging SaaS platform hosted by a cloud services provider.

“TA.Link can eliminate many of the costly challenges and operating risks that organisations take into account when connecting to external parties, instead providing a low-cost, subscriptionbased service to the securities finance industry”
– Matthew Phillips, Trading Apps

What features make this possible?

Microservices — a software design that structures an application as a set of services designed to perform specific business functions.
Auto-scaling allows the organisation providing the service to automatically increase or decrease computing resources according to the demands of the user base. A global messaging service will have peaks and troughs of demand during a 24-hour cycle, as each individual market increases its activity during peak trading periods, or sees increased activity when there is an operating overlap between time zones.
Serverless cloud provider managed services for message queues and data storage — the outsourced provider’s managed service enables applications to seamlessly process requests, manage workloads, handle complex workflows, and store the resulting data for access by users. Messages are stored in the cloud allowing users to access them on demand (borrow requests, availability, trades, re-rates, recalls, returns). It is therefore possible for lenders to easily update availability throughout the business day so that borrowers can have near real-time data. Typically, borrowers are required to re-check availability with the lender before executing a borrow trade.
Using a container orchestrator — a container orchestrator is a platform used to automate the deployment, management, scaling and networking of containerised applications. Container orchestrators provide functions such as scheduling, load balancing, service recovery, and automated rollouts and rollbacks.
Immutable infrastructure is a deployment approach that allows for upgrades to be released as a server deployment, rather than installing and updating application software itself. This drives consistency across the platform services and facilitates rollback if necessary.
A Service Mesh is a software layer that handles all communication between services in applications. Common features provided by a service mesh include service discovery and load balancing. They can make service-to-service communication fast, reliable and secure.
Open API — an industry standard way to describe web service application programming interfaces (APIs), speeding up the development process by allowing developers to quickly get up to speed with the interface definition.

With the above foundation, a cloud-based messaging platform can provide a community of users a way of communicating that is not limited to securities finance messages. This type of message connectivity could be used for any online contract negotiation and other tradeable products with lifecycle management such as derivatives.

The main advantage to the user community is that while messaging remains between two parties, this technology stack allows that to happen for a limitless set of eligible users of all types, such as lenders, borrowers, trading platforms with matching and chaining functionality, and central counterparties.

Trading Apps and TA.Link

To automate deal capture, the original Trading Apps tools relied upon extracting borrow requests from emails and messages from chat services, as well as connecting to existing messaging services.

Trading Apps then developed TA.Link, initially to be a dedicated channel for its lender and borrower clients to directly exchange a suite of standardised messages, bringing efficiency and consolidating the way data flowed between the counterparties. From a post-trade perspective, it will be a real-time channel for rate optimisation, recalls management, and returns management, all of which could be generated automatically.

The next step was to explore how this could be fully democratised to provide the same capability to non-Trading Apps customers. This was achieved by exposing an OpenAPI-based interface into the messaging platform, enabling firms to build their own TA.Link integration services.

Trading Apps took the concept a step further by developing TA.Link web portals, for both borrowers and lenders. Being web-based, the portals provide users with instant access to counterparties connected via Trading Apps tools, the OpenAPI or other portal users. Portal users can upload borrow requests and availability and conduct trade negotiation and execution. Completed transactions can then be transferred to a trade uploader in their proprietary system.

Being a cloud-based SaaS platform using the technology and architectures described above, TA.Link can eliminate many of the costly challenges and operating risks that organisations take into account when connecting to external parties, instead providing a low-cost, subscription-based service to the securities finance industry.

We recently caught up with our COO, Matthew Phillips, to discuss his experience at the CDM Showcase event, which was impressively organised by ISLA, ISDA, ICMA, and FINOS, and hosted by State Street. The event provided a valuable platform for exploring advancements in the securities finance sector, focusing on the application of new technologies for regulatory reporting and the digitisation of contracts.

Among the highlights of the showcase was the panel on “How to Build CDM-Based Applications for Repo Trading & Post-Trade.” This session, featuring insights from Gabriel Callsen, Lee Braine, and Nicholas Hamilton, delved into the potential of the Common Domain Model (CDM) to significantly transform the securities finance technology landscape. The discussion outlined how CDM could lead to a future where systems are more homogeneous, reducing duplication and promoting standardisation across the industry.

In his own words, Matthew explains:

“From the panel I participated in (Application of the CDM in Trading), the need for a standardised language in securities finance emerged as a clear consensus. For too long, the sector has grappled with inefficiencies—like the decades-old, poorly formatted availability file data—that have only served to introduce friction and unnecessary labour into pre-trade processes. The discussion underscored a pivotal shift: the focus on functionality and quality of service as the true differentiators in our field, rather than the mere use of a common language or data format.”

“A highlight for me—and something I’m particularly excited to share—was the opportunity to spotlight our own TA.Link. As a bi-lateral messaging platform that’s swiftly adapting to validate CDM format messages, starting with availability posts. TA.Link is set to become an indispensable tool in this evolving dialogue. If CDM is the language of the future for securities finance, TA.Link aspires to be the phone that everyone will use to communicate in that language, seamlessly connecting counterparties!”

“This showcase was a reminder of the innovation and collaboration happening in the securities finance industry. As we continue to explore and embrace these advancements, I’m convinced that our collective efforts will lead to a more efficient, transparent, and standardised future.“

Could you tell us about TA.Link?
At Trading Apps, we are always working on new and innovative ideas to deliver to market. We feel we have some of the smartest brains in the industry and TA.Link is the latest we are bringing to market. TA.Link is an alternative way to communicate trading activity between securities finance participants.

In what ways does TA.Link deliver significant savings compared to existing messaging services for instructing trades?
TA.Link has a single monthly cost payable when the service is available to use, so there is no initial minimum set-up cost and no per trade or volume costs. TA are not party to how existing services charge, but it has been indicated to us that we would be approximately 10 per cent of the current average cost.

Can you elaborate on the cost structure of TA.Link? Specifically, how is the low fixed monthly cost per participant determined and are there any additional costs that participants may incur?
It is a fixed monthly cost which is the same for all participants.

TA.Link provides an alternative connection to mitigate the risk of relying on a single messaging service. Could you elaborate on how TA.Link addresses this risk and ensures a more secure communication environment?
We mitigate the risk to a participant of relying on a single messaging service by offering an alternative. TA.Link messages are fully end-to-end encrypted using industry-leading technology and, as such, are far more secure than email. Using AWS cloud-based services, TA.Link runs on multiple servers located around the world with instant failover in a disaster recovery situation.

When Trading Apps first started supplying software to the securities finance industry, the norm was to deliver software to the customer’s in-house IT department for them to manage as an on-premise installation. Today, Trading Apps almost exclusively provides its products as Software-as-a-Service (SaaS) on hosted infrastructure managed by Trading Apps.

On-premise and hosted technology provisions have their perceived advantages and disadvantages, as do proprietary systems versus vendor products and services. In this article, I hope to explore the pros and cons of both approaches, albeit from a Trading Apps perspective.

Whenever banks are seeking to bring in or use technology from an external provider, they have several important considerations. Firstly, they need the confidence that the new product will meet or exceed the expectations or promises that have been made by the vendor

or internal technology projects. Will the final solution truly solve the issues, or indeed increase the profitability and business performance of the desk, or reduce risks for those who depend on its performance? How do you calculate your return over investment costs?

When considering a product to implement, the suitability should
be easy to assess for an existing vendor product, either hosted or on-premise. It is possible to see good demonstrations of the product, alongside thorough scrutiny of documentation and Q&A sessions with the vendor, before making the purchase. Fortunately, our marketplace involves recommendations and people moves, both of which add confidence to the pre-existing vendor solution.

But our industry has many examples where a new system development project, with many promises relating to functionality and costs, are proven unsuccessful. That is true of vendors and of IT departments, of course. Maybe this is why proven systems tend to stand the test of time and there is occasional reticence to change.

Normally with vendors, and definitely with Trading Apps, there is no big financial commitment until the product is fully accepted by the customer as fit for purpose — if the product does not deliver what was promised, the institution has the right to a refund for all its licence fees. Vendors tend to provide ‘proven’ products but, in many ways, they compete against the ambitions of internal initiatives.

Do institutions compare these in-house build proposals well enough and properly understand the true upfront and ongoing costs and risk of failure. Do they understand the likely timescales to going live, of internal provision versus buying in a ready-to-roll service? Hosted provision enabled Trading Apps to recently deploy a trading stack within five months of contract signature, working in close collaboration with internal teams to assist with integration. This was a real success for both vendor and customer.

“If a good product cannot be maintained to be functional and accessible whenever it is needed, this could cause havoc with workflows, reputation, risk and personnel morale”

Alongside the functionality of the product, the other high priority consideration is one of security. Banks and their supply chains
are a continuous target for cybercriminals. They must ensure that
their systems and data are protected from malicious attacks as the reputational damage from data breaches can be incalculable. Vendor assessments that Trading Apps must complete are a testament to how seriously this is taken. We have the benefit, in some ways, of multiple audits and scrutiny from across our entire customer base. The vast array of increasingly challenging questions continually pushes our team to be best in class, taking in suggestions from multiple banks and audit companies.

The next important consideration is how reliable the provision of the technology will be to the desk. If a good product cannot be maintained to be functional and accessible whenever it is needed, this could cause havoc with workflows, reputation, risk and personnel morale. Everyone knows what it is like when your system goes down and how stranded or stressed it can make you feel. But does the desk really know why the service went down? Where the product is managed in house, it may not be the fault of the vendor — the supplied product relies on the environment in which it is installed and managed. With so many moving parts, often it is difficult to identify the true causes.

So, what about on-premise versus hosted when it comes to ‘functionality’? Products of the complexity and interoperability of Trading Apps place great reliance on the background infrastructure and database management to work correctly. For on-premise customers, these are handled by the internal IT team of the bank and any equipment or infrastructure challenges commonly sit on their to-do list with all of the other demands that the team faces.

The IT crowd may present a one-office team focused on sorting your issues, but that is not often the case in a global bank and varies greatly between institutions. There are often separate teams with responsibility for networks, databases, hardware, software configuration and interfaces — quite commonly operating in a relatively siloed manner.

When Trading Apps hosts a product, we strive to ensure everything works harmoniously and stays connected on the client’s behalf and we provide this as a fixed annual fee. When considering budgets, vendor fees should be compared appropriately against the true costs within the bank of providing all of these services internally. Those costs are not just the machines and the connectivity, but the personnel costs to support, maintain and fix issues as they arise. With vendor-hosted products, all a client needs to manage is their web browser and external connectivity. Once the vendor is locked and loaded to the right parts of the system, we manage everything that is needed to have optimal enjoyment of the product.

After clients have made their decision and they move forward and want new features, there are new considerations. Inevitably, workflows and opportunities change continually through time. New systems and new interfaces need to be adopted and connected. Incoming files or feeds may alter and downstream connections to other systems or to external bodies need managing continually too.

As on-premise customers seek to enhance their vendor-provided product, the speed at which those improvements are available to them can be hindered by the process of moving through the internal pipeline to deliver this into the production environment. Whereas, in a hosted deployment, the vendor has direct access to their system logs to constantly analyse and fine tune the product’s performance, this is not always the case with on-premise setups, where it can be very difficult for vendors to get the correct diagnostic information they need from deep within the bank’s systems. When hosted, the vendor has access to both user acceptance testing (UAT) and production environments, allowing rapid diagnostic analysis, appropriate testing and deployment of the next enhancement or bug fix.

In summary, there is a lot to mull over before deciding to build or buy the next solution, and then whether to bring it in house or have it provided as a service (SaaS). Key considerations in shaping this decision are:

• Functionality – does it solve your problem or improve your business?
• Security – is it reassuring to know that vendor environments and procedures are multi-audited to the highest degree available in the industry, or do you prefer the comfort of the bank’s own standards?
• Reliability – good software is no use without good hardware, database and infrastructure management, which needs to improve with the product as you grow the business — how easy will it be to improve the product through time to keep you ahead of your competition?
• Cost – have all the costs been compared appropriately, including the future management of the product, and are those figures fixed or variable? If it fails, who picks up the tab?

When mulling these big decisions over, remember Trading Apps and, of course, other vendors are very happy to share their experiences. Trading Apps are keen to support clients in making the best decision for their situation.