Global firm eSecLending has established a local business in a bid to tap into Australia's superannuation industry.
"Australia is one of the largest pension fund markets in the world. Globally, large institutional investors are looking for specialist market providers in securities lending," eSecLending chief executive Chris Jaynes said.
eSecLending provides securities lending services for institutional firms including superannuation funds.
The global company actively lends assets in about 30 markets on behalf of clients who collectively manage about $2.6 trillion in assets.
Traditionally, custodians provided securities lending services to Australian superannuation funds.
However, according to Jaynes, securities lending demands specialist skills.
"Historically, custodians offered securities lending as part of their bundled services. It was purely an operational function. Now securities lending has evolved as part of asset management, which requires more specialist trading skills," he said.
Jaynes said the firm was in discussions with a number of potential clients in the Australian market.
"We have had positive discussions with a number of clients and asset consultants and are optimistic about securing new mandates in 2010," he said.
The firm has one representative in Australia, however Jaynes said the number of staff "will grow over time".
Securities lending came under pressure following the global financial crisis as governments around the world implemented temporary bans on short-selling.
Despite the number of temporary short-selling bans, Jaynes said securities lending will remain vital in efficient markets.
"Securities lending will continue to play an important role in financial markets by providing liquidity and contributing to orderly, efficient trading," he said.
