Born from the acquisition of a securities lending technology platform, industry veteran Tony Venditti embarks on his next adventure: leading new fintech firm Transparence IO.
鈥淵ou truly never know where your career will take you. But this is genuinely one of the more exciting things I've done. I've always been drawn to technology, and I see Transparence as the natural next step for me in that journey,鈥� says Venditti.
As a provider of outsourced securities lending technology and operational solutions for US broker-dealers, banks, custodians, asset managers, and foreign financial institutions, the new company enables firms to manage securities lending trading, inventory, portfolio and cash analysis, position management, and operational workflows.
The opportunity was born out of South Street Holdings鈥� software platform which was recently purchased by Venditti in early September. The idea all started when Venditti was being courted by South Street, which had a well-capitalised broker-dealer, strong balance sheet, and reputation in the fixed income repo business, as well as its technology company Matrix Applications.
He had an idea to build a similar platform for securities lending, one that would complement South Street鈥檚 repo offering from both a sales and trading perspective, as well as a licensing/software/back-office viewpoint.
鈥淭he name Transparence came about a year after we officially launched the securities lending business. The thinking was simple: give our existing clients a securities lending system while attracting new clients active in equities. It was the perfect cross-sell,鈥� he notes.
Making room for new players
The acquisition of South Street鈥檚 securities lending technology platform came about when the firm came to a crossroads, Venditti explained that as the firm considered scaling and allocating resources, ultimately it concluded that the securities lending business was not scalable on its own without a trading desk behind it; and South Street was not ready to make the quantum leap into equities trading from scratch.
With the decision to close the securities lending business at South Street at the end of March, came a key conversation on what would happen to the technology that was built. This presented an opportunity to Venditti to purchase the platform; and so Transparence was born.
Transparence follows a 鈥渕odular鈥� approach to the securities lending lifecycle, from connections to trading to contract management, front office to back office. The platform allows traders and operations teams to look at the exact same content; it also connects to the Depository Trust Corporation (DTC), enabling users to view settlements in real time.
鈥淚've always been fascinated by how great technology and a talented programmer can drive not just revenue but efficiency,鈥� notes Venditti. 鈥淭he idea was to build tools that genuinely help firms operate more efficiently and face their counterparties in a way that makes transacting easier.鈥�
This includes messaging protocols and support; electronic execution and trading across all securities financing flows; as well as how firms manage their daily book and positions through the lifecycle.
In terms of Transparence's 鈥減owerful鈥� reporting functionality, Venditti says this is evident in how end of day reports are captured. Users are able to make multiple reports available to a CEO or a risk manager, displaying cash usage, balance sheet impact, daily P&L, and any cash sitting in any depository, multiple exchanges, or even any margin usage. Further, the platform promises to deliver tools that help users monitor sector exposure and market risk.
Venditti comments: 鈥淎t the end of the day you have your flash P&L, but it covers every metric you'd want. It's all on one sheet; you could show it to anyone, and they'd understand exactly what you do, who you're dealing with, and where the opportunities are, as well as where your risk resides.鈥�
With the platform harnessing outsourced securities lending technology, the debate of buy versus build is natural to contemplate. Looking back on his career within trading firms, hedge funds, and a particular bank, Venditti identified that larger, more complex organisations have far more layers of technology and legacy connections to manage.
鈥淭he other challenge, and this applies to firms of every size, is that trading and sales groups are internally competing for the same resources, budget, and headcount,鈥� he explains. 鈥淚n my experience, the moment you put a new business strategy or technology build in front of an IT and operations team, they come back and tell you it will take significant time and cost to deliver.
鈥淚've always valued being able to bring in outside vendors to challenge those internal estimates and deliver a solution that's usually more cost-effective and faster to market.鈥�
The purpose of Transparence is to solve the pain points players face in this market. It is designed to fill the gaps across most lifecycle events in the financing space, in a modular, cost-effective way. The team has worked to build in 鈥渁 fair amount of鈥� analysis and real-time reporting around risk, credit, resources, and P&L management.
Venditti suggests the platform is 鈥渁 perfect fit鈥� for those looking to minimise headcount and costs while increasing flow and revenue. 鈥淚 don't see many vendors operating in this specific space, and I believe there's real room for a startup like mine to make an impact.鈥�
Moving the industry forward
As a new player entering the market, Transparence is US-focused for now but has left a door of opportunity open for a global expansion further down the line. According to Venditti, the company is a connector, one which plugs 鈥渙n top of, around, and even beneath鈥� other service providers in this space.
With a desire to equip clients with the tools to enhance their own inventory and flow, making them more desirable counterparties to face, Venditti says the platform is not simply selling a system, but is promoting solutions and efficiency.
鈥淢ost vendors come with rigorous onboarding requirements, long-dated contracts, and built-in annual increases,鈥� he continues. 鈥淲e're trying to change that model: Transparence grows with its clients, because our clients grow because of Transparence.鈥�
So what does the future hold for Transparence?
Right now, its core focus is to get the platform fully up and running, undergoing the migration from South Street over to the firm鈥檚 strategic licensing partner, Softek. Next steps will see the firm onboard and test with a handful of beta clients, and then scale from there, primarily in the traditional finance space.
While still in progress, the platform that is being built by Venditti and his team has the ability to facilitate centralised and decentralised finance players. Currently in the testing phase, he has hopes for a strong offering across the whole tokenisation and digital asset space.
The consideration of tokenisation and digital assets comes as no surprise, given the current and increasing interest from the securities finance market, and others, in moving to a more digital world. But it is a world that is still finding its footing.
Providing his insight on the topic, Venditti says: 鈥淧eople will eventually solve a real problem with tokenisation, but I'm not certain yet exactly where that takes us as an industry. What I firmly believe in is that there is a lot of leverage in traditional finance.
鈥淚 am not sure if the immediate simultaneous settlement of cash and securities will increase or decrease that leverage. I also want to see a genuine, great use case of tokenisation for any liquid, easy-to-settle trade before industry players invest heavily in this space.鈥�
While he remains hesitant of discussions around tokenising the most liquid assets 鈥� as he believes, in the case of the US market, it is already efficient 鈥� he says there may be areas such as transferring cash and different currencies, where tokenisation offers a real solution.
鈥淏ut the real question is: what's the single use case where the whole industry says, 鈥榳e're all in鈥�? I know it's coming. I just don't know yet whether it will be facilitating a certain buyer, asset, or currency, and how exactly it moves the industry forward. When the solution arises, it will be safe to say Transparence will be there,鈥� he confirms.
Transparence will also focus on connectivity to everyone, whether that is a counterparty, a system, a service provider, or an electronic exchange. That is where he sees the biggest opportunity 鈥� helping clients to connect quicker, faster, easier, and more affordably than they can today.
At its core, Venditti wants to centralise his focus on how he can help others through both technology and strategy. Complementing this is the consulting practice that sits alongside Transparence, which he believes goes hand-in-hand with the platform itself.
鈥淭here are challenges everywhere in this business, but I always see that as an opportunity to provide a solution. And if you can provide a genuine solution, that's the easiest way to get paid for it. What we're trying to do is provide solutions where people genuinely see the value, where they benefit, and where we, as the technology provider, benefit too.鈥�
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Image: Tony Venditti 