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Predictive AI in Securities Finance: Step One

How to Develop an Efficient, Legally-defensible Machine Learning Infrastructure

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On April 2nd, 2026, an effusion of data from a daily trove of U.S. regulatory filings will create resources to drive many new use cases for artificial intelligence in capital markets. A clear opportunity exists in securities finance, where practitioners have repeatedly stated that major IT investments will be needed to comply with the many new regulatory mandates. “Black box” AI platforms may seem a ready solution but can also create nightmares for client reviews and lawsuits.

Beyond Benchmarking: The Race to Predictive Analytics in Securities Finance

10C-1 public data can reveal Watch Lists, but vendor data can predict market leverage and fees

Ed Blount 0 1024

When, on October 13, 2023, the Securities and Exchange Commission released its long-awaited final 10c-1 rule on reporting and public disclosure of securities loans, the most important passage, at least to the commercial data vendors who support the securities finance community, stated that, "the final rule could render existing securities lending data services less valuable, potentially leading to less revenue for the firms currently compiling and distributing these data for a fee." But is that true? Are bonuses and careers really at risk?? As shown in the table below, there is hope for vendors because the public data release will either omit or delay several data elements that are crucial to many important vendor applications today.

 

Untold Stories of Market Manipulation: Archegos Capital

How Securities Lenders Unraveled the $100 billion Pump and Dump Scheme

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By Ed Blount and Dan Hammond

“In a matter of days, the companies at the center of Archegos’s trading scheme lost more than $100 billion in market capitalization,” Archegos owed billions of dollars more than it had on hand, and Archegos collapsed.” 

This blog tells the untold story of how securities lenders in March 2021 became more than simply a source of liquidity to markets. Lenders became a market posse. Lawsuits dominated the business news about the collapse of Archegos Capital,  but nothing was reported about the chain of contractions that was set in motion by securities lending agents and custodians. It was their automated ceiling on total credit extension – share inventory buffers -- that led, in a very short time, to the traders’ discovery, surveillance and opposition to Archegos’ massive fraud and manipulation.  With a dataset of more than 225 million securities loans, we evaluated how the market responded to the Archegos’ manipulations. According to the SEC charges, the "relevant period" of the manipulation covered fewer than 150 days. During that time, more than 175,000 loans were made for equities of CBS Viacom (VIAC). We have chosen that issue as an example for our study. 

Balancing the Risks of Loan Disclosures for Traders

Is 10c-1 Regulatory Overreach? Or a Good Starting Point?

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“The best trader I ever knew was broken when he took over a dying friend’s book. Everyone knew the book and turned on him.” Born in 1899, Henry Goldberg was the oldest trader on the floor of the New York Stock Exchange when I interviewed him in 1985. He answered my questions about trading expertise during a NYSE-sanctioned survey to find possible use cases for artificial intelligence. 

FIRST DO NO HARM

A Hippocratic Oath for Securities Lenders

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If the Securities and Exchange Commission approves the many industry requests for delay of its proposed 10c-1 reporting rule for securities loans, leaders in the Global Association of Securities Lending Associations (GASLA) should move quickly to create a more efficient and lower cost disclosure regime.

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