Donato (Don) D’Eramo
Managing Director and
Global Head of Securities Lending
RBC Investor & Treasury Services
- 1. Tell us about your current role.
My financial services career spans more than three decades. Today, I am Global Head of Securities Lending at RBC Investor & Treasury Services (RBC I&TS), located in Toronto. Prior to this, I was Head of Securities Finance, EMEA, at State Street.
- 2. Describe a typical day as Global Head of Securities Lending at RBC I&TS.
On a normal day, I am out of bed by 5:00 am. By then, markets in London have been open several hours, and I check on developments across Europe. The need to stay connected and informed with global markets is especially important in times of turbulence. During the Brexit vote and the recent U.S. presidential election, I was up throughout the night, monitoring activity and available to clients for any inquiries they may have had.
Then it is breakfast, although sometimes that is just a coffee. Like my grandfather in Italy, I always make an espresso using the traditional stovetop method. When possible I spend time in the gym en route to work, either cycling or doing plyometric workouts. Next, it’s off to the office. There my focus turns to meeting with clients and working with internal partners to drive the strategy and growth of our business. I am continuously collaborating with clients to ensure that our program is successfully optimizing their portfolios, while maintaining ongoing discussion on market trends and the future of the industry. It is also imperative that I engage our borrowers to ensure that my finger remains on the pulse of the demand side so that we effectively balance their needs while optimizing returns for lenders.
My day does not end at the Toronto market close, as it is then time to check in with Asian markets. And a few evenings a week, I meet with clients or business and industry partners to discuss the trends and demand drivers that will help shape solutions and forward-looking product development.
- You have been in the business for more than 30 years. What keeps you going?
The challenge that excites me is the search to add value to clients’ evermore- complex scenarios and an evolving regulatory landscape. At RBC I&TS, our securities lending strategy focuses on delivering value and performance for clients, both on the supply and demand sides. This is consistent with RBC I&TS’ focus on client-centricity and putting our clients at the centre of all we do.
- What’s the biggest challenge in your current position?
In previous roles, I had regional responsibilities within a single time zone, while now I have a global mandate in which our desks are essentially open 24 hours a day, five days a week. That presents some logistical challenges—and can also result in me sleeping with one eye open.
- What is one thing clients are usually surprised to learn about securities lending?
In an industry with a global focus, it is not widely known that Canada is at the top of the list. Canada is the second largest securities lending market in the world with approximately CAD 1.54 trillion in lendable assets, while the industry as a whole hits over CAD 20 trillion globally. Across both equities and fixed income, the Canadian market has over CAD 171 billion out on loan, of which RBC I&TS captures a 40% share. (Source: DataLend, as at February 23, 2017)
- What’s the toughest task you face in demonstrating the value of securities lending to clients?
Key components of my work are ensuring clients’ requirements are heard and they understand what we are doing to support them in achieving their goals. This often means translating highly technical terms and complex strategies into clear, actionable approaches for clients and providing tools to help interpret performance. This can be challenging to do effectively.
The value of the securities lending industry can also be difficult to quantify. It exists to promote the smooth and transparent operation of financial markets. The benefits to clients— increased liquidity and enhanced returns—are significant but not necessarily apparent at first glance.
- What’s the most innovative securities lending solution you have developed?
Years ago, I led the Canadian industry into providing a solution for the acceptance of cash collateral within the local securities lending marketplace. A first of its kind at the time, it certainly ranks up there as an innovative solution for the Canadian market, and a definite highlight of my career.
Today, we have developed an approach that allows clients whose assets are custodied at RBC I&TS to participate in select opportunities without committing to the broader securities lending offering. This model allows clients to take a “walk-before-run” approach.
- What does the future of securities lending look like?
Compared to the earliest days of my career, the future is already here—20 years ago, trade tickets were written by hand! Throughout my career, I have seen an exponential rate of change across the industry and going forward, I expect this to continue as we see amplified regulatory requirements, more digitization and new products that broaden the scope of securities lending. I am particularly excited about the potential for increased efficiency gains associated with technology innovation and how this can deliver the capacity to manage larger volumes.
- How is “digital disruption” affecting the securities lending business?
Like others in our industry, RBC I&TS is working on optimization initiatives using varying approaches, and seeking further revenue enhancement opportunities for client portfolios. In my view, fintech can help deliver these solutions. Although I am traditional in many respects, disruption and advanced technologies are clearly the path forward.
- What do you hope to achieve as President of the Canadian Securities Lending Association (CASLA)?
My goals for CASLA in 2017 are first, to raise the industry’s profile and second, to help ensure that regulatory guidelines are consistent across client segments, such as mutual funds, pension plans and insurance companies, in order for beneficial owners to equally benefit from demand opportunities.
- What do you do in your spare time?
I have passion for all things Italian. If I retired today, my dream is to live in Tuscany for part of the year, and open a small restaurant with no menu to speak of. Whatever is freshest and in season would be offered. Actually, this flexible approach is very similar to the “agile” methodology adopted by RBC I&TS in delivering solutions, products and technology.
- What is the best advice you’ve ever received?
My grandfather used to always talk about the value of surrounding yourself with bright people and making sure you learn from them. Of course, his world was far away from the world of securities lending, but I have always modeled my actions along those lines— ensuring I cultivate and recognize key talent, promote accountability and growth in my team and benefit from the people around me.
Reprinted from The Purple, February 2017