Once an entrepreneur pitching money saving tool Pouch to a panel of intimidating business professionals on Dragon鈥檚 Den, Ben Corrigan was far removed from the world of repo.
He has worked within startups all of his life, originating from the e-commerce and marketing technology space, but now stands as a co-founder to the London Reporting House.
After selling Pouch 鈥� a browser extension that automatically applies voucher codes to shopping baskets 鈥� in 2019 to Daily Mail partner Global Savings Group, Corrigan was left searching for his next venture.
He was approached with a proposal to start a compliance business focusing on 歐美性愛 Financing Transactions Regulation (SFTR) reporting. The idea formed the basis for what is now known as the London Reporting House, and came from none other than Danny Corrigan 鈥� not only a 鈥渇ounding father of the repo industry鈥�, but Ben鈥檚 own father.
Working within the repo market for much of his career, Danny formerly ran CME European Trade Repository at the Chicago Mercantile Exchange, and now sits alongside Ben and industry veteran Richard Comotto as a co-founder at the London Reporting House.
Speaking about the contrast between Pouch and LRH, Ben Corrigan says: 鈥淥n the face of it, it was a very different business, and a very different environment to the world of financial markets data, which is pretty cutthroat. Pouch was ultimately a data business, albeit focused on online shopping and buying behaviour. But there are surprisingly many parallels to what we're doing at LRH.鈥�
When Corrigan 鈥渓ooked under the hood鈥� of the initial idea for an SFTR reporting business, he identified two core observations. Firstly, the market was 鈥渟aturated鈥� with reporting and compliance businesses, and in Corrigan鈥檚 opinion 鈥渘ot particularly exciting and with limited revenue upside鈥�. Secondly, the far bigger, more interesting and lucrative opportunity lies in the data itself 鈥� for Corrigan, this was the key.
SFTR is 鈥渁n absolute and utter gold mine鈥� in Corrigan鈥檚 eyes, and a golden source of data. With this regulation, market participants must report every repo, securities lending, margin lending trade and transaction every day. Each report and trade contains over 90 fields, including information on rates, haircuts, counterparty types, trading venues and settlement depositories.
鈥淣obody is doing anything with the data. It's mind boggling,鈥� Corrigan remarks. 鈥淏anks, asset managers, and hedge funds spend ungodly amounts of time and money on complying with this incredibly detailed regulation, and the data just sits in a draw at the central banks and authorities. The opportunity was so obvious to us that there's this treasure trove of data just sitting there within the trade repositories.鈥�
Grasping the opportunity, London Reporting House built the give-to-get model, which allows the firm, with express permission, to access clients鈥� live SFTR data. The business will then anonymise, clean, aggregate, process, and enrich the data while making it available to subscribers.
鈥淭he repo market has been crying out for reliable, timely, high-quality data, and it turns out, this obscure regulation, this SFTR regulation, was the answer that's been staring everyone in the face for the last five years,鈥� states Corrigan.
Looking from the outside in
Coming in as an 鈥榦utsider鈥� to the repo business in 2021, Corrigan expressed his surprise at how dispersed the market was. He notes that, unlike other continuously traded markets, there was little quality data available to repo market participants.
鈥淚t appears as though there's never been a proper quality assessment of repo data in the past, except for on trading venues 鈥� which only really concern short-term government repo data, but not the term and not the all-important credit repo markets,鈥� he explores.
Another key observation for Corrigan was the discrepancy between how long it takes certain banks to onboard a vendor. In his experience, some global banks have taken three months to go live with London Reporting House, while others required 30 months.
鈥淚n reality 鈥� the way that we work 鈥� there's no integration, there's no technology resources needed to work with LRH,鈥� he confirms. 鈥淭he delays mostly sit with legal, procurement, cybersecurity, and so in my previous life in the e-commerce world, you would never normally work with a client that's taken 30 months to onboard.
鈥淏ut in banking, that's just the way it is and it's difficult to predict which banks are geared up for innovation, and making decisions and quickly moving forward, and which ones just have this inertia when it comes to vendors.鈥�
Co-founding London Reporting House in 2022 with the aim to create a truly data-driven repo market, Corrigan reflects on the last three years, which has 鈥渃ertainly been a journey鈥�.
In his review, he says: 鈥淭he main thing that we've done is stack the LRH team with what I consider to be the finest technical and data talent in the City of London. Our data team, led by our head of data, Dr Luke Johnson, and our quantitative analyst lead, Dr Marian Priebe, is world class.鈥�
The focus, especially over the last year, has been on scrutinising the firm鈥檚 data set and implementing machine learning methodologies, as well as integrating AI to provide insights into the UK and European repo markets. For the business, AI and machine learning has proved to be the largest shift during the past three years.
鈥淲e were very fortunate that these astonishingly powerful AI tools have come to market, just as we have,鈥� Corrigan notes. 鈥淢oreover, our engineering team 鈥� led by Thomas Leeds and Robbie Thandi 鈥� have been tirelessly building our game changing user interface, allowing end users to visualise and intuitively understand the repo landscape; because there's so many ways of slicing and dicing the data.鈥�
A significant part of the engineering lift for Corrigan has been ensuring that the firm is at the forefront of cyber and information security best practice, because 鈥渨hen your clients are the biggest systemically important global banks, the expectation around cyber and information security is enormous鈥�.
Another core shift for the firm has been the laser focus on its credit repo offering. He continues: 鈥淭here really hasn鈥檛 been any reliable credit repo data in the market until LRH. So that's been a big factor in convincing our clients and our early adopters to join LRH.鈥�
Contributing to the firm鈥檚 success was undoubtedly its partnership with Kaizen in March 2023, which saw the regulatory and data specialist purchase a majority stake in LRH.
鈥淥ur entire platform is made available on the Kaizen Hub, so clients can access our services via Kaizen,鈥� Corrigan explains. 鈥淲hen you're starting a company, as I have been, some of the hardest things are accounting, finance, legal, IT, office space; and so they've been really crucial in getting us to the stage that we are now.鈥�
Kaizen has been credited as the 鈥渃rucial reason鈥� for the success the firm has achieved, and has aided in the onboarding of early adopters of the give-to-get model. Corrigan highlights: 鈥淣ow we're at 鈥榯he end of the beginning鈥� phase of the LRH journey. We have so much to do, there's so much growth ahead of us, and we're starting to explore funding and investment opportunities with some of the largest market infrastructure providers to help take LRH 鈥� with Kaizen remaining as a large shareholder 鈥� to the next stage.鈥�
A decentralised market
With a mission to create a truly data-driven repo market, Corrigan explores the current relationship between the repo market and the need for real-time and quality data.
According to Corrigan, 鈥渢he problem鈥� facing the repo market in regards to quality data is the structure of the market itself. The market is decentralised, repo data is also decentralised. Banks, broker-dealers, asset managers, and hedge funds deal with repo, and each type of participant has disparate information sources, and therefore different information sets.
LRH analysis of client data reveals around half of trades in government repo markets are dealer-to-dealer (D2D), and the other half are dealer-to-customer (D2C), with the venue cleared trades dominating, especially in the short end.
In the less liquid but information-rich sovereign, superanational, and agency bond (SSA), credit, and corporate repo markets, LRH reports that D2D dominates with over 60 per cent of transactions against the D2C. But these trades are overwhelmingly traded over-the-counter (OTC), via brokers, sales teams or messaging, and accordingly, markets are not visible and readily available to all.
Market data from real transactions is not in one place, not unified, not readily accessible pre-trade, at the point of trade or post-trade, Corrigan adds. 鈥淭here are dark sides to the moon of each kind of participant.鈥�
He continues: 鈥淚n summary, traders cannot go to one place to deal in repo because liquidity is not centred in one place. Accordingly, repo market data is also decentralised. It's not a deep pool, it's available in a series of shallow ponds.
鈥淚t's our challenge at LRH to bring together aggregate real transaction data with actual repo trades, volumes, collateral prices, with extraordinary granularity in as near to real-time as possible 鈥� and that's never been done before. That's why SFTR is the only viable source, and LRH is the only one doing this in this space.鈥�
In bringing together aggregate real transaction data, London Reporting House released its repo data solution in June 2024. For Corrigan, the significance of the solution lies within its originality. 鈥淚t鈥檚 the first time granular details of real trades, not synthetic trades or made up data, but real trades executed across the market via trading venues, brokers or sales teams, have been brought together and made available to the contributors.鈥�
The data can be applied to firms鈥� front offices to assist in repo trading, sales, and management, as well as in the support functions in counterparty, liquidity, regulatory, capital, risk management, and in credit repo.
Over a year on from its release, the London Reporting House already looks to expand its offering with a new feature release in the fourth quarter of this year, which Corrigan labels as 鈥渁n absolute game changer鈥�. The addition will allow clients to compare their own repo activity against the market-wide view within the firm鈥檚 user interface and API.
As a result, users will be able to evaluate their strategies, identify their inefficiencies in real-time against their peers, and also over the last two and a half years.
Exploring next steps, Corrigan adds: 鈥淚n terms of where we're moving, we will naturally expand our offering beyond repo and into margin lending and securities lending, because this data is also reported under SFTR.
鈥淔urthermore, we will look to apply our 鈥榯hesis鈥� that regulatory reporting data is enormously valuable, and apply that vision to other reporting regimes like EMIR or MiFID and markets including swaptions and non-deliverable forwards. Once we prove this works for repo, margin lending and securities lending, we will be proving this out across more or less every financial market.鈥�
Use, don鈥檛 abuse
AI and machine learning are a core focus for LRH. Appearing 鈥渓ike a gift from God鈥�, Corrigan says these tools will be in the hands of his team of experts, who are keen to capitalise on the 鈥渦nique greenfield opportunity鈥�.
Internally, the firm uses artificial intelligence tools such as Copilot to help with sales and business development. In addition, a litany of AI tools are being used by the business for coding and engineering, as well as interrogating its data set.
According to Corrigan: 鈥淯tilising AI and machine learning to better understand data for internal business information purposes is highly beneficial. However, it becomes complex for clients when we apply our own machine learning and AI to the data and expect them to utilise it independently.
鈥淐lients need to comprehend our methodologies, use cases, and best practices, and depend on our analysis. These are global banks with their own AI capabilities; some of the largest institutions will analyse our data using their proprietary AI systems.鈥�
While numerous companies look to integrate different AI or machine learning tools for their own uses, whether that be for improving offerings or organising data, the topic sparked a conversation on where it may be deemed inappropriate to use artificial intelligence.
In his personal review on its uses, Corrigan is 鈥渟ick鈥� of AI being used on platforms such as LinkedIn, which has become 鈥渁 cesspool of lazy people pumping self-promoting nonsense in ChatGPT and spewing it out鈥�. His strong stance on this use comes from the concern that AI-generated content is 鈥渃rowding out鈥� good quality content. This even applies to its 鈥渙ver reliance鈥� within emails.
Though less concerned with this particular aspect, Corrigan explores: 鈥淲e鈥檙e at the very early stages of this, I don鈥檛 think it will have an immediate impact on culture but I do worry that in the workplace, people will rely on AI more and more, and will be thinking less about what they鈥檙e writing, and therefore not fully understanding the points they鈥檙e trying to convey and how they鈥檙e trying to get it across.鈥�
Worried that these tools could water down engagement, Corrigan is firm in his approach to avoid AI use in communications with customers, prospective clients, or in marketing.
Looking forward
鈥淐lients, clients, clients 鈥� that鈥檚 the main thing.鈥�
For Corrigan, the market is quickly approaching a tipping point in which repo traders at any bank or financial institution must participate in the LRH give-to-get model, 鈥渙r else they'll be trading at an informational disadvantage to their peers鈥�.
Over the last three years, as the business has been building the product, the team 鈥� including the recent hire of 鈥渞epo market legend鈥� Gabriele Frediani as head of sales and business development 鈥� and the data set, LRH says it has spoken to 鈥渁lmost every repo desk in Europe鈥�. The response so far has been very positive, Corrigan boasts.
Over the next few months, the firm鈥檚 main objective is to onboard as many banks as possible 鈥� 鈥渙ur business model is intriguing; the value of our data increases as more subscribers participate in our give-to-get model, creating mutual benefits鈥�.
Having secured banks across Japan, Australia, Canada, and in the UK; LRH has its sights set on Germany and Italy, as it hopes to provide sufficient coverage across all markets.
As a fast-growing startup, London Reporting House has found its place in the repo market 鈥� and it appears the industry can expect much more from the business as it continues to scale.
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Fidelity Investments
Justin Aldridge
Image: Ben Corrigan 