Fireside Friday with… Transcend’s Bimal Kadikar

Transcend recently completed a Series B funding round – what does that investment allow the firm to do that it couldn’t do before? We’ve been very fortunate because we’ve grown well and quite aggressively over the last few years. As of last year, we’re also a profitable company. Even so, we decided to pursue a Series B round with a wonderful partner. The round was completed with 7RIDGE, a highly respected investor in the capital markets space. They have deep expertise in many of the areas we operate in and are investors in firms such as Trading Technologies and Digital Asset Holdings, among others. The team at 7RIDGE are industry practitioners who know many of our clients and partners. The Series B was about more than just capital. Of course, the funding allows us to invest in our growth plans, but it was equally important to partner with someone who can help take us to the next phase of growth and support our long-term ambitions. In particular, we’ve been doing a lot of work helping clients optimise what we call the intersection of collateral, funding and liquidity. We’ve done this across securities finance, cleared and uncleared derivatives, and we’ve also started working more closely with asset managers and insurance companies. The next phase of growth is focused on expanding in these areas We’re investing heavily in several areas. First, we’re expanding our go-to-market efforts for the new client segments we’ve created. Second, we’re investing in new initiatives around tokenisation and digital assets, including deeper integration with digital asset ecosystems. Third, we’re making significant investments in AI and will soon be launching AI-based solutions on our platform. Finally, optimisation has always been a journey for us. We’ve built significant capabilities in post-trade optimisation, and we’re now looking to move that closer to the front office through the introduction of pre-trade optimisation capabilities. What are the biggest challenges your clients are facing today when it comes to collateral optimisation and liquidity management? This is a very important question because collateral and liquidity optimisation isn’t a single problem. Most of our clients, whether on the sell-side or buy-side, operate globally and trade across multiple venues. Take a sell-side bank as an example. It may have an equities finance business, a repo financing business and various derivatives businesses. All of those activities require collateral, but they often operate on different platforms. The financing businesses may conduct bilateral transactions as well as a significant amount of triparty financing. Those triparty activities may be spread across providers such as BNY, JP Morgan, Euroclear and Clearstream, among others. This creates a many-to-many challenge. When you think about collateral optimisation, if you’re only optimising one channel, then by definition you’re not fully optimised. To achieve true optimisation, firms need a holistic view across all trading venues and, ideally, across all business lines. The scope ultimately depends on the firm’s ambitions, but that’s one of the biggest challenges. Clients need all of their internal data aligned, connectivity to all relevant external venues, harmonised information, optimisation algorithms and frameworks, and the ability to model internal costs, policies and regulatory requirements. It’s really a framework that has to come together as a whole, and that’s what we help our clients achieve. Even once you’ve built that framework, it’s essential to stay current with – or ideally ahead of – market developments. That’s another significant challenge for firms. Where do you see the most practical and immediate use cases of DLT emerging? From our perspective, we’re seeing genuine use cases emerge, stronger industry momentum behind key initiatives and much greater buy-in from market participants. There are some very encouraging signs that tokenisation is moving from theory into practice. One example is the work being undertaken by DTCC around tokenised Treasuries and tokenised equities. We expect to see meaningful progress throughout 2026, with further developments likely to follow in 2027. We’re actively involved in that initiative and are excited by what it could deliver. The Canton Network has emerged as a leading platform for many of these efforts. It may not be the only network, but it has certainly established itself as an early frontrunner. Many banks are attracted by its permissioned architecture, which aligns well with their operational and regulatory requirements. Based on what we’re hearing from clients, there’s currently a higher degree of comfort with Canton, based on the security and compliance factors. There are a number of initiatives planned throughout the year that will connect additional market participants and support production-ready use cases around collateral mobility. That’s an area we’re particularly excited about and one in which we’re actively engaged alongside our clients. Beyond that, we’re also involved in several other initiatives. We partner with HQLAx and have worked with Ownera on efforts to bring tokenised money market funds into collateral ecosystems. Our strategy isn’t to pick winners. Our goal is to be wherever our clients need us to be. Just as we’ve connected the collateral ecosystem in the traditional market, we’re extending those capabilities into the digital world. That’s the thinking behind Transcend Digital, our initiative designed to help clients bridge the gap between traditional collateral markets and the emerging tokenised ecosystem. Ultimately, clients aren’t necessarily concerned about which network wins. What they care about is managing collateral efficiently across both traditional and digital assets. They need to see inventory, requirements, eligibility criteria and optimisation decisions in a single framework. Looking ahead over the next few years, what do you think the collateral management landscape will look like? What developments should custodians, asset managers and banks be paying closest attention to? At the end of the day, whether you’re a bank, asset manager or custodian, profitability remains the most important metric. To achieve that, firms need to manage both sides of the equation: revenue generation and cost efficiency. They also need to make the most of every opportunity available to them. Collateral and liquidity can often be an invisible tax on an organisation. Yet there are now proven examples showing that firms can generate meaningful value – and even alpha – by managing these resources more effectively. The firms that get this right will have a significant advantage over those that don’t. For organisations where collateral and liquidity play an important role, it’s essential to evaluate their infrastructure, capabilities and measurement frameworks. They need to ask whether they’re truly equipped to optimise across multiple business lines, venues and asset classes. Equally important is having the right incentive structures in place. If one desk is using collateral sourced from another desk, firms need mechanisms that ensure behaviour is rewarded appropriately when it benefits the organisation as a whole. I often describe this as an architectural challenge. The technology, data, processes, governance and incentives all need to work together. The second major trend is tokenisation. Tokenisation is no longer theoretical. It’s happening. That said, I don’t believe we’ll move entirely into a tokenised world within the next year or two. The transition will take time. What is clear, however, is that tokenisation will increasingly become a central theme across the industry. For many years to come, firms will need to operate in both traditional and tokenised markets simultaneously. That means organisations must build infrastructure and operating models capable of supporting both worlds side by side. If traditional assets sit in one ecosystem and digital assets sit in another, firms risk creating fragmented operating environments that are difficult to manage and even harder to scale. As these market developments continue to evolve, ensuring that traditional and digital collateral ecosystems can work together seamlessly will become one of the most important strategic considerations for banks, custodians and asset managers alike.