Evolution of Insourcing: Understanding the Different Models

Hi friends, welcome back to another episode of Peer Connections, the podcast series brought to you by the Global Peer Financing Association, also known as GPFA. These podcasts offer our GPFA members and global beneficial owner friends a forum for information sharing and discussion on topics most important to them. And we hope you, our listeners, appreciate the insights, best practices and transparency offered from our members and industry friends about securities, finance or related investment areas. Now let's get into the episode. Welcome back, listeners, to a episode of the Global Peer Financing Association Peer Connections podcast series. It's been a while, and I hope that you forgive us for taking a while to regroup on our podcasting efforts as an association. But I'm very excited to welcome back some returning voices to the GPFA podcast, and this time in a slightly different configuration, coming together to discuss a very interesting topic that I think is relevant to many global beneficial owners. So first, I'll introduce our guests, and then we can introduce our topic for discussion today. With me today, I have three representatives from major institutional investors globally. I have Matt Brunette from Norges Bank Investment Management. I have Jerry May from Ohio PERS, and I have Michael Stamm from State of Wisconsin Investment Board. So gentlemen, welcome. And maybe I can ask the three of you to go around and introduce yourselves and your roles within your organizations. Matt, do you want to start? Yeah, sure. Thank you for having me back again, Brooke. I think Jerry and I are in a competition. I'm trailing behind him for a number of podcasts, so this isn't going to help me in that regard, but pretty excited about this. I am the global head of financing for Norgus Bank Investment Management, which includes all our treasury and liquidity functionality, as well as our securities lending product. Thanks, Matt. And Jerry, welcome. Thank you. I'm the senior portfolio manager here at Ohio PERS. I am in charge of securities lending and cash management. And did you know you were in competition with Matt prior to just now? I did not, but I'm excited. All right. Well, Mr. Stamm, I think you did participate in one previously as well. So this is your second. Welcome back. And I'll have you introduce yourself, Mike. Yeah, I'll have to pick up my pace for recording these. Great to speak with you guys today. I'm Mike Stamm from SWIB, State of Wisconsin Investment Board. I'm the Director of Financing and Collateral Management. Great. Good. Well, thank you, gentlemen. And so listeners, what we thought would be an interesting topic of discussion to sort of restart the GPFA Peer Connections podcast is a topic that's come up fairly frequently as of late within the GPFA community. And I know it's been discussed across some of the closed door peer sessions that the three of you and many other GPFA members participate in globally. And that's the topic of insourcing, insourcing securities lending, insourcing securities financing. But it means very different things to each person that probably discusses it. And I think that ultimately that's because there's probably a wide range of ways in which people can think about insourcing and what that really means. And ultimately, perhaps it's just about taking a bit more control over certain functions of your securities lending or securities financing programs. And so, Matt, I thought you could maybe help our listeners just better understand the reasons for this topic, where some of the conversations started and how they're maybe evolving and developing across the association and across other peer members, and maybe give some context to how maybe you would define and how the conversations have been defined within some of the meetings around the concept of insourcing securities lending. Yes, I certainly can. So this is a theme that has come up in quite a few interactions I've had across the industry. It's come up in GPFA meetings, as you mentioned. We can also plug some of the working groups that we're doing around similar topics. It came up, it was one of the topics that we had in the beneficial owner's breakfast for Isla in Lisbon last year. And I think the more people I meet in the industry that are doing similar type things, as you say, it's different for everybody. There's an evolution to it, but I think we can certainly call it a trend. There are, as you say, different motivations for this. So some of those topics, hopefully that we can get into in this call, can be taking more control of your own liquidity management. Some is just thinking that I can do certain things better than my agent. That could be operational, that could be technical, that could be just trading, right? So I think it's a very interesting topic to explore. Thank you, Matt. And so Jerry, you have been added in the industry for a while, but specifically with OhioPERS. I want to say, I'm going to guess 2003, 2004 timeframe. Am I correct? Are you approaching a 20-year mark within OPRS? Yes. February of 04 is when I was hired here. All right. Well, good. Well, that's exciting. Congratulations on the anniversary then. Yeah. We just had it. So let's make this the congratulatory podcast to celebrate Jerry's 20th anniversary at OPRS. I'll backdate the episode and give it a congratulatory title. But Jerry, maybe you can talk about your perspective within OPRS around insourcing, because I think you could argue, or I would argue for you that you have insourced quite a bit of your program, but you've done it in stages and you've done it maybe in different ways than others maybe have over time within securities lending. And so I think it's just a helpful example of how it can mean different things to different plans and how people can approach it in different ways, if you don't mind. Sure. So as mentioned, I was hired in early 04. The program at that point was much more traditional in nature. We were segregated among several different lenders. And at the time in 2005, we were tasked with the idea that we should be doing a little more cash management. So cash management became the first piece. We took over that for one of our lenders in 2005, and that cash collateral management continued on for several years. We had success with that. We were able to manage risks with that. And as you're aware, the financial crisis occurs 2007, 2009 period. And we had an agent lender that was lending for us using the same cash guidelines who did not go through that period very well. But we took some losses from their program. And we decided at that point that we wanted to consolidate all of our cash management within house. So we did that in 2009. And then in 2010, 2011, we began the conversation that we wanted to bring some of the lending in-house as well. And we were pretty adamant that we didn't want to take the risk of any corporate action issues. So we stayed with fixed income. So we brought in pieces of treasuries and MBS securities lending. So we started doing that in, I think, 2011. And those were a little bit of a hybrid model because we did the trading, but we did not do any of the back office or middle office functions. Those remained with the agent lender. And that model is still in place today. And it works out very well for, I think, both parties. So that's just from a high level where we're at with our program. And Jerry, a question for when you very first took cash in-house, how much of that was driven by wanting to control the risks around the cash reinvestment for securities lending versus the recognition that OPRS was managing short-term cash for your plan outside of securities lending and it made sense to also oversee the cash collateral aspect for your SEC lending program? Or was it both? I mean, how much was it sort of a risk mitigant? Because obviously later in time, post-credit crisis, you definitely realized it being sort of a risk control mechanism, but how much was it day one, if you don't mind? Yeah, I think most of the motivation in the beginning was just that we had a program where we were managing cash for the portfolios internally, and it made sense for us to at least manage part of that cash collateral as well to see how we do with that. And that was the motivation initially. I think the other motivation of controlling risk was definitely more borne out through the financial crisis. And that became much more significant for us as time went along. So Mike Stam, state of Wisconsin, and for all three of you, GPFA has recorded prior episodes where each of you talk about your plans or your organization's individual approaches to your securities lending programs. And so I'd encourage listeners to go back, look in our episode archives. There's a podcast that Matt has done a few, Jerry has done some on his program, and Mike and Chris Benesch have also done some on the program at SWIB. So if you're looking to just better understand the approaches to lending, I'd encourage you to do that. But Mike, so in terms of SWIB's approach to insourcing, you might not have the same longevity with SWIB as Jerry does, but you guys have taken, especially in recent years, a lot more of a hands-on approach to how you look at lending. Can you maybe talk about how you view the involvement that you and your team and the rest of the folks at SWIB have over your lending program and sort of the pieces of it that you would view as insourcing and maybe a little bit of getting to the why that you take the approach you take? Yeah, it'll be 15 years before I get my anniversary podcast. So I've got a while to go. Yeah, at SWIB, we have a couple agent lenders. And the way I see it is we appreciate the shovel-ready scale that those guys bring for us. that exercise that I think maybe it's a wheel that we don't want to reinvent. But I think from hearing you speak, Jerry, and Matt, you on some of these things, there are places like around the edges or more tactically where you can customize and insource things that matter for your particular plan or more nuanced use cases where it makes sense to try to do it yourself because an off the rack product doesn't exist to meet that need. And that's kind of where we're focusing is, you know, let the scale products take care of the scale thing and we'll try to customize around the edges where needed. And Jerry, that sounds similar to your evolution. You know, you just keep on evolving and finding that you're too sophisticated for the off-the-rack system anymore. And then you take it on yourself. I think that's kind of the path we're on. What would be one example of where you sort of think that you've taken that additional step beyond what was regularly available to you? Maybe cash collateral reinvest. You know, we've found that instead of just letting that cash sit there at our agent, we can better deploy it in our own organization to meet some of our leverage needs. And by doing that, we see real benefits that only exist if you have a certain type of program like ours. Those solutions aren't there waiting for people, but we've been able to craft a way to do that that really works for us. And maybe that's a good example. That's great. Right. And Matt Brunette, so you obviously have also done some of the past podcasts and gone into a lot of detail on the approach and the philosophy that Norges Bank has with regards to lending and how that's evolved probably over, say, a similar 20-year history too. Because I think you've probably, am I right to guess that your timeframe could be similar to Jerry's? Oh, 22 years. Take that, Jerry May. Oh, so we missed the congratulatory celebratory podcast for you is what you're getting at. We're going to have to hit a 25-year mark for you, Matt. Unfortunately, everybody else missed it too, so don't feel bad. Agency lending is very much the backbone of our strategy, but we also trade in a direct way via inequities, via TRS, and fixed income via repo. I think for context, it helps to remind listeners that we run an unindemnified program, so we spend a heck of a lot of our time on risk management and actively manage the collateral on the back of that, which is probably another podcast in itself. But would you describe that piece as insourcing your risk? oversight on the program, I guess? Yeah, absolutely. We own a hundred percent of the counterparty risk in the program. So I don't know what we want to call that managed agency lending, but I think certainly for this podcast, I'll be fighting in the corner of the agent lenders and claiming that there is some value in an agency program, but I think, you know, call it managed agency lending. But the important part is we're very involved in a process. There is a strategy, even though the agent is executing that strategy. Matt, I think that brings up a good point about maybe how we think of our relationship with our agent lenders as well, that it's managed, right? They do a lot of that day-to-day and take care of the scale, but it's a very active conversation between us or you and the agent. And while we do have an indemnified program, we still do have very active conversation with those agents and have kind of very heavily customized our plan to fit our needs with them. So in that case, we've crafted an agented SEC lending program where we have really crafted it to our needs. And I think that that in itself can be considered an insourcing effort. And so let's get a little bit more at the why, because I think that a lot of people listening will understand that the three of you take different approaches. Some beneficial owners out there will look at the three of you and say all three of their organizations are very sophisticated in this space, have a lot of oversight, maybe have more resource than I, depending upon the beneficial owner structure, but maybe don't understand sort of why they should be thinking about it in different ways or why you have all come to these conclusions and maybe also where you are today and to the extent you continue to evolve and continue to sort of think about your program as it moves forward in the coming years, what are the potential whys of how you could look at things in the future differently also? And so Jerry, maybe going back to you, we talked a little bit already. I tried to pick out the why a little bit when you first brought cash in-house, but can you speak a little bit more to the why on when you made the decision to start bringing the trading in-house for your fixed income assets and what you saw as the ability to differentiate yourself on that piece of your program and sort of the why there? Sure. I think the primary goal at the time was that we wanted to see if we could perform as well as or better than the agent that was in charge of our lending of treasuries and mortgages. So we brought it in-house. Performance actually improved significantly for us. So that was a huge benefit and it brought validity to management and the board on the decision. But I think there were some tangential things that we thought made a lot of sense. And the primary one was that securities lending is an asset liability management tool. That's all it is. And if you are controlling both legs of this model, you're controlling the asset side as well as the liability side. There are a lot of opportunities that you have that you can increase alpha generation from a program. So that definitely was one of the reasons that we chose to do it, in addition to the increased earnings revenue that we thought we could generate. Being able to control both sides, not just from an alpha generation standpoint, but also from a risk management standpoint, we thought made a lot of sense for us. I think another thing is that we thought that there were some benefits internally, because this was all occurring for internally managed portfolios. All of our fixed income was managed at the time in-house. So we were able to get real time data on specials and levels from the marketplace. And we were able to provide those internally to the fixed income management team. And there was value in that to them. And then also, this is not as big, but it was significant. We also thought that there was an ability by doing this to be viewed by Wall Street brokers, borrowers as a more sophisticated investor. And that's been borne out. We get a lot more discussions about outside the box thinking. We are shown quite a bit of potential new deal structures, certainly more than our balances and activity warrant with them. So I think all of those things together have played out and shown that the decision for us was the right one. So Jerry, maybe I can jump in there because I'm really interested in the different reasons for why people think they can perform better than their agent. And you kind of answered that by saying, well, it's an asset liability and that we can control both legs of that trade. But I would guess that your agent would say the same thing or our agents would say, well, we can control the lending and we can control where we invest that cash. But where do you get it right where maybe they got it wrong for you in the past, I guess, if you can comment on that? Sure. Well, as mentioned, one of our agents was managing cash to the same guidelines that we had internally, and the comparison was very much in our favor. I mean, we were cognizant of the risks we were taking. We sold assets early in that process so that we weren't taking mark-to-market losses, things like that. So I think being very sensitive to the risks on the cash collateral side allows us to be more aware of what we're doing and the risks to the total fund. And then also for the opportunities, because coming out of the financial crisis, there were a lot of assets that were available to invest in, you know, 11, 12, 13% that we were able to take advantage of and it generates additional alpha. Whereas maybe most of the fish in the stream are avoiding risk at that point, we were able to take risk because we saw the opportunity. So I think that both sides of that are beneficial to us. When you made the decision, Jerry, to take your fixed income assets in-house to trade those, were you at that point already managing the associated cash collateral with that? Or was that still with an agent under a managed situation? It was still with an agent in a managed situation. Okay. So it was an Apple. So Matt's question is very relevant. It was that it was either the agent was managing both sides of the trade and you were essentially moving the entirety of it to yourself to manage both sides of the trade. Okay. Yep. Thank you, Jerry. I think that's really interesting. And I would cynically file that in the agent problems as other people's money or Jerry's team is just very good at picking credits. Yeah. I mean, it's probably, Matt, not unlike, you know, it's a good analogy comparison to sort of how your program views the risk and the counterparty oversight and the fact that you don't take indemnification, but the reasons why you're comfortable being in that position because of how you sort of control that risk and it's yours to own. I mean, to me, that's sort of analogous to that for your program. Do you agree with that? Yeah, absolutely. We can digress a bit. But the initial reason to start taking in the risk management ourselves was we wanted to do things that weren't covered by the identification that we thought we had a competency in and that was specifically around equity collateral and management of equity, volatility and risk. And it wasn't identified. So we had to do it to pursue that strategy. But we did find that if we want to keep this on the theme of insourcing, when we insource risk management, it totally changed the way that we think about our program, our strategy, and primarily how we look to price and get compensated for the transactions that we enter into. Jerry, just to your point about asset liability management, that got me thinking, how can we all from our seats optimize that better than an agent? And I think it just comes down to we know our financing positioning better than our agents, right? They'll take some guesses about kind of how you want to be set up or what success looks like based on what other people do or, you know, what they've been told is successful for other plans. But for us, that might not work. And about something you said about how shifting between SEC lending, swaps, futures, repo, and other forms of financing, if it's in the box, your agent lender is going to lend it, right? But that might actually not be the best use of that asset from our seat. And being able to modulate, jump among all of those various tools is a way that you can kind of take advantage of seeing the whole board in a way that your agent with just one tool cannot, right? for them, if all you have is a hammer, everything looks like a nail, but we have a whole toolbox at our disposal. And by kind of insourcing some of that management, you get to take advantage of those other tools. And Mike, I love that analogy, by the way, but how easy do you think it is to do that in sort of a managed agency program that you run? And Matt, maybe you can speak to this next, because I imagine it's similar for you. How do you work with your agent knowing that you have that additional layer of control and oversight and decision-making about how securities may or may not be used and that interplay between, are they putting it out on loan or are you directing them to do otherwise? Or are you directing it not to go out on loan because you're going to make use of it in other ways? How fluid is that, I guess? Some of it is as simple as communication, right? Saying what you have a preference for, how you value various asset classes in terms of their financing potential, setting up collateral schedules that mirror that both on the lending and the borrowing side or showing a preference for what you use to collateralize your borrows. But then it just comes down to how you set up your book. They can't lend it if you've sold it and replaced it with a swap, right? So it's only available if it's in the box. So for us, if we see an opportunity to raise financing through some of those other tools, we can just sell it and buy the synthetic as part of a rebalance or something in a way that kind of makes the decision for them. So in some ways, it's just an allocation exercise among these various tools. In other ways, it's a conversation. I suppose kind of on a single name basis with repo, it might get trickier, right? You can't both be grabbing the same QSIP on the same day, but kind of at a broader brush asset class level, it's doable, I suppose, at least for us. Yeah, that's interesting. And Matt, what's your take on it. You've obviously had many years of, I appreciate you do it differently than SWIB, but similar approach in this sort of managed agency model that you described earlier. Can you talk about maybe just the efficiencies of that and how you've made it work well with your agent over the years? Sure. So I think it's very important that we're very clear on what the mandate is. The agent is an extension of our own trading desk and provides an infrastructure that we don't have. So that needs to be controlled and coordinated with them. We're very clear about where the lines of inventory ownership lie. There's a lot of communication, which is essentially data files in various forms and even verbal communication sometimes when we have to, where there's exceptions. But who owns what inventory? Because we don't want to step on each other's toes and we want them to have the opportunity to perform within the mandate that they have. So in a very general way, we have the TRS, for example, is a way to get an outperformance beyond what a securities lending trade can capture. Because of some of the balance sheet savings the bank can make, they're willing to sort of share some of those savings. So you have an incremental return. And because of the way we structure our agency lending program, we don't do really small margin trades. So we can capture value on those assets that aren't capturing any value in the stock loan program. So we're not fighting over the same assets. On the fixed income side, where we're trading repo, we own the specials. That's pretty easy to identify. We use those to manage our own internal liquidity needs. And then anything that is a structured trade and securities lending, typically asset funding with right of substitution type trades. Think of equity funding for term funding for prime brokers, et cetera, that is sort of aggregated at the agent and then vetted with my team for pricing and risk allocation and then approved. So they own all that GC fixed income inventory, but has to roll through our desk. So in a nutshell, they have a discretionary mandate to trade overnight in the equity space. And then anything that has a term component or any type of guarantee on a specific name or a COAC has to come through our desk for approval. So that way we're not trading the same names and we're having some type of dialogue around pricing and risk allocation. Could I ask a question of Matt and Mike? I realize that a lot of this is incremental in nature and you're getting there with steps, but what have been some of the challenges or hurdles that your plans have had to address to get to this point? So obviously there's infrastructure, there's building the tools and the operations to manage this. We lend in 35 markets globally. So 35 equity markets, and then a subset of that are also fixed income markets. So that's a pretty big infrastructure. You need trading desks that are open. I believe some people trade overnight, but you need local trading desks. So the agents provide that scale. They provide a networking effect, but there were pieces of it that we could do ourselves. We had some history with TRS that we could leverage. We insourced our equity back office years ago so that we can manage the asset servicing, the reconciliations, the transaction management and settlement on that, and have automated those processes so that we think we can do that quite well. For us, a lot of this comes down to infrastructure, right? The size of our programs and everything make these things not easily taken up. And, you know, really a lot of it comes down to having the systems that are able to kind of do this at the size needed. And so really for us, it's infrastructure and data transparency, being able to understand what's going on with all these tools and being able to put them together in a like-for-like way so we can understand them. Besides that, for us, a lot of these tools have kind of come, you could say it's like necessity is the mother of invention, right? You kind of get to a point in your evolution and you say, okay, now what? And the next step is obvious and then is taken on. So I don't know. Do you call those challenges or opportunities? I'm not sure. I think you guys are kind of answering this question with what you both just said. But if you had a situation where your boards or your executive groups that are dictating resources were all of a sudden told you securities lending or securities financing has unlimited resources coming from this organization starting tomorrow, And if you need it, we will allocate it. If you need budget for it, we will support it. Would that change? And I appreciate that that's unlikely to ever happen and all of the reasons why this is a dream scenario and not reality. But in that dream scenario, would any of your responses that you just shared evolve or adapt differently if you were given unlimited resources and had the ability to either build out things or hire more people or bring different systems in-house, et cetera? Yeah, I'm not sure. You know, where is the next bit of low-hanging fruit, right? You're always going to tackle projects by what's the best opportunity at this moment. I'm not sure if like rebuilding the whole SEC lending program internally is where I would immediately jump to given unlimited resources. Maybe it's more like building more agility among these kind of various insource and outsource tools, but that's certainly a lower lift and doesn't require unlimited resources, but something ample limited resources maybe. And maybe that's where I'd go first. So your answer might be back to management or your board that you're happy to share those unlimited resources with many other areas of your organization. Make good in other places too. Maybe I'd hoard them, but I wouldn't use all of them at once. What's all of them if they're unlimited? Yeah. Yeah. I think, Brooke, if you would have asked me even four or five years ago, I probably would have said no, that the securities lending has been one of the last places in the financial markets that has really developed the technology and the automation to deal with these problems. And agents in the past have just thrown bodies at it, right? But technology has finally come to our corner of the world in different places are farther than others. But I think I wouldn't take unlimited people because I think we're pretty good at building and automating systems. But yeah, I think there's definitely a case to be made there where you can utilize some of the technologies, some of the expertise, some of the ways of communication and data moving to APIs from file transfers, etc. Some of the ways that even the agents have automated some of their trading and interaction with borrowers, albeit that's been challenging the first quarter of this year. Yeah, I think you do it, but you still have this problem. I would put it in the category of operational risk, where you kind of ask yourself, what are agents good at? The agents are banks, and what are banks good at? They create relationships, they manage relationships, they have documentation supporting this plethora of client and financing relationships, they have networks across the world operationally and trading-wise, et cetera. And so when you move out of an agency program, sorry, I'm gesticulating with my hands and people can't see that, but you move from a one-to-one relationship on your instructions, if you're selling stock that generates recalls, if you're doing corporate actions and you're choosing elections on that, you notify the agent and then the agent notifies your 57 borrowers of that, right? You remove that agent and now you've got 57 nodes instead of one. And there's 57 more ways to screw that up and take losses as a result of it. And people that have worked in corporate actions know that those numbers can be pretty big. But technology is getting us there, but that's something to bear in mind, I think. Yeah. Okay. And Jerry, maybe just going back to when you did decide to take in some of the trading in-house, can you maybe just give a little bit of perspective on how you approach that? Because maybe for the listener's benefit, you do just the trading. And so you're not doing the back office admin portion of everything Matt just referenced. But can you maybe talk about how you sort of came to that conclusion and what went into that thought process and analysis? Yeah, definitely can. I will just comment one thing in regards to your last question about what would we change if we had unlimited resources? Oh, you want the unlimited resources as well? Yeah, if it's going around, I'd like it. All right. I'm sorry I left you out of that one, Jerry. I didn't mean to limit you in any way. That's fine. I would just say about that, that probably in addition to the technology, the one area that we would probably really focus on are external threats. Regulation in particular the last two years has really come out in ways that we think are going to be impactful to our program and other programs similar to ours. So being prepared for those things, having the resources that could address those directly, I think would be an important change that we could make. Interesting. Yeah. No, and it's not something that people probably think about all the time. And not that anyone ever wants more lawyers in their lives, but whether that be more lawyers looking at things like that and thinking proactively about how to structure things differently? And kind of how do you put in place solutions that are going to help address the new way forward if regulations do continue to change and adapt? That's an interesting one, and one that's very relevant to probably other market participants right now. I mean, I'm sure the amount of focus that the banks have in that space is pretty significant right now. But Jerry, back to the other question, what was your thought process around when you brought the fixed income trading in-house? So the first obstacle that we had to overcome was fear. I mean, because nobody was doing this. So that's a big hurdle. And that's one you have to tackle with management and a board who are at times perhaps more prone to that. And so that emotion had to be overcome. And we had to do it with what we thought were legitimate numbers. I came with a background of being in a agent lender capacity. I did securities lending for 10 years before I got to Ohio Purse. So I was able to draw up on some numbers that I had seen and I had been a participant in. So that helped a lot allay some of those concerns. And then we focused on what resources do we need, and that included technology as well as human. Once we had management support, that's the path that we went down is to ensure that we had the right resources in place, that we had the right partner externally that could do it, and it worked out well. Thank you, Jerry. And I want to wrap up here in a bit just to make sure we keep our listeners with us on this first Peer Connections reboot podcast. But the one thing that I feel like we'll miss if we don't address here before we conclude is none of you are Canadian and none of you are with Canadian organizations. And we all know within the GPFA peer community and just even outside of it broadly that the Canadian pensions do take a much different approach than many other global beneficial owners. And they've sort of been at the forefront of insourcing securities lending over time. And many of them take if there was a spectrum, and you all were somewhere on that spectrum, the Canadians are going to be even further along than you all in terms of the activities that they manage in house. And so many of them don't even use an agent for any of the functions and services that some of you are talking about. I'm not asking you to speak on their behalf, because we could always get them to do their own podcasts as well. But any thoughts in terms of where you think some of the differences, the whole like why, why are they approaching it this way versus you're choosing not to? Do you have any maybe closing remarks that might help just even summarize what it is you've already shared? But I just do think it's an interesting compare contrast when you look at the three of your programs versus some of the known Canadian pensions that are in the GPFA community. I can go first on that. So it's great to speak on behalf of our peers that aren't on this call. We'll let them judge you afterwards. If I had to contrast with our own fund and our own program, two things come immediately to mind. One is the asset mix or the asset allocation of the portfolio. We have almost no private assets. We have 3% of our portfolio in real estate and infrastructure. Most of the Canadian peers that I know are very different from that. They have up to 50% of their assets in private markets. And two, within the public markets, as I said earlier, we're invested in over 70 markets globally. We're lending half of those just because the other ones don't really have much of an infrastructure to utilize. So they've done great work, nothing to take away from them. I think they're inspiring to talk to about how they've come down that road and how they think about markets, but the public markets are a bit more limited. and somehow they can manage to trade those from their home in Canada. And so I don't know specifically, but I think they have less markets to cover on that space. So it's a little bit simpler. And then maybe I'll add a third while I'm thinking at the same time, is there's also, because of the private assets, they have much more value in the liquidity aspect of securities finance and the options that managing that internally can give you in terms of how do you finance some of those private assets? How do you finance transitions, leverage, if you want to call it that, et cetera, that not all of us have, but I'll let someone else try now. So Jerry, any thoughts that you have? Yeah, I think very similar to what Matt had said and what Mike had said in a different area, but they have a perspective on the total plan that I think is advantageous for them. They manage a portfolio that they don't care really as much about whether they hold a derivative or if they hold a physical security. And I think if you looked at their portfolios compared to at least the U.S. plans, there would be some significant differences in that regard. I also think that quite a few of them have resources that they've dedicated to this process in terms of people and technology that just overwhelms what the U.S. plans have ever committed to this process. So all of those together, I think, show that, yes, they're much further along the path than at least the U.S. our plan is. You know, I'll just add also, maybe echoing, Jerry, what you and Matt said, we all get lumped together, but there are nuances across all of our plans that determine our path, right? And we're all at the point we are kind of because of that. And it's hard to place a value on why or if it was the right decision, but it's very path dependent. And I think the key that I think maybe we're all expressing here, and maybe the Canadians are a really good example of is make those decisions, make active decisions about how you manage these things. Don't put it on cruise control. And the path might look different across all of our peers, but the unifying factor is that we're actively thinking about it. And I think maybe that's one thing to take from the Canadians is that they've really focused on this area. That's great, Mike. And I think it's a nice concluding thought. Although I do think that if any of you also have concluding thoughts, sort of a takeaway to market participants that are not beneficial owners, that are other agents or vendors out there. I'm sure we'll also tune into this and listen with great interest. And I think the overall message is that even the topic of insourcing for all three of you is one done in partnership with many other market participants, many other agents and vendors. And that doesn't mean that all of a sudden you're looking to go it alone. And really, ultimately, it sounds like the three of you are looking to move forward in partnership with your key vendors, partners, agents, whomever it may be, and continue to evolve that way. So I don't know any other closing remarks, whether it be in that regard or any other messages to our listeners before we wrap up. I think it comes down to identifying, we always like to talk about competitive advantages, but what's the skillset of your team or your organization? Are you good at creating technical solutions? Are you good at automating processes, because this is an area with loads of operational risk. I'll come back to that. And if you're not, I think you're going to struggle. Or just the hybrid model makes a lot of sense, right? So where I'm really impressed with the Canadians is that they've found technical solutions to really complicated problems. And I think that's super interesting. But if your skill set is trading, if your skill set is picking the right credits in your cash reinvestment, then stick to your lane. That's kind of my conclusion. Well, good. Okay. Well, thank you, gentlemen. I really appreciate you all taking the time to podcast for GPFA and getting back on the mics. And it always comes up whenever we podcast, there's always references to that topic being another podcast that we could do. And so my goal is to keep the GPFA series alive and well, and hopefully we can ask the three of you to contribute and convince some of your peers to get on the mic as well. So thank you. And listeners, we will hopefully talk to you again soon. Thanks all. Thanks for listening to another episode of Peer Connections by GPFA. We hope you found the information shared in this podcast interesting and beneficial. And as always, please feel free to reach out to GPFA with ideas or interests for future episodes. And if you liked what you heard today, don't forget to subscribe wherever you get your podcasts. Now for the disclaimer, the opinions expressed in this podcast are those of the presenters and do not necessarily reflect the views, or opinions of their respective employer organizations. This material is for your private information and does not constitute legal, tax, or investment advice. There's no representation or warranty as to the current accuracy of nor liability for decisions based on this information.