Beneficial owners are asked to rate the performance of their agent lenders.

Respondents are asked to rate their agent lenders across 12 service categories (see below) from one (unacceptable) to seven (excellent).

CALCULATIONS

There are two methodologies: unweighted and weighted.

Unweighted methodology

All valid responses for each agent lender are averaged to populate unweighted tables. All beneficial owners’ responses are given an equal weight, regardless of the size of their lendable portfolio. All categories are given equal weight regardless of how important they are considered to be by respondents. No allowances are made for regional variations.

Weighted methodology

The weighted table methodology makes allowances for both the size of the respondent’s lendable portfolio and how important the respondents, on average, consider each category to be. An allowance is also made for differences between average scores in each region to make meaningful global averages.

Step one – weighting for lendable portfolio: A weighting is generated to reflect to the size of the respondent’s lendable portfolio. Each respondent is put into a quartile depending on its total lendable portfolio. The scores of the respondent are then given a weighting based on this quartile. As the boundaries of each quartile are determined by all the responses received in this year’s survey, the boundaries are unknown until the survey closes.

For the purposes of the 2016 survey all Asian responses will be given a weighting of 1. Asian responses will not be included in determining the quartile boundaries. However all Asian responses will be subject to step two – see below.

Step two – weighting for importance: An additional allowance is made for how important beneficial owners consider each category to be. This is done to acknowledge the fact that beneficial owners consider some categories to be more important than others.

Respondents are asked to rank each service category in order of how important the function is to them. An average ranking is then calculated for each of the twelve categories (11= highest ranking, 0 = lowest). This number is then divided by 5.5 to give a weighting within a theoretical band between 0 and 2, with an average of one. Again, basing weights around one is done to preserve comparability with unweighted scores.

To illustrate, if every respondent considers category X to be the most important it would get an average rank of 11. This is then divided by 5.5 to provide the weighting for category X, i.e. 11 / 5.5 = 2.

TABLES AND SCORES

Overall tables

The overall table contains all responses for a lender regardless of its relationship with the beneficial owner, whether custodial or agent. The following scores are calculated: separately for each region, a global total, a global average and for each service category.

Regional scores are the average of all responses from beneficial owners based in that region (it is the location of the beneficial owner, not the lender, that is the relevant). There are three regions. A lender must receive a different minimum number of responses to qualify in each: seven in the Americas, five responses in Europe, Middle East and Africa (Emea) and four in Asia Pacific. To qualify globally, a lender must qualify in at least two regions.

Custodial and third-party agent lender tables

Ratings of lenders acting in a custodial or third-party agent lender capacity are recorded in separate tables.  The respondent is asked to define their relationship with the lender: custodial, agent or both. If the relationship involves both forms of arrangement, the response counts for both the custodial and agent lender tables. Therefore, some responses will be included in both the custodial and third-party agent lender tables. All the scores calculated for overall lenders will be replicated for custodial and third-party agent lenders separately.

The qualification criteria is lower for the custodial and agent lender tables compared with overall. To qualify for either the overall custodial and third-party agent lender tables, lenders need five responses in the Americas, four in EMEA and three in Asia Pacific.

Most improved

The agent lender that improved its score by the greatest margin over its equivalent 2014 score is the most improved firm. Agent lenders are ineligible if they did not qualify for the 2014 survey.

Service categories

Respondents are asked to rate each of their providers from one to seven across 12 service categories. The ratings of respondents for each service category are averaged to produce the final score for each provider. The service categories are:

• ·         Income generated versus expectation
• ·         Risk management
• ·         Reporting and transparency
• ·         Settlement and responsiveness to recalls
• ·         Engagement on corporate action opportunities
• ·         Collateral management
• ·         Relationship management/client service
• ·         Market coverage (developed markets)
• ·         Market coverage (emerging markets)
• ·         Programme customisation
• ·         Lending programme parameter management
• ·         Provision of market and regulatory updates

To qualify for each service category table, the lender needs the same amount of responses as to qualify for the corresponding main table; i.e., to qualify for an overall, custodian or agent lender service category the lender must qualify in two of the three regions (for example, five responses for that category in the Americas and four in Emea). A lender can qualify in some categories and not others – it does not have to qualify globally for all service categories to be any particular service category.

VALID RESPONSES

For a response to count for the purposes of qualification, the beneficial owner must rate the lender in no fewer than eight of the 12 service categories (i.e. it can tick n/a in no more than four service categories).

It is possible for a lender to qualify globally or regionally without qualifying for all service category tables, if it receives n/a responses for certain categories. For example, it may not offer emerging market coverage and therefore receive a string of n/a ratings in that category but qualify for all other categories, regionally and globally.

If a lender receives two or more responses in the same region from the same beneficial owner, an average of the ratings will be taken and it is considered to be one response for qualification purposes. If a lender receives two or more responses from the same client in different regions (e.g. pension scheme X rates lender Y in EMEA and the Americas) the responses are not averaged and are counted as separate responses for qualification purposes.