The eSecLending securities lending auction platform has made an important breakthrough in Europe by conducting its first auction for a Europe-based client.
The company won a securities lending auction mandate from the Frank Russell Investment Company plc, and conducted an initial auction of exclusive borrowing rights for $1.5 billion of global equities on its web-based eSecAuction platform on 23 April.
eSecLending says several major financial institutions submitted bids, and the winners included Barclays Capital, Deutsche Bank Securities Inc., Lehman Brothers Inc. and UBS Warburg. Exclusive borrowing rights were awarded for staggered terms (depending on the portfolio segment) and will expire after terms of between 9 and 18 month, after which rights to the securities will be re-auctioned.
“We are very pleased with the results eSecLending has helped us to achieve,” says John Poole, Manager of Fund Administration & Operations for Russell in Europe. “The auction process has allowed us to capture additional performance for our funds, whilst at the same time not requiring us to compromise our very strict risk control parameters.”
The transaction is a further important step for eSecLending in dispelling allegations by its detractors that it is a one-lender operation for the giant Californian pension fund, CalPERS, as well as proving that its business model works on both sides of the Atlantic. Having signed up SEI Investments in the autumn, and a number of interested lending prospects lined up in the UK, eSecLendng can justly claim to be servicing a spectrum of lenders in both the US and UK and to have a steady stream of auctions scheduled.
“We are very pleased to have been hired by Russell in Europe,” says Susan Peters, Chief Executive Officer of eSecLending. “Our customized auction and lending model works well for their multi-manager investment strategy and their risk parameters. The first auction we held for their global equities was a tremendous success. We are pleased to count Russell in Europe amongst our clients and we look forward to future successes with them.”