Equilend, the securities lending platform controlled by a ten-strong consortium of investment and custodian banks, will start trading before the end of June. In an interview with www.globalcustodian.com, president Dirk Pruis and CEO Ian Drachman confirmed that Equilend was on course to open for business by the end of the first half of the year. The IT platform is built, and the only cause of delay is the need to secure regulatory approval to act as a broker-dealer from the National Association of Securities Dealers (NASD).
Four out of the six key functions of the Equilend platform will be available immediately. On the negotiation side, the one-to-one and one-to-many negotiation tools (corresponding to the telephone-based market of today); the availability tool (which allows lenders to advertise what they have); and the automated borrowing tool (for the commoditised overnight GC market) functions will all be ready for use from the outset. So will one of the three operational tools: the contract comparison tool (which will enable firms to check open contracts with each other are filled, on a day-to-day basis). The two remaining operational functions – namely, the billing tool and the bi-lateral mark-to-market function for any necessary movements of collateral – will follow less than a month later.
The pricing models and fee schedule are yet to be made public, but Pruis and Drachman promise they will be both simple and designed to attract a broad range of users from around the world. Indeed, both men reject the widespread supposition that Equilend is a cartel rather than a platform open to all-comers. “Equilend was initially built for the ten founders, because they did provide the capital and the intellectual capital which define what it does and how it operates, but it is hopefully going to be a utility for the industry,” says Drachman. “We are looking for other participants to join. It is only because we have a broker-dealer licence pending that we are prohibited from marketing the platform, and talking about why we are here and what we are looking to do next.”
Equilend was formed in May 2001 by Barclays Global Investors, Bear Stearns, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Northern Trust, State Street and UBS Warburg.