GC Friday Interview: Brian Lamb, CEO of EquiLend on South Africa’s Securities Finance Market

Although most securities market trading in South African names occurs off shore, trade and post-trade service and platform provider EquiLend has taken its first local client, Barclays Group Africa’s banking entity Absa Bank, live on its trading platform. EquiLend CEO Brian Lamb sees the deal as opening a new market that will encourage more securities finance trading domestically rather than offshore.
By Rob Daly(2147487629)
Although most securities market trading in South African names occurs off shore, trade and post-trade service and platform provider EquiLend has taken its first local client, Barclays Group Africa’s banking entity Absa Bank, live on its trading platform. EquiLend CEO Brian Lamb sees the deal as opening a new market that will encourage more securities finance trading domestically rather than offshore.

GC: How would you describe the South African securities finance market?

BL: I’d say it is a mature market. We commissioned jurisdictional surveys of every country that had securities finance activity, including South Africa, 13 years ago. It has taken us some time to receive the go-ahead from the local market regulator, in this case South Africa’s Financial Services Board, to offer our trading services. We’re excited that we now can offer our efficient trading and post-trade offerings to the South African market.

GC: Is this EquiLend’s first toehold into the South African securities-finance market?

BL: Yes, it is. Absa is our first domestic South African client. We also are in advanced discussions with a few other banks in South Africa and hope to have more news on those in the very near future.

GC: What did EquiLend need to do in order to participate in the South African market in terms of meeting regulatory requirements?

BL: Wherever we go, the local market regulators pay attention. We want to be above board and clear to the local regulators that we want to help and that we have a platform that will make their markets more efficient.

You’d be surprised to learn that EquiLend is a FINRA-regulated broker-dealer in the US, a FCA-regulated multilateral trading facility in the UK that allows us to passport our services to the rest of the EU and an IIROC-regulated alternative trading system in Canada.

Depending on the market and its regulators, we secure either regulatory approval, regulatory exemption or are deemed not required to do either to operate our platform domestically. South Africa is an example of the latter.

GC: Did EquiLend have to set up a footprint in South Africa to deliver its services?

BL: Not at all. All the trading on our platforms happens locally, but the trades are matched, or compared, on machines that reside in our datacenter in Carteret, N.J. We are an application service provider, so the application sits on our machines, and our clients access the platform via leased lines or an Internet connection. It allows us to be very flexible in how we connect new clients to our services. Whether our clients are in Japan, Hong Kong or South Africa, they are interacting with our servers in Carteret.

Our CTO once told me that when we started 13 years ago, we were the cloud before anyone started using that term. That is pretty much how we operate. We’re open for business 24 hours a day, six and a half days a week, covering every marketplace in the world.

GC: How long did the negotiations with Absa take?

BL: It took fewer than 12 months. Once the South African market became familiar with our product offering, it became compelling. It allows them to play on a larger scale and [offers] the potential to trade with more counterparts, which would allow them to distribute more of their business.

GC: Was Absa’s EquiLend selection precipitated by the Johannesburg Stock Exchange’s move to a T+3 settlement cycle?

BL: The two are related, but it probably was not Absa’s primary motivation. I think their initial interest stemmed from our DataLend market data product, which we launched in early 2013.

The South African market took notice of it, which led to conversations about our core services, EquiLend platform services. In turn, that led them to want to use the highly efficient and automated tools that we offer for trading and post-trade of securities finance. It will also help with the shortening of the settlement cycle.

GC: What is next for South Africa?

BL: We’re hoping to have three or four [more clients in South Africa], both domestic and the local offices of global banks, by the end of the year. The larger banks are operating offshore in the over-the-counter market. They’ve always been transacting South African securities over the counter, but may not be dealing locally.

«