A glimpse of nirvana for securities lenders was offered today by SecFinex. The online marketplace for securities finance says it has hosted three successful auctions, which ought in theory to allow the owners of securities to maximize the value of the securities they lend. Three auctions have been completed.
The SecFinex auction system allows lenders to create auctions at any time, defining various parameters such as size of auction, reserve level, and collateral, as well as determining which firms can bid at the auction. Bidders can bid as many times as they wish. All bids are firm and the highest bid wins the auction. Sarah Nicholson, Head of Securities Lending & Repo at Morley Fund Managers is pleased. “We have run two auctions on the new SecFinex auction system and have been very impressed with the functionality,” she says. “It has resulted in better transparency and thus we have achieved higher lending rates than in the bilateral market.” John Oddie, Chief Executive Officer at SecFinex, added: “The introduction of on-line auctions to the SecFinex product line has been very well received by the marketplace, both by lenders and borrowers. We are heartened by the response to the first few auctions that have been completed on the system.”
In a separate development, seven additional firms have signed up to use the SecFinex system bringing the total number of firms active on the system to 24. New firms include ING Bank NV, Macquarie Bank Limited and Schroder Salomon Smith Barney. “The SecFinex system enables us to efficiently manage the anticipated growth in our securities financing activities due to the imminent opening of an index arbitrage desk in London,” explains Henry Lee, Associate Director Equity Markets at Macquarie Bank Limited. But it is the arrival at SecFinex of ING Bank which is more significant: it is the first custodian or agent lender bank to join the system. “ING is delighted to be the first custody bank to join SecFinex, which will benefit our custody customers by streamlining our lending processes and moving us closer to straight through processing,” commented Jan Bart de Boer, Senior Manager of Securities Lending at ING Bank in Amsterdam. John Oddie is not slow to recognise the importance of the move. “ING’s decision to join the SecFinex trading platform is yet another indication of the different types of leading securities financing industry players that are recognizing the significant benefits available to them from SecFinex,” he commented.