EquiLend is a relatively new product in securities lending but thanks to the backing it enjoys from 11 of the biggest banks in the industry it has quickly established itself as a leader. It is now tipped to bring standardization to this notoriously fragmented market.
The platform was founded by 10 banks in May 2001 and is an approved broker-dealer. Deutsche Bank became the first non-founding member to join in October 2002. EquiLend’s aim is to act as a utility for those involved in securities lending.
The platform has been modelled in such a way as to increase the ease and efficiency of borrowing and lending large volumes between those firms. It had already processed $120 billion of securities lending volume by October this year. The system also facilitates a lot of back-office efficiency for its users.
The banks have created a central hub through which they are all connected with each other and can make enquiries and execute trades. This eliminates the need to communicate with each bank individually.
The system has an auto-borrow facility that enables borrowers to set up their system so that it automatically sends out its borrowing requirements to the platform, where they are automatically matched. Then the user can start the day with deals already completely filled or partly filled. EquiLend is not involved in the trade but facilitates the deal.
The Equilend platform will try to match as many transactions as possible. Those that aren’t matched are highlighted for the institution’s operations to deal with. The platform matches transactions on four levels, including strict matching based on 17 parameters.
One of the real efficiencies that Equilend enables is in the post-trade environment where the system offers contract comparison, billing comparison and marking to market. For example, this means that any discrepancies between contracts can be discovered and corrected before they result in a failed trade.
