This award goes to a site that stands out prominently from the competition. The Barclays Capital Strax platform has been running for two years, helping communication by sitting between the borrower and the lender. But Barclays Capital itself steps away from the negotiation and guarantees the risk from both sides. That is, Strax facilitates direct negotiation between the bank’s hedge-fund customers and the lending community, while Barclays Capital remains the principal intermediary.
The site offers all the expected market commentary and news feeds but it stands out because of its attempt to bring more transparency to the market.
The site is used by 55 hedge funds, which account for around 145 individuals. On the other side, 14 lending institutions, which are both agency and principal lenders, account for about 90 people. Clients tend to be global, so they will lend and borrow into any market.
Strax allows borrowers to interact directly with potential lenders online. Lenders put their prices on the web for borrowers to view, and the identity of the lender is available on the site so that the borrower can make an informed assessment on the stability of the securities it wishes to borrow.
This means that the borrower can assess whether the lender is a passive index tracker, which will typically hold the security for a longer duration, or an institution that is highly active and, therefore, may recall the security sooner than the borrower initially intended. The lenders post about 580 hard-to-borrow equities a month, and borrowers ask for around 840 names a month.
Barclays Capital’s prices as a prime broker appear alongside those of the lenders, which forces the bank to ensure its spreads are competitive. The bank has also obtained historical data from agent lenders on their lending activity.
