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Equilend : EquiLend 10th Anniversary
equilend – 10 yeaRS of innovaTion 04 LaurEnCE marsHaLL managing director, chief operating officer Decades: What was the objective of EquiLend at the outset? Ben: It was initially unclear: even before the get-go, there was disagreement. Ralph Vitale wanted it to be a securities lending bid-offer exchange; the broker dealers wanted it to be a collection of middle-office post-trade processes designed to bring automation and efficiency to an industry that, at the time, was woefully behind. Brian: It was the latter position that won out. What EquiLend’s members finally agreed upon was a single ambitious goal: outsourcing front-to-back interoperability to a consortium that would exist as a utility in the middle of the market. The model would be applicable in every country to allow members to manage and scale-up their business around the world. But there really was no consensus about how to get to that goal. The early weeks and months were characterised by a number of meetings, discussions, debates and even arguments – it was a brutal time. The founding members had all had something in mind and were trying to promote their concepts to their advantage. Laurence: Firms had real concerns. At UBS there was considerable anxiety from traders that their jobs were at risk. Because of the confidentiality issue, the number of founder firms was small; there was a perception in the market that this was too few for it to be adopted on a large scale, and so be useful. Finally, there was the objection that this would create a two-tier market – I remember discussions about that. Decades: What was EquiLend’s governance structure and how was the company organised? Brian: There were ten owner firms, a US board, and a UK advisory board. Each firm had a representative on both boards, which met every month. In addition, there was an interim management committee to which Dirk Pruis and I reported every week. Initially, these reports involved considerable detail because many board members found it difficult to trust each other. Paul: I remember my first day at the firm after Dirk and Ben had started to hire staff; it was quite a shock. I was used to working There was a single ambitious goal: outsourcing front-to-back interoperability to a consortium that would exist as a utility in the middle of the market” Brian Lamb B y December 2000, the ten founding members of EquiLend had come together to sign a letter of intent. But the path ahead was far from clear. Board chair Ralph Vitale of State Street had a definite view of what he wanted to accomplish, but few other participants had strong convictions. Many were there because they didn’t want to miss out: they knew something would happen and that it might have a detrimental effect on their business. But how they should influence EquiLend’s development was a difficult question for them. Following an initial $150,000 commitment the previous year, in 2001 the ten firms were asked to provide $4m and one full- time member of staff in each of five key areas: trading, technology, operations, legal and project management. Technology consultants NerveWire were engaged to help develop and build the platform, in a deal worth $35m. Brian’s background at BGI had encompassed trading, operations and technology. He was appointed, alongside Dirk Pruis of Goldman Sachs, as one of two program managers who reported directly to the EquiLend interim management committee and Board of Directors. Ben, EquiLend’s longest-standing employee, had worked at PWC, before becoming the firm’s second hire after Dirk Pruis. There was concern around a team staffed entirely by external consultants, so Dirk and Ben were tasked with building a team of full-time employees to run the platform after it had gone live. Paul, hired in June 2002, from PWC’s audit practice, became EquiLend’s chief financial officer, overseeing the firm’s financial and human resources as it grew. In August 2005, Dirk retired from EquiLend and Brian took over the reins. Laurence, now COO, came from UBS; he had previously held the position of chairman of the board of EquiLend Europe Ltd. >> EL.indb 4 26/08/2011 09:53