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Equilend : EquiLend 10th Anniversary
Profile: john Martinez Decades: What have you been doing since you retired in 2003? Retirement has given a lot of time for me to participate in my family’s development: I have a 19-year-old son at NYU, a 13-year-old son and a 10-year-old daughter. I still have contact with the industry through a board position I hold for iShares as well as, until recently, sitting on the Independent Review Committee for the Canadian iShares funds business. But for the last nine years I’ve also been involved as a board director for Larkin Street Youth Services. This is a not-for-profit organisation providing services for homeless, runaway and at-risk youth here in San Francisco. We have both emergency and transitional housing programs, as well as education and health programs. The health projects, which are partly in partnership with San Francisco general hospital, help children on the streets who need medical, mental health or addiction services. In turn, we aim to get them to transitional programs in education and job skills, partnering with the San Francisco School District. Decades: Is there a common thread to your work before and after you retired? What is common to the work I did at BGI, my work with EquiLend and what I do now at Larkin Street is my interest in transparency and measuring performance so that results can be demonstrated. What drove me at EquiLend – and what drove us at BGI – were the twin benefits of transparency and efficiency. With Larkin Street what attracted me, beyond the mission, was the opportunity to measure outcomes of the work to ensure that our services achieve what we intend. The common thread there is transparency: part of our strategic plan at Larkin Street is to have a strong organisation to ensure that, as a business, we’re investing wisely and can see the return in terms of agency performance. Another element is research and dissemination, where we measure the effectiveness of our activities by following the homeless youth to see that they’ve maintained a level of independence and are pursuing goals after they have finished using our services – this is very important to donors as well. This enables us to say, for example, that among the 5,700 homeless youth in San Francisco, Larkin Street last year provided some sort of service to 3,400 of them, that 76% of the youth that complete programs stay off the streets for good and that 84% of Larkin Street’s funding goes directly to program services. // Curriculum Vitae (extracts) 2003 – director, larkin street youth services 2003 – director, us ishares fund complex 2000 – Ceo, Global index and Markets, bGi 1996 – Ceo, Capital Markets Group, bGi Left: John martinez at an outreach education project of larkin Street youth Services, where he is a director more transparent, but no one wanted to be left behind when, inevitably, it happened. No one wanted to miss the boat but no one wanted it to leave the dock. Ultimately, we settled on some common interests related to operating efficiency, transaction processing and settlement, and that was the initial value that EquiLend provided. Despite the early challenges, once EquiLend was set up it worked very well: we were all owners, we were all investing resources and we all wanted it to be a success. I don’t remember anyone involved with it not being fully supportive once it had launched. Decades: What challenges does the securities finance industry face over the next few years? In the US, the regulatory challenges are considerable. Now that retail investors have become more involved in securities lending through the involvement of mutual funds, the SEC has heightened its focus on the industry. The regulator wants to understand the risks to investors, the terms between lending agents and borrowers and the potential conflicts between mutual fund managers and affiliate lenders. But the growth in ETFs and index funds is good for supply because funds that index don’t trade as much as active managers so there is less chance that the loaned stock will have to be recalled. I’m not sure where the fallout from the market collapse – the huge shrinkage of leverage and risk-taking on balance sheets and in client portfolios – will end for securities lending. The low rate environment is obviously tough, too; this is a spread business, so if rates are at 30 basis points then there’s not much spread to make and profitability is getting challenged. But I don’t think this means that participants will get squeezed out of the markets. For the larger firms securities lending is typically part of a broad offering of products that are valuable to clients, and one of a portfolio of businesses which there are good diversification arguments to retain. No one wanted to miss the boat but no one wanted it to leave the dock” 60% proportion of San Francisco’s homeless youth who benefited from facilities provided by Larkin Street Youth Services in 2010 www.equilend.com 13 EL.indb 13 26/08/2011 09:54