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Equilend : EquiLend 10th Anniversary
equilend – 10 yeaRS of innovaTion 22 D ecades: When did the idea for EquiLend first occur to you? State Street was running an internal seminar with experts and consultants from outside the firm to discuss the opportunities provided by the internet. I pictured the four participant groups in our industry – hedge funds, broker- dealers, agent banks and pension funds – and saw clearly that they were not joined by a simple set of connections but via a spaghetti- like mess. When you looked at the model, it was clear that the two middle men – the agent lender and the prime broker – were ripe for streamlining. This idea matched to my well-formed concerns that our business was at risk of disintermediation by broker-dealers going directly to our clients; it led to the notion of an exchange-like vehicle. Why was it so hard to get support for a bid-offer exchange? My original idea was to create a full exchange with its own credit facility. At BGI, Judith Robertson and John Martinez were pushing benchmarking as a step towards price discovery; we at State Street were behind this. It would have given us a view of how much the broker-dealers were marking up our stock in exchange for the credit risk they took on. Manufacturing consent In 1999, State Street’s Ralph Vitale had the original idea that, two years later, would give birth to EquiLend. He reveals how he got the industry’s ten leading players around the negotiating table – and kept them there – as chair of EquiLend’s first management committee EL.indb 22 26/08/2011 09:56