by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Equilend : EquiLend 10th Anniversary
equilend – 10 yeaRS of innovaTion 24 J ohn: We had a prior relationship with Ralph Vitale, from work we’d done as consultants for State Street in the past. Early in 2000, we were helping with their business-to-business e-commerce strategy for securities lending and developed the idea of a global ‘hub’ for securities lending. Ralph then worked with a number of the leading financial institutions, including J.P. Morgan Chase, Morgan Stanley and Goldman Sachs, to think out the vision and strategy for the new initiative. Certainly, there was a realisation that the advent of the dot-com era would change the industry and that much of what was currently performed in a point-to-point way could be done electronically through a web-based hub. Also, these institutions realised that a number of new entrants and pure auction sites could arrive to disintermediate them – particular the brokers. This wouldn’t suit the lenders either, since they would have to take on huge counterparty risk: it’s one thing dealing with Goldman Sachs but another taking on the credit risk of a small hedge fund or even a private investor. In this scenario, lenders feared that they’d be cut out, too; what was stopping someone letting a hedge fund deal directly with CalPERS via the internet? EquiLend was rare: its innovation was not born out of a crisis. Instead, it was generated from a few people with some vision coming together and saying: “If we can put aside our differences then there may be a way to make things work better for all of us.” But at that point it was only the idea; no consortium had been set up. We worked for three or four months until, in early fall, the idea of a global platform for securities lending emerged and the remaining six firms came on board. From January to April 2001, the group worked through key questions to devise a direction for the project: should it be a full auction site; should it be open or closed; should it focus on one-to-one transactions; should it be based around AutoBorrow [AutoBorrow is the fully automated transmission of orders for securities loans and the fully automated acceptance of those offers, which together constitute a trade]? Taking the stage John Plansky, CEO, and Jamie Solomon, chief technology officer, won the biggest deal in their firm’s history when 180-person NerveWire beat industry giants Sapient and Booz Allen to the $35m EquiLend build contract. They tell Decades how they did it and what happened next EL.indb 24 26/08/2011 09:57