Why did EquiLend move into Australia?
EquiLend has been offering its post-trade services in Australia since inception. The move we made last year by working with the regulators was to permit the use of our trading services by domestic entities within the market. Offshore trading flow in Australia has been there since the inception of EquiLend.
Having said that, why did we move to allow for domestic trading to flow over the system? The simple answer is that our clients asked for it. Since opening our office in the Asia Pacific region in 2011, our client base in Australia has been requesting this move. It took some time to apply and receive regulatory clearance from the Australian Securities and Investments Commission to allow domestic trading in the market, but we are happy to report trading has been active domestically in the market since we launched it last year.
Was it important to current clients, or is about attracting new ones in that part of the world?
It was both. Our global clients that have domestic entities wanted to have the efficiencies onshore that EquiLend provides for their offshore businesses. For those clients, it was also about being able to use the system with local clients that previously could only use the system from a post-trade perspective. Those new clients are very keen on the system, as they are seeing the efficiencies that our current clients have enjoyed for a number of years.
How has your platform been used since you went live in Australia? What would you attribute these trends to?
Since day one of being granted permission to allow trading in Australia, we have seen the system used by the local community. As you may expect, it has seen a few teething issues, as often Australian domestic books can be separate to the rest of the world, but as we have seen those issues resolved by clients, usage has ramped up.
Having said that, we feel that 2015 will be the year where we see a significant increase in trading volumes in this market as domestic firms sign up to the system and current users work on making sure their systems give them the efficiencies that EquiLend provides.
Why do securities lenders and borrowers use the EquiLend platform in the US and Europe? Is this similar or different to what you have seen in Australia, and why?
EquiLend has been offering trading and post-trade services globally since inception, and in 2013 we entered the market data business as well with DataLend.
From a trading perspective, historically, EquiLend primarily was used for general collateral trading, but in recent years this has shifted to cover trading of the harder to borrow names. Now we see around 20 percent of our trades in the warm and hard to borrow names, and as our new NGT platform is rolled out, we anticipate this growing even more significantly across the globe.
In Australia specifically, we are still seeing our trading platform used at present for general collateral trades primarily, but this is mainly due to clients wanting to get comfortable with the product before expanding outside of this area of trading.
On the post-trade side, EquiLend is still growing in the Australian market compared to the level of usage in Europe and the US. This is indicative of the fact that domestic Australian books historically have been quite separate to those in the rest of the world. However, we are seeing a worldwide shift, from more manual processes to more automated solutions such as those offered by EquiLend.
What are the opportunities are within the Australian domestic market?
The opportunities are great for our clients, our prospective clients and EquiLend as well in the market. A few standout opportunities include increased potential for BondLend, our fixed income trading and post-trade system, as there is a healthy level of domestic fixed income flow in the Australian market.
Also, the advent of NGT this year will bring great opportunity to the clients of EquiLend, bringing the efficiencies that we have been providing to general collateral trading to the whole gamut of trading for domestic clients.
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