EquiLend acquires AQS
01 August 2016 New York
Image: Shutterstock
EquiLend has acquired Automated Equity Finance Markets, commonly known as AQS, for an undisclosed amount, paving the way for "unprecedented access to central clearing services".
The deal, which was completed on 31 July, will see EquiLend take charge of AQS and related technology from PDQ Enterprises, the service’s owner since it bought Quadriserv in August 2015.
AQS will be rebranded as EquiLend Clearing Services. Existing clients will be able to continue to use the service undisrupted to connect to the Options Clearing Corporation’s (OCC) Market Loan Program.
EquiLend intends to connect its trading and post-trade services, including Next Generation Trading, with AQS by the end of 2016.
AQS CEO Pat Cestaro and co-founder Greg DePetris will remain as senior advisers to EquiLend regarding central counterparty (CCP)-related issues.
Cestaro commented: “As the securities finance industry has evolved—from new technologies to new regulations and more—it was critical for AQS and the key stakeholders in the industry to arrive at the best model for long-term marketplace operation.”
“We believe this transaction reflects a clear measure of success in defining that relationship and are happy to be working with EquiLend to see so many years of hard work at AQS turn into a positive outcome for the industry.”
Brian Lamb, CEO of EquiLend, said of the acquisition: “Momentum has been building in the past two years in support of CCPs in the securities finance marketplace. Balance sheet costs, risk weighting and tougher capital-adequacy requirements have highlighted to the industry the potential benefits of using central clearing services.”
“This acquisition combines EquiLend’s broad client base, market expertise and trusted technology with Automated Equity Finance Markets’s proven CCP-based securities lending market technology. By providing seamless access to OCC’s Market Loan Program, the securities finance market now will have unprecedented access to central clearing services.”
Craig Donohue, executive chairman of OCC, added: “We look forward to working with EquiLend to design and deliver solutions that allow for broader access to cleared solutions and the capital and risk management benefits that are realised with OCC’s clearing programmes.”
“By working with AQS, and now EquiLend, OCC is continuing to expand its strong foundation in clearing and risk management capabilities for securities lending, as reflected by the 5,000-plus loans processed daily and approximately $130 billion in risk-managed open loans.”
The acquisition of AQS follows hot on the heels of the launch of Swaptamization, EquiLend’s new service for total return swaps, and the roll-out of the Next Generation Trading (NGT) securities finance trading platform.
Asked if there might be more acquisitions or new product launches in the near future, Lamb said: “Through discussions with our board, our global client base, industry associations and regulators, EquiLend is continually evaluating where there are inefficiencies in the securities finance marketplace and considering how we may be able to mitigate them.”
“Sometimes that results in the expansion of an existing service (such as Trade Match, Unified Comparison) or the launch of a new service (NGT, Swaptimization) or, in this case, acquiring technology that we believe would offer greater value to the global securities finance market if it were incorporated into our suite of services.”
The deal, which was completed on 31 July, will see EquiLend take charge of AQS and related technology from PDQ Enterprises, the service’s owner since it bought Quadriserv in August 2015.
AQS will be rebranded as EquiLend Clearing Services. Existing clients will be able to continue to use the service undisrupted to connect to the Options Clearing Corporation’s (OCC) Market Loan Program.
EquiLend intends to connect its trading and post-trade services, including Next Generation Trading, with AQS by the end of 2016.
AQS CEO Pat Cestaro and co-founder Greg DePetris will remain as senior advisers to EquiLend regarding central counterparty (CCP)-related issues.
Cestaro commented: “As the securities finance industry has evolved—from new technologies to new regulations and more—it was critical for AQS and the key stakeholders in the industry to arrive at the best model for long-term marketplace operation.”
“We believe this transaction reflects a clear measure of success in defining that relationship and are happy to be working with EquiLend to see so many years of hard work at AQS turn into a positive outcome for the industry.”
Brian Lamb, CEO of EquiLend, said of the acquisition: “Momentum has been building in the past two years in support of CCPs in the securities finance marketplace. Balance sheet costs, risk weighting and tougher capital-adequacy requirements have highlighted to the industry the potential benefits of using central clearing services.”
“This acquisition combines EquiLend’s broad client base, market expertise and trusted technology with Automated Equity Finance Markets’s proven CCP-based securities lending market technology. By providing seamless access to OCC’s Market Loan Program, the securities finance market now will have unprecedented access to central clearing services.”
Craig Donohue, executive chairman of OCC, added: “We look forward to working with EquiLend to design and deliver solutions that allow for broader access to cleared solutions and the capital and risk management benefits that are realised with OCC’s clearing programmes.”
“By working with AQS, and now EquiLend, OCC is continuing to expand its strong foundation in clearing and risk management capabilities for securities lending, as reflected by the 5,000-plus loans processed daily and approximately $130 billion in risk-managed open loans.”
The acquisition of AQS follows hot on the heels of the launch of Swaptamization, EquiLend’s new service for total return swaps, and the roll-out of the Next Generation Trading (NGT) securities finance trading platform.
Asked if there might be more acquisitions or new product launches in the near future, Lamb said: “Through discussions with our board, our global client base, industry associations and regulators, EquiLend is continually evaluating where there are inefficiencies in the securities finance marketplace and considering how we may be able to mitigate them.”
“Sometimes that results in the expansion of an existing service (such as Trade Match, Unified Comparison) or the launch of a new service (NGT, Swaptimization) or, in this case, acquiring technology that we believe would offer greater value to the global securities finance market if it were incorporated into our suite of services.”
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