IB's new stock lending effort with Quadriserv AQS platform

Discussion in 'Order Execution' started by Prez, Jul 28, 2009.

  1. Prez

    Prez

    Interactive Brokers conference call on July 23rd highlighted its new efforts to radically change the access to stocks for professional traders.

    “Building out our platform to incorporate Quadriserv AQS platform will also help fuel customer growth. One obstacle we have faced with gaining new prime Brokerage clients is our relatively limited availability of securities for lending compared to the larger prime brokers. We have been working on interfacing our trading and brokerage systems with Quadriserv. This is an electronic securities lending platform. Stock lend and borrow transactions happen just like trades on an electronic exchange and they are cleared by OCC, the same central clearing house that stands behind all listed option trades in the US.
    Counterparty credit risk in the stock loan business always bothered us. And of course, you cannot conduct the stock trading business without resorting to the stock loan market. We were very lucky that we were watching Lehman and had only a very tiny exposure to them when they went under. Quadriserv with OCC will also solve these kinds of problems.
    Starting sometime in August, our customers will have direct access to this market and will be able to borrow and lend stock at competitive rates in a transparent marketplace. We will be first broker to offer this capability to customers and we have received indications of interest from a number of prospective institutional customers. We’ve put a lot of effort into this project, because if it is successful, it will greatly increase our access and our customers’ access to the stock loan market and will bring us more institutional customers.”

    Any thoughts on the impact of transparency in the stock-lending business?

    It just seems that this could be quite beneficial for those looking to borrow stocks from what was a closed system.
     
  2. Eight

    Eight

    :cool: