18 August 2017
New York
Reporter: Drew Nicol

Pension plans accuse banks of anti-competitive behaviour


Three US pension plans have accused six of securities lending’s biggest banks of blocking nascent platforms and keeping the market for themselves.

The Iowa Public Employees’ Retirement System, Orange County Employees Retirement System and Sonoma County Employees’ Retirement Association filed an anti-trust class action in the US Southern District Court of New York on 16 August and called for treble damages and injunctive relief.

The pension plans alleged that “having formed EquiLend, the prime broker defendants made it clear to market participants that all new entrants into the market would need to go through EquiLend”.

Alleged systematic suppression of free market development by the defendants, which include Morgan Stanley, J.P. Morgan, Bank of America, Credit Suisse, and UBS, occurred between 2009 and 2016.

According to the complaint, the defendants aimed to maintain high fees for their stock loan services by boycotting start-up lending platforms and threatening clients to do the same.

The complaint continued: “Recognising the nascent threat posed by all-to-all electronic trading, the prime broker defendants took steps to organise themselves into a working cartel. Their first step was to form a ‘dealer consortium’ to protect their mutual interests.”

One such platform was Quadriserv’s Automated Equity Finance Markets, commonly known as AQS, according to the pension plans.

EquiLend, which launched in 2002 as a joint venture to provide post-trade and trading services in securities lending, acquired AQS last year for an undisclosed sum.

The pension plans also alleged that the defendants targeted securities lending platform SL-x, which was “forced” to shut down in 2014.

EquiLend, Bank of American, J.P. Morgan and UBS declined to comment. The other defendants did not immediately respond to requests for comment.

More news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
NEX Regulatory Reporting made trade repository under EMIR
24 November 2017 | London | Reporter: Jenna Lomax
The trade repository, which will be based in Stockholm, Sweden, will prepare NEX for its trade operations post Brexit
Al Ramz Capital gains short selling licence
24 November 2017 | Abu Dhabi | Reporter: Jenna Lomax
Al Ramz Capital is one of the first investment providers to offer short-selling in the UAE
BNP Paribas bolsters its senior agency lending roster
24 November 2017 | London | Reporter: Drew Nicol
Adnan Hussain moved from RBC to take up a role as global head of agency lending and head of market and financing services in the UK for BNP Paribas
Hedge funds continue 2017 run
23 November 2017 | Madrid | Reporter: Drew Nicol
Global AUM of hedge funds rose 24 percent to $3.2 trillion in the past two years, according to data captured by IOSCO’s latest market survey.
Goldman Sachs appointed by Thrivent for agent lending
23 November 2018 | Minneapolis | Reporter: Jenna Lomax
Thrivent Financial has appointed Goldman Sachs as it new lending agent
ICMA maps repo and cash bond operations
22 November 2017 | Zurich | Reporter: Zsuzsa Szabo
ICMA has launched a free-to-read mapping directory for more than 80 technology solutions for repo and cash bond operations
FCA publishes MiFID II guide
22 November 2017 | London | Reporter: Jenna Lomax
The guide focuses on the regulatory regime in MiFID II for trading venues and data reporting services providers