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 Industry 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
US Volcker Rule not fit for purpose, says SIFMA
22 September 2017 | New York | Reporter: Drew Nicol
The US Volcker Rule is too broad, excessively complex, and uniquely prescriptive, according to the Securities Industry and Financial Markets Association
Pirum joins South African securities lending association
21 September 2017 | Johannesburg | Reporter: Drew Nicol
Pirum Systems has joined the South African Securities Lending Association
EquiLend and Trax partner for SFTR solution
20 September 2017 | London | Reporter: Drew Nicol
Trax and EquiLend are joining forces to tackle SFTR reporting requirement with a a full front-to-back solution for mutual clients
ISLA confirms BoE conference keynotes
19 September 2017 | London | Reporter: Jenna Lomax
Sarah John, head of sterling markets division, and Jon Pyzer, senior manager for the sterling markets division will speak to attendees on 12 October
UCITS funds enjoy assets boom in Q2
18 September 2017 | Brussels | Reporter: Jenna Lomax
The latest growth figures represent the highest level of net sales recorded since Q1 2015
ESMA releases responses from CCP’s conflict of interest report
15 September 2017 | Paris | Reporter: Jenna Lomax
As part of the consultation, ESMA proposed giving further counsel to CCP’s management to “ensure common, uniform and consistent application” of EMIR guidelines
Preqin: Hedge funds chalk up 10th growth month
15 September 2017 | London | Reporter: Jenna Lomax
Hedge funds generated gains of 0.97 percent in August 2017, extending their win streak to 10 consecutive months of positive returns