Lendex aims for transparency - mostly

24 March 2008

“The securities industry and clearing agencies don’t seem to recognize that it’s only a matter of time before these problems catch up with them and kill off the goose that is, at present, laying very golden eggs. The securities industry needs to seize control and propose effective remedies to increase transparency in stock lending and borrowing.”

(former SEC Chairman Harvey Pitt, Forbes, July 11, 2006)

For a company that aims to lift the vale on the opaque world of securities lending, New Jersey-based Lendex LLC has so far been pretty tight-lipped about its own service.  In January, HedgeWorld learned that the firm was planning to launch an electronic exchange that would match securities lenders and borrowers.  But little had been heard from the firm until Global Pensions recently reported that Lendex is expecting to launch its service in Q2 of this year. 

They’re not the only game in town, though.  Venture-backed Quadriserv launched Aquas, a “technology portal to the securities lending industry last August.  But Lendex is of particular interest because one of its founders is Harvey Pitt, former SEC Chairman (or more specifically, his consulting company).

(With a product already on the market, Quadriserv is more willing to share its thoughts.  In fact, the firm was the subject of this article in Alpha Magazine last year and last month, it was also the subject of a Bloomberg News story.)  

According to Traders Magazine, Lendex has struck a deal with a small Anchorage-based trust company that is active in the space to act as the de facto market-maker in these transactions.  According to the president of that company:

“Five years from now, it’s going to be a completely different market. It will be an institutional electronic exchange just like everything else. This looks to be the last vestige of the broker to broker business…”

It remains tough to find out anything about the company.  The website http://www.lendex.net/ remains blank (It appears lendex.com was already owned by LendingTree) and there are precious few media citations of the venture.  Guess we’ll just have to wait until Q2.   

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