Fidelity Plans to Make Securities-Lending Rates Transparent
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Thursday, July 26, 2012

Fidelity Plans to Make Securities-Lending Rates Transparent

Fidelity [profile] is preparing to launch a pricing service that will make the securities-lending market more transparent. Kirsten Grind and Jason Zweig of the Wall Street Journal report that the firm will offer a service that lets its hedge fund clients compare lending rates from various Wall Street firms.

Grind and Zweig write that this move puts Fidelity on a "collision course with its rivals." The average rate that firms charge for securities lending is 6 basis points, but rates can vary widely across the opaque $800 billion lending market, according to the WSJ.

Fidelity's forthcoming pricing service, which has not yet been named, will be offered to the firm's hedge fund brokerage clients at no cost.

Fidelity is not the only Wall Street giant aiming to shake up the securities-lending market. The WSJ piece says that State Street [profile] is prepping a broader electronic bond-trading platform, and BlackRock [profile] has been testing a platform that will allow buyers to link directly with sellers, bypassing investment banks.

Brian Conroy, Fidelity Capital Markets president, told the WSJ that the firm is "engaging in a variety of initiatives to bring transparency to opaque markets."

Fidelity is currently testing this service among its hedge fund clients, and execs expect it to launch in the next two months.

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