SecFinex

SecFinex was a London-based electronic securities-lending and borrowing platform active from 2000 to 2011. The business began as PPA Capital Limited and adopted the SecFinex name in November 2000. Its purpose was to provide an electronic venue for stock-loan transactions, supporting the borrowing and lending of equities across a broad set of European, Japanese, and United States markets. Securities lending is used by market participants for purposes including settlement support, market making, hedging, and short-selling activities. The platform formed part of the financial-market infrastructure associated with Euronext and, subsequently, LIFFE. In December 2006, NYSE Euronext acquired a controlling 51 percent interest in the London business. Société Générale and Fortis remained minority shareholders. By March 2007, SecFinex was described as operating as an Euronext subsidiary and later as a subsidiary of LIFFE (Holdings) plc. Its ownership and exchange affiliation positioned the company within a broader effort to make securities borrowing more standardized, electronic, and centrally cleared. SecFinex supported equities listed in Belgium, France, Germany, Ireland, Italy, Japan, the Netherlands, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The platform’s transactions were linked to central counterparties and clearing arrangements. LCH.Clearnet cleared transactions involving Belgian, French, Dutch, and Portuguese stocks, while SIS x-clear handled stock-loan transactions in Austria, Denmark, Finland, Germany, Norway, Sweden, and Switzerland; coverage for the United Kingdom was planned for 2011. The use of central clearing was intended to reduce bilateral counterparty exposure and improve the operational processing of stock loans. SecFinex was authorized and regulated by the United Kingdom Financial Services Authority. Its business model depended on sufficient participation and transaction activity from securities lenders, borrowers, and intermediaries. In December 2011, NYSE Euronext decided to stop financially supporting the business. The exchange group stated that it continued to believe central counterparties could play an important role in the future of securities borrowing, but concluded that SecFinex had not achieved sufficient market traction. The platform was therefore closed and wound down rather than maintained as a going concern. The company’s regulatory authorization was removed from the FSA register on January 6, 2012, marking the formal end of its regulated operation. SecFinex is consequently a defunct financial-market infrastructure brand. Its stated market role and principal named competitor, EquiLend, place it within the development of electronic and centrally cleared securities-lending services in the 2000s and early 2010s.

SecFinex originated as PPA Capital Limited and changed its corporate name to SecFinex, Ltd. in November 2000. It developed as a United Kingdom electronic platform for securities lending and borrowing, a market function in which institutions lend securities against collateral and other participants borrow them for settlement, financing, hedging, market making, or short-selling purposes. The platform was designed to support stock-loan transactions across multiple national equity markets rather than operate as a conventional retail trading brand. Its coverage included equities from Belgium, France, Germany, Ireland, Italy, Japan, the Netherlands, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States. This geographic scope reflected the need for securities-finance participants to transact across markets with different settlement systems, legal frameworks, and clearing arrangements. SecFinex became associated with the Euronext market infrastructure group. In December 2006, NYSE Euronext acquired a controlling 51 percent interest in the London-based company, while Société Générale and Fortis retained minority stakes. By March 2007, the business was reported as an Euronext subsidiary and it later operated as a subsidiary of LIFFE (Holdings) plc. The ownership structure connected SecFinex with major exchange and derivatives-market institutions and supported its positioning as an institutional market-infrastructure service. A central feature of the platform was its relationship with central counterparties. Transactions involving Belgian, French, Dutch, and Portuguese stocks were cleared through LCH.Clearnet. SIS x-clear provided clearing for stock-loan transactions in Austria, Denmark, Finland, Germany, Norway, Sweden, and Switzerland, with United Kingdom coverage planned for 2011. These arrangements were intended to support more standardized processing and reduce the risks associated with purely bilateral securities-lending transactions. SecFinex was authorized and regulated by the UK Financial Services Authority. The business operated in a competitive environment that included EquiLend and other securities-finance infrastructure providers. Its commercial success depended on attracting enough lenders, borrowers, intermediaries, and clearing participants to generate sustainable transaction volumes. In December 2011, NYSE Euronext decided to stop providing financial support and closed the business. The group said that, although it believed central counterparties would remain important to the future of stock borrowing, SecFinex had not gained enough market traction. The company was wound down, and its regulatory authorization was removed from the FSA register on January 6, 2012. SecFinex therefore represents an early attempt to combine electronic execution, multi-market equity coverage, and central clearing in the securities-lending sector. Its closure illustrates the difficulty of establishing a specialized financial-market platform when network effects, liquidity, participant adoption, and clearing connectivity are all necessary for scale.

• 2012

  FSA authorization is removed

  [1]SecFinexen.wikipedia.org

  SecFinex's authorization was removed from the UK Financial Services Authority register on January 6, 2012.

• 2011

  Platform is closed and wound down

  [1]SecFinexen.wikipedia.org

  NYSE Euronext ended financial support and initiated the closure of SecFinex in December 2011 after the business failed to achieve sufficient market traction.

• 2007

  SecFinex operates within the Euronext and LIFFE structure

  [1]SecFinexen.wikipedia.org

  By March 2007, SecFinex was described as an Euronext subsidiary and later operated as a subsidiary of LIFFE (Holdings) plc.

• 2006

  NYSE Euronext acquires a controlling stake

  [1]SecFinexen.wikipedia.org

  NYSE Euronext took a 51 percent controlling interest in the London-based business in December 2006, while Société Générale and Fortis retained minority holdings.

• 2000

  PPA Capital adopts the SecFinex name

  [1]SecFinexen.wikipedia.org

  Originally known as PPA Capital Limited, the company changed its name to SecFinex, Ltd. in November 2000.

An institutional electronic marketplace and post-trade infrastructure provider for securities lending and borrowing, with emphasis on multi-market equity coverage and central clearing.

• Securities lending and borrowing · 2000

  SecFinex electronic stock-lending platform

  SecFinex operated an electronic venue for institutional stock-borrowing and stock-lending transactions. The platform covered equities across a range of European, Japanese, and United States markets and was designed to make securities-finance activity more systematic than wholly bilateral dealing. Transactions were connected with central clearing arrangements, including LCH.Clearnet and SIS x-clear for specified national markets.

• 2011

  NYSE Euronext decides to withdraw financial supportStrategy

  Background

  SecFinex had not generated sufficient market traction for its owner to continue funding the operation. NYSE Euronext nevertheless maintained that central counterparties could remain important to the future of stock borrowing.

  Action taken

  NYSE Euronext closed the platform and began winding down the business in December 2011.

  Aftermath

  The business ceased operating and its UK regulatory authorization was removed from the FSA register on January 6, 2012.

  Source

• 2012

  SecFinex authorization removed from the FSA register[1]SecFinexen.wikipedia.org

  Regulation

  Following the 2011 wind-down, SecFinex's authorization as a regulated UK financial-services business was removed from the Financial Services Authority register on January 6, 2012.

• 2011

  NYSE Euronext ends financial support for SecFinex[1]SecFinexen.wikipedia.org

  Other · Bankruptcy

  NYSE Euronext closed and began winding down SecFinex in December 2011 after determining that the business had not achieved sufficient market traction, despite its continuing view that central counterparties could have an important future role in stock borrowing.

1. 1SecFinexen.wikipedia.org