![]() ![]() “We’re taking a market that’s in the dark,” Byrne says, “and we’re putting it on an exchange.” He wants to break the hold of the agent lenders and prime brokers, arguing that, as it stands, they make untold amounts of money from the loan market without giving stock holders their proper share. Using technology based on the blockchain- the technology that underpins the bitcoin digital currency-he wants to move the stock-loan market onto the Internet and put it in the hands of, well, everyone. Patrick Byrne, the iconoclastic CEO of e-commerce site and an unwavering voice for reform on Wall Street, wants to bust this market open. “In order to lend or borrow securities, you need to be one of the players in this market.” “Securities lending has historically been a closed network,” says Josh Galper, who runs a financial consulting firm, Finadium, that closely tracks stock loans. And it’s a market controlled by a relatively small group of players, most notably the prime brokers. The agent lenders alone make about $19.2 million a day helping organizations lend out their stock, and the prime brokers likely make even more. And, yes, middlemen take a cut too, including prime brokers such as Goldman Sachs and Morgan Stanley and dedicated lending houses, or “agent lenders,” like BNY Melon and State Street. But the same goes for those who lend the securities out, including retirement funds and other large stock holders. Sure, the borrowers can make some extra money. ![]() Many players benefit from this little-discussed market. ![]()
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