Financial Industry Leaders Create EquiLend to Address Securities Lending Needs.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 22, 2001

Consortium Builds Automated Platform to Further New Standards of

Efficiency and Client Service in Equity Securities Lending Industry

A consortium of leading financial institutions today announced the creation of EquiLend LLC, a global platform to meet industry calls for efficient, standards-based processes in equity securities lending.

EquiLend plans to begin initial operations in 2002.

Founding members are: Barclays Global Investors; Bear, Stearns & Co. Inc.; The Goldman Sachs Group, Inc.; J.P. Morgan Chase & Co.; Lehman Brothers; Merrill Lynch; Morgan Stanley; Northern Trust Corporation; State Street Corporation; and UBS Warburg.

EquiLend's automated platform will provide the securities lending industry with the technology to streamline and automate transactions between borrowing and lending institutions and will introduce a set of common protocols. EquiLend will connect borrowers and lenders through a common, standards-based global equity lending platform enabling them to transact with increased efficiency and speed, and reduced cost and risk. EquiLend will also create a repository of data from members' transactions that can be used to produce a set of statistically significant and objective benchmarks for the industry. The founding institutions have committed equal contributions toward an aggregate capital investment of $40 million.

"The experience and reputation of the founding members and their input in the development of the EquiLend platform enables it to address broad industry needs," said Ralph Vitale, Executive Vice President at State Street. "We believe EquiLend presents an opportunity for the industry to reach a new level of efficiency and client service in global equity securities lending."

"The efficiency gains that EquiLend will provide offer a compelling value proposition to securities lending participants thereby increasing liquidity in the markets," added Martin Tell, Managing Director at Morgan Stanley. "Globally, EquiLend will provide benefits to all transaction participants and offer members the flexibility to borrow and lend individual stocks as well as baskets of securities."

About Securities Lending

Securities lending involves transactions where lending institutions, including agent banks, pension funds, mutual funds and insurance companies earn incremental income on their portfolios by lending securities to borrowing institutions, typically broker/dealers, facilitating proprietary and customer short positions in the market. Securities lending transactions can be initiated by either side of the market.

As securities lending transactions exist today, a borrower typically communicates demand through a variety of non-standardized communication methods to locate the security and then negotiates the terms with the lender. This is a manually intensive process, particularly with securities that are difficult to locate. When the security is located and the terms are agreed, the deal is recorded in each firm's internal systems where the parties capture all the information needed for settlement and billing.

How EquiLend Works

Through the EquiLend platform, a borrower or lender has the option to initiate an order to one or many counterparties, thus improving the efficiency of locating securities. When an offer is located and the terms are agreed, EquiLend will match the parties' settlement instructions and send a shared trade ticket to each of the participants' proprietary trading and settlement systems. EquiLend's automated platform will streamline manually intensive front and back-office activities throughout the transaction as well as reduce the number of failed trades in the settlement process.

EquiLend is working with NerveWire(TM), a management consulting and systems integration firm focused on inter-enterprise collaboration.

Barclays Global Investors (BGI); Bear, Stearns & Co. Inc. (NYSE: BSC); The Goldman Sachs Group (NYSE: GS); J.P. Morgan Chase & Co. (NYSE: JPM); Lehman Brothers (NYSE: LEH); Merrill Lynch (NYSE: MER); Morgan Stanley (NYSE: MWD); Northern Trust Corporation (NASDAQ: NTRS); State Street Corporation (NYSE: STT); and UBS Warburg (NYSE: UBS)