OCC sees securities lending activity fall in 2019 03 January 2020Chicago Reporter: Natalie Turner
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The Options Clearing Corporation (OCC) saw its securities lending central counterparty activity fall by 5.27 percent over 2019, compared to the year before.
The Chicago-based equity derivatives clearinghouse chalked up 1.3 million new loan transactions in 2019.
For December alone the OCC also recorded a 4 percent drop in new loans, with 102,583 transactions for the month, compared to the same period in 2018.
OCC’s average daily loan value in December was $83.156 billion, a decrease of 18.52 percent compared to December 2018.
Overall last year, OCC’s total cleared contract volume was 4.98 billion contracts, which it says is the industry’s second-highest ever annual volume.
The total was however down 5.1 percent compared to OCC’s “record-breaking pace” of 5.24 billion contracts in 2018.
Speaking to SLT, Matt Wolfe, OCC vice president, new products highlights that the continued bull market of 2019 contributed to an industry-wide decline in activity balances and adds that, for OCC, the notional value of securities lending ended 2019 very close to when 2018 started.
"Despite this decline OCC continues to see increased interest in clearing as cost pressures increase," he adds. "During the year we had an additional seven members sign up for the stock loan programmes bringing the total to 78 clearing members.”
The drop-off follows the industry-wide trend of 2019’s securities lending trading figures failing to live up to the giddy heights of 2018, which saw lenders rake in $10.7 billion, the industry’s best revenue returns since the 2008 financial crisis.
Data published by DataLend this week showed that securities lending revenue falling by 13 percent last year, compared to 2018, to sit at $8.66 billion.
Commenting on the data at the time, DataLend’s global product owner Nancy Allen said that global macro uncertainty, driven by trade wars, Brexit and central bank actions, resulted in a general lack of conviction by hedge funds and alternative investment managers in 2019.
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