European specials losing their luster
04 October 2013 London
Image: Shutterstock
While European specials shares have increased in number, the same cannot be said for the fees they command, said a Markit analyst.
A report by Simon Colvin, an analyst at the financial information services company, said that the fee commanded by specials in Europe has fallen below the four year average.
However, specials have seen a resurgence amongst the most borrowed European shares, with UK and Germany seeing the largest increase.
Colvin noted that the surge in new supply has not been met by a matching rise in demand to borrow, meaning that fees commanded by equities have dropped since the start of the year.
The 1,000 most borrowed European equities currently have an average benchmark fee of 73 basis points, a number that has fallen by six basis points since the end of last year.
“This fall in average fees is driven by a drop in the fees commanded by the most expensive shares,” said the report, adding that the value weighted average “specials” fee—for shares with a benchmark fee greater than 100 basis points and demand to borrow over $10 million—has held consistently below the 4 percent level since the start of the year.
A report by Simon Colvin, an analyst at the financial information services company, said that the fee commanded by specials in Europe has fallen below the four year average.
However, specials have seen a resurgence amongst the most borrowed European shares, with UK and Germany seeing the largest increase.
Colvin noted that the surge in new supply has not been met by a matching rise in demand to borrow, meaning that fees commanded by equities have dropped since the start of the year.
The 1,000 most borrowed European equities currently have an average benchmark fee of 73 basis points, a number that has fallen by six basis points since the end of last year.
“This fall in average fees is driven by a drop in the fees commanded by the most expensive shares,” said the report, adding that the value weighted average “specials” fee—for shares with a benchmark fee greater than 100 basis points and demand to borrow over $10 million—has held consistently below the 4 percent level since the start of the year.
NO FEE, NO RISK
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