Market volatility a boon for sec lending
23 October 2015 New York
Image: Shutterstock
The US market’s recent slump has allowed short sellers to return to the market in levels not seen for several years, according to Markit’s latest data.
American short positions have climbed to $594 billion, the highest since 2008, and daily revenues for October are up by 20 percent on last year.
The financial information provider has noted that the average short interest in the S&P 500 index risen above 3 percent for the first time in over three years, which is over 50 percent higher than the levels seen a year ago.
Greater interest in short selling has had a positive knock-on effect on the securities lending market, which has surged from $500 billion at the start of 2015 to $594 at last count by Markit analysts.
US short positions are now valued at its highest level since 2008, when they were worth $700 billion.
Market volatility and an subsequent explosion in shorting activity has caused utilisation of lending portfolios to be pushed past the 7 percent mark for the first time in three years.
Markit data on lending fees highlighted that the recent weighted average of 60 basis points (bps) to 70 bps needed to borrow US assets over the recent period of volatility is above the 58 bps average for the past five years.
In dollar terms, the revenues generated by US assets since the start of October are up by 18 percent from the same time last year.
There was also the highest proportion of special trades recorded (6.6 percent of shares) since the financial crisis.
Energy providers’ shares made up the majority of specials lending with 43 percent of big energy companies trading special, 50 percent more than the start of the year.
American short positions have climbed to $594 billion, the highest since 2008, and daily revenues for October are up by 20 percent on last year.
The financial information provider has noted that the average short interest in the S&P 500 index risen above 3 percent for the first time in over three years, which is over 50 percent higher than the levels seen a year ago.
Greater interest in short selling has had a positive knock-on effect on the securities lending market, which has surged from $500 billion at the start of 2015 to $594 at last count by Markit analysts.
US short positions are now valued at its highest level since 2008, when they were worth $700 billion.
Market volatility and an subsequent explosion in shorting activity has caused utilisation of lending portfolios to be pushed past the 7 percent mark for the first time in three years.
Markit data on lending fees highlighted that the recent weighted average of 60 basis points (bps) to 70 bps needed to borrow US assets over the recent period of volatility is above the 58 bps average for the past five years.
In dollar terms, the revenues generated by US assets since the start of October are up by 18 percent from the same time last year.
There was also the highest proportion of special trades recorded (6.6 percent of shares) since the financial crisis.
Energy providers’ shares made up the majority of specials lending with 43 percent of big energy companies trading special, 50 percent more than the start of the year.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
