OFR: agent lenders have a $1 trillion stake
24 August 2016 Washington DC
Image: Shutterstock
The US Office of Financial Research (OFR) has taken another step towards achieving its goal of better quantifying the securities lending market with the publication its 2015 pilot industry survey results.
Seven agent lenders reported approximately $1 trillion in outstanding daily loans over 9 October, 10 November and 31 December, revealing their stake in global securities lending to be 11 percent of the total $9.4 trillion business.
They voluntarily submitted a snapshot of their securities lending activity from the three separate days of trading, including three sets of data relating to: inventory of securities available for lending; transaction-level detail for outstanding securities loans; and collateral information.
According to the OFR: “Benchmarked against available market size data, securities lending activity facilitated by agents participating in this pilot represent a significant share of the total activity.” The survey did not register bilateral activity.
The results revealed that investment firms were the largest lenders with nearly $3 trillion in securities available to lend. Pension funds and endowments followed with $2.5 trillion in available securities. Sovereign wealth funds, insurers, banks and broker-dealers made up the remainder
On the other side of the transaction, broker-dealers were, unsurprisingly, the biggest borrowers, with a daily average of $869 million in securities being borrowed by these participants.
Banks and credit unions were the second largest borrower demographic with a borrowing appetite valued at $142 million. State pension funds and hedge funds were also highlighted as notable borrowers.
US equities were the most in demand during the OFR’s snapshot period and stocks made up an average $315 billion of the securities loaned. US treasuries and government agency securities made up roughly $302 billion.
Collateral from borrowers was split almost equally between cash and non-cash.
In a blog post, OFR director Richard Berner stressed the need to “shine a light into the dark corners of the financial system by filling gaps in financial data”.
Berner described the pilot programme as a another milestone reached on the road to better understanding the wider securities finance market.
The securities lending pilot survey was initiated on the heels of a similar OFR project to collect data related to bilateral repo activity.
The OFR noted in its report on the the survey that the Financial Stability Oversight Council recommended the need for “permanent data collections for bilateral repos and securities lending” in its 2016 annual report and reiterated its committed to “carrying out those recommendations quickly”.
Seven agent lenders reported approximately $1 trillion in outstanding daily loans over 9 October, 10 November and 31 December, revealing their stake in global securities lending to be 11 percent of the total $9.4 trillion business.
They voluntarily submitted a snapshot of their securities lending activity from the three separate days of trading, including three sets of data relating to: inventory of securities available for lending; transaction-level detail for outstanding securities loans; and collateral information.
According to the OFR: “Benchmarked against available market size data, securities lending activity facilitated by agents participating in this pilot represent a significant share of the total activity.” The survey did not register bilateral activity.
The results revealed that investment firms were the largest lenders with nearly $3 trillion in securities available to lend. Pension funds and endowments followed with $2.5 trillion in available securities. Sovereign wealth funds, insurers, banks and broker-dealers made up the remainder
On the other side of the transaction, broker-dealers were, unsurprisingly, the biggest borrowers, with a daily average of $869 million in securities being borrowed by these participants.
Banks and credit unions were the second largest borrower demographic with a borrowing appetite valued at $142 million. State pension funds and hedge funds were also highlighted as notable borrowers.
US equities were the most in demand during the OFR’s snapshot period and stocks made up an average $315 billion of the securities loaned. US treasuries and government agency securities made up roughly $302 billion.
Collateral from borrowers was split almost equally between cash and non-cash.
In a blog post, OFR director Richard Berner stressed the need to “shine a light into the dark corners of the financial system by filling gaps in financial data”.
Berner described the pilot programme as a another milestone reached on the road to better understanding the wider securities finance market.
The securities lending pilot survey was initiated on the heels of a similar OFR project to collect data related to bilateral repo activity.
The OFR noted in its report on the the survey that the Financial Stability Oversight Council recommended the need for “permanent data collections for bilateral repos and securities lending” in its 2016 annual report and reiterated its committed to “carrying out those recommendations quickly”.
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