DataLend: Securities finance generated near $10bn in revenue last year
04 January 2019 New York
Image: Shutterstock
The global securities finance industry generated just under $9.96 billion in revenue for lenders in 2018, marking a record year for revenue since DataLend began tracking the market in 2013.
According to DataLend one of the contributing factors included, increased on-loan balances for most of 2018 as a result of rising asset prices, with the exception of December, which saw a sharp selloff in global equities, was a factor that impacted revenue increase.
It also found that a small number of very hot specials in the equities market was also a factor that impacted the revenue increase last year.
Other factors included the sustained need for high-quality liquid assets and increased demand to borrow Asian assets.
Regionally, Europe, the Middle East and Africa and Asia Pacific revenue were up 20 percent and 30 percent, respectively in 2018.
Both regions benefited from a significant increase in volumes, while spreads increased only slightly, EquiLend revealed.
The only region not to see an uptick in revenue was the Americas, which dropped 6.5 percent year-over-year.
Meanwhile, EquiLend’s next generation technology (NGT) securities finance trading platform also experienced recent growth.
EquiLend cited that it experienced a 35 percent increase in the average daily notional value traded on the platform in 2018 compared to 2017.
Nancy Allen, global product owner of DataLend, said: “While early industry estimates suggested revenue may exceed $10 billion in 2018, the securities finance market finished the year just shy of that mark. However, 2018 was a very positive story with gross revenue up 8 percent compared to the year prior, primarily driven by higher market values.”
Brian Lamb, CEO of DataLend’s parent company EquiLend, added: “Securities lending was once considered a back-office, operational activity offering beneficial owners incremental yearly returns on their portfolios. Now, we see a firm shift in mindset, where more firms treat lending as a front-office activity generating significant alpha for those who lend.”
According to DataLend one of the contributing factors included, increased on-loan balances for most of 2018 as a result of rising asset prices, with the exception of December, which saw a sharp selloff in global equities, was a factor that impacted revenue increase.
It also found that a small number of very hot specials in the equities market was also a factor that impacted the revenue increase last year.
Other factors included the sustained need for high-quality liquid assets and increased demand to borrow Asian assets.
Regionally, Europe, the Middle East and Africa and Asia Pacific revenue were up 20 percent and 30 percent, respectively in 2018.
Both regions benefited from a significant increase in volumes, while spreads increased only slightly, EquiLend revealed.
The only region not to see an uptick in revenue was the Americas, which dropped 6.5 percent year-over-year.
Meanwhile, EquiLend’s next generation technology (NGT) securities finance trading platform also experienced recent growth.
EquiLend cited that it experienced a 35 percent increase in the average daily notional value traded on the platform in 2018 compared to 2017.
Nancy Allen, global product owner of DataLend, said: “While early industry estimates suggested revenue may exceed $10 billion in 2018, the securities finance market finished the year just shy of that mark. However, 2018 was a very positive story with gross revenue up 8 percent compared to the year prior, primarily driven by higher market values.”
Brian Lamb, CEO of DataLend’s parent company EquiLend, added: “Securities lending was once considered a back-office, operational activity offering beneficial owners incremental yearly returns on their portfolios. Now, we see a firm shift in mindset, where more firms treat lending as a front-office activity generating significant alpha for those who lend.”
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
