Global securities lending revenues down for Q2
05 July 2019 London
Image: Shutterstock
Global securities lending revenue totalled $2.6 billion, down 10 percent of the average Q2 revenue over the last three years, according to Sam Pierson, director of securities finance, IHS Markit.
Equity lending revenues came in at $2.1 billion, which demonstrated a decline of 17 percent compared with Q2 2018, Pierson found.
Asia equity lending revenues fell 14.6 percent compared with Q2 2018, the first year on year decline in quarterly revenues since Q3 2017.
Pierson also found that corporate bond lending revenue fell 18 percent year on year, which was primarily driven by declining demand for dollar denominated credits.
Meanwhile, exchange traded funds lending revenues continued to underperform, which was the result of lower fees and balances for high-yield bond funds, Pierson noted.
Borrow demand for exchange traded products remains robust and Pierson explained that Q2 balances were 12 percent higher year on year.
He commented: “The year on year revenue shortfall in the first half of 2019 relative to 2018 appears rather large, however it's worth noting that H1 2018 was the best six month span post-crisis, making for a tough comparison.”
“For some perspective, the H1 2019 revenues were a 4 percent improvement compared with H1 2017. Against the broad trend of declining fees and balances, some asset classes have presented opportunities to generate incremental income, notably including the Cannabis sector, emerging markets, ex-USD corporate bonds, US Initial Public Offerings and hard-to-borrow UK equities.”
Equity lending revenues came in at $2.1 billion, which demonstrated a decline of 17 percent compared with Q2 2018, Pierson found.
Asia equity lending revenues fell 14.6 percent compared with Q2 2018, the first year on year decline in quarterly revenues since Q3 2017.
Pierson also found that corporate bond lending revenue fell 18 percent year on year, which was primarily driven by declining demand for dollar denominated credits.
Meanwhile, exchange traded funds lending revenues continued to underperform, which was the result of lower fees and balances for high-yield bond funds, Pierson noted.
Borrow demand for exchange traded products remains robust and Pierson explained that Q2 balances were 12 percent higher year on year.
He commented: “The year on year revenue shortfall in the first half of 2019 relative to 2018 appears rather large, however it's worth noting that H1 2018 was the best six month span post-crisis, making for a tough comparison.”
“For some perspective, the H1 2019 revenues were a 4 percent improvement compared with H1 2017. Against the broad trend of declining fees and balances, some asset classes have presented opportunities to generate incremental income, notably including the Cannabis sector, emerging markets, ex-USD corporate bonds, US Initial Public Offerings and hard-to-borrow UK equities.”
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
