Securities finance revenue sputters in H1
02 July 2020 New York
Image: frankie's/Shutterstock.com
The global securities finance industry generated $3.89 billion in revenue for lenders in the first six months of the year, representing a 13.94 percent year-over-year drop-off, according to DataLend.
The decline in revenue was experienced across both the equity and fixed income markets, as well as regionally across Europe, the Middle East and Africa (EMEA) and Asia Pacific, were year-over-year revenue was down 33 percent and 25 percent respectively.
The only region to buck the trend was the Americas, where revenue increased by 5.6 percent from 2019 to 2020.
The top five revenue-generating securities in the global securities lending market for this period were Match Group, Canopy Growth, Peloton Interactive, Wirecard and Aurora Cannabis, which together brought in $349 million in lending revenue in H1 2020.
Global Q1 lending revenue was down 13.31 percent year-over-year, reflecting an ongoing long-bias in the markets peppered with a few specials, DataLend notes.
Nancy Allen, global product owner of DataLend, says: “In the Americas, while equity loan values declined 14 percent year-over-year, average fees increased by 22 percent driven by a number of special names, including four of the top-five revenue-generating securities and a number of COVID-related specials.
Allen notes that fees to borrow EMEA equities in mid-March averaged 43.67bps, the lowest value at any point in the last three years, following large selloffs in the global equity markets coupled with short-selling bans.
“However, as bans have been lifted and equity markets have started to rebound, demand for EMEA equities has returned,” Allen adds. “Fees to borrow EMEA equities have steadily risen, with a dramatic climb throughout May and into June, resulting in an average fee of 76.42bps for H1.”
As the COVID-19 pandemic continued into Q2, lower market valuations and short selling bans resulted in a 14.53 percent decline in revenue year-over-year for the period.
However, as bans were lifted and equity markets have started to rebound, demand for Europe, the Middle East and Africa (EMEA) equities has returned.
Fees to borrow EMEA equities have steadily risen with a dramatic climb throughout May and into June, resulting in an average fee of 76.42 bps for H1,” says Nancy Allen, global product owner of DataLend.
The decline in revenue was experienced across both the equity and fixed income markets, as well as regionally across Europe, the Middle East and Africa (EMEA) and Asia Pacific, were year-over-year revenue was down 33 percent and 25 percent respectively.
The only region to buck the trend was the Americas, where revenue increased by 5.6 percent from 2019 to 2020.
The top five revenue-generating securities in the global securities lending market for this period were Match Group, Canopy Growth, Peloton Interactive, Wirecard and Aurora Cannabis, which together brought in $349 million in lending revenue in H1 2020.
Global Q1 lending revenue was down 13.31 percent year-over-year, reflecting an ongoing long-bias in the markets peppered with a few specials, DataLend notes.
Nancy Allen, global product owner of DataLend, says: “In the Americas, while equity loan values declined 14 percent year-over-year, average fees increased by 22 percent driven by a number of special names, including four of the top-five revenue-generating securities and a number of COVID-related specials.
Allen notes that fees to borrow EMEA equities in mid-March averaged 43.67bps, the lowest value at any point in the last three years, following large selloffs in the global equity markets coupled with short-selling bans.
“However, as bans have been lifted and equity markets have started to rebound, demand for EMEA equities has returned,” Allen adds. “Fees to borrow EMEA equities have steadily risen, with a dramatic climb throughout May and into June, resulting in an average fee of 76.42bps for H1.”
As the COVID-19 pandemic continued into Q2, lower market valuations and short selling bans resulted in a 14.53 percent decline in revenue year-over-year for the period.
However, as bans were lifted and equity markets have started to rebound, demand for Europe, the Middle East and Africa (EMEA) equities has returned.
Fees to borrow EMEA equities have steadily risen with a dramatic climb throughout May and into June, resulting in an average fee of 76.42 bps for H1,” says Nancy Allen, global product owner of DataLend.
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