IHS Markit to publish index-tracking lending revenue reports
17 April 2020 London
Image: solarseven/Shutterstock.com
IHS Markit has launched “first-of-its-kind” monthly performance benchmarking reports that measure securities lending returns in six MSCI global equity indices.
The reports aim to help lenders, particularly asset managers and pension funds, to better analyse the value of their portfolio across markets and assets. The report focuses on the past five years of historical lending returns on constituents of each index.
The reports track the MSCI World Index, MSCI USA Index, MSCI Europe Index, MSCI AC Asia Pacific ex Japan Index, MSCI Japan Index and MSCI Emerging Markets Index.
For each index, insight is provided on monthly, quarterly and annual returns, index short interest levels, contribution by securities lending fee categories and top-performing sectors by revenue and nation, IHS Markit says.
“These pioneering monthly reports bring high-level performance metrics to the securities lending community, enabling firms to identify new opportunities and optimize returns,” says Paul Wilson, managing director and global head of securities finance at IHS Markit. “Readers will gain innovative, index-based reference points powered from our comprehensive universe of securities finance data, which covers more than $25 trillion of lendable inventory and $2.5 trillion of loan balances.”
Commenting on the introduction of these reports, Andy Dyson, CEO of the International Securities Lending Association (ISLA) adds: “ISLA welcomes the public availability of broad returns data which helps bring greater visibility to the role securities lending plays in financial markets.
“It also helps bridge the understanding between the securities lending market and investor communities.”
Key findings from the first set of reports include:
The MSCI World Index returned 1.3bps to 2.3bps over the 12 months ending in March, with US contributing 43 percent of the total revenue.
From April 2019 to March, the MSCI Emerging Markets Index produced the highest securities lending return with a range of 6.9 bps to 12.9 bps, more than 75 percent contributed by special stocks. Year-to-date returns in 2020 have declined in comparison to the same period last year.
The MSCI USA Index produced the lowest return, 0.5bps to 0.8bps, with general collateral stocks contributing 67 percent of the return.
Short-term peaks in returns for the MSCI World and MSCI USA indices relate to exchange offers, which generate significant revenues for shareholders who agree to forgo the offer to lend shares.
All six indices show a lower level of securities lending return for Q1 compared to Q1 2019, however global equity utilisation increased sharply in March which could set the stage for higher returns to lendable going forward.
Healthcare equipment and services was the top-performing sector in the MSCI World index last month, contributing 24 percent of securities lending revenue. It was also the most prominent sector in MSCI USA where it contributed around 50 percent of the securities lending revenue for the month.
The reports aim to help lenders, particularly asset managers and pension funds, to better analyse the value of their portfolio across markets and assets. The report focuses on the past five years of historical lending returns on constituents of each index.
The reports track the MSCI World Index, MSCI USA Index, MSCI Europe Index, MSCI AC Asia Pacific ex Japan Index, MSCI Japan Index and MSCI Emerging Markets Index.
For each index, insight is provided on monthly, quarterly and annual returns, index short interest levels, contribution by securities lending fee categories and top-performing sectors by revenue and nation, IHS Markit says.
“These pioneering monthly reports bring high-level performance metrics to the securities lending community, enabling firms to identify new opportunities and optimize returns,” says Paul Wilson, managing director and global head of securities finance at IHS Markit. “Readers will gain innovative, index-based reference points powered from our comprehensive universe of securities finance data, which covers more than $25 trillion of lendable inventory and $2.5 trillion of loan balances.”
Commenting on the introduction of these reports, Andy Dyson, CEO of the International Securities Lending Association (ISLA) adds: “ISLA welcomes the public availability of broad returns data which helps bring greater visibility to the role securities lending plays in financial markets.
“It also helps bridge the understanding between the securities lending market and investor communities.”
Key findings from the first set of reports include:
The MSCI World Index returned 1.3bps to 2.3bps over the 12 months ending in March, with US contributing 43 percent of the total revenue.
From April 2019 to March, the MSCI Emerging Markets Index produced the highest securities lending return with a range of 6.9 bps to 12.9 bps, more than 75 percent contributed by special stocks. Year-to-date returns in 2020 have declined in comparison to the same period last year.
The MSCI USA Index produced the lowest return, 0.5bps to 0.8bps, with general collateral stocks contributing 67 percent of the return.
Short-term peaks in returns for the MSCI World and MSCI USA indices relate to exchange offers, which generate significant revenues for shareholders who agree to forgo the offer to lend shares.
All six indices show a lower level of securities lending return for Q1 compared to Q1 2019, however global equity utilisation increased sharply in March which could set the stage for higher returns to lendable going forward.
Healthcare equipment and services was the top-performing sector in the MSCI World index last month, contributing 24 percent of securities lending revenue. It was also the most prominent sector in MSCI USA where it contributed around 50 percent of the securities lending revenue for the month.
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