厙惇勛圖

Home   News   Features   Interviews   Magazine Archive   Symposium   Industry Awards  
Subscribe
厙惇勛圖
Leading the Way

Global 厙惇勛圖 Finance News and Commentary
≔ Menu
厙惇勛圖
Leading the Way

Global 厙惇勛圖 Finance News and Commentary
News by section
Subscribe
⨂ Close
  1. Home
  2. Industry news
  3. Lending revenue down for 2019
Industry news

Lending revenue down for 2019


02 January 2020 London
Reporter: Drew Nicol

Generic business image for news article
Image: Shutterstock
Macro market uncertainty and skittish hedge funds resulted in securities lending revenue falling by 13 percent last year, compared to the bumper year in 2018, according to DataLend.

The latest figures from the market data provider, which is owned by EquiLend, showed that lenders earned $8.66 billion in 2019, representing a decline in revenue across all regions globally and in both the equity and fixed income markets.

On-loan balances and fees to borrow also fell in all regions, with the exception of Asia-Pacific, which experienced a marginal increase in balance, DataLend explained.

The year-on-year drop-off was widely expected by the securities finance industry following the previous record-breaking year for global revenue ($10.7 billion), which marked the industry's best result since the 2008 financial crisis.

Warning signs that a repeat performance was not on the cards initially emerged in , when Q1 and Q2 revenue fell by 18 percent and 15 percent respectively, compared to the year before. Revenue in H1 2019 overall peaked at around $5 billion, down 15 percent from 2018.

Lacklustre H1 revenue only slightly recovered in Q3 and Q4, driven primarily by an uptick in the equity markets, where a handful of specials which DataLend classifies as securities trading at 500bps and above were responsible for a significant portion of overall revenue gains.

The global top-five revenue-generating securities last year were , Cannabis producers Aurora Cannabis and Canopy Growth, the Chinese automobile manufacturer NIO, and the French retail giant Casino Guichard-Perrachon, which together generated $680 million for lenders.

Commenting on todays figures, Nancy Allen, global product owner of DataLend, highlights that global macro uncertainty, driven by trade wars, Brexit and central bank actions, resulted in a general lack of conviction by hedge funds and alternative investment managers in 2019.

As uncertainty loomed, the securities lending markets experienced lower on-loan balances and fees globally, she adds. However, a significant amount of revenue was generated from lending a very concentrated number of securities.

As a result, Allen notes, beneficial owners lending those hot securities likely will have experienced a more positive 2019 than others.



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 厙惇勛圖 Finance Times
Advertisement
Subscribe today
Knowledge base

Companies in this article
→ EquiLend
→ DataLend

Explore our extensive directory to find all the essential contacts you need

Visit our directory →
Glossary terms in this article
→ Hedge
→ Specials

Discover definitions, explanations and related news articles in our glossary

Visit our glossary →