Global securities lending revenue continues to underwhelm
02 October 2020 New York
Image: magann / Adobestock.com
The top-five revenue-generating securities in the global securities lending market for Q3 generated less than half the income for lenders compared the top five securities in the same period last year, according to DataLend, the market data division of fintech EquiLend.
Varta AG, Nikola Corp, Carnival Corp, Canopy Growth Corp, and Inovio Pharmaceuticals generated $106 million for the global securities lending market in Q3, compared to $284 million earned by the top-five securities in the same period in 2019.
This figure represents a significant decline from Q3 last year when loans revenue for Beyond Meat, 2019's top earner, brought in $120 million over the three-month period on its own.
In total, the global securities finance industry generated $1.77 billion in revenue in the lender-to-broker market in Q3, equaling a 17 percent year-over-year decrease from the $2.13 billion generated for lenders in Q3 2019.
Year-to-date, lender-to-broker revenue has totalled $5.67 billion, a 14.7 percent decrease over the $6.65 billion generated for lenders in the first three quarters of 2019, says DataLend.
Revenue in the broker-to-broker market has totalled $1.58 billion in 2020 through the end of Q3, a 4.6 percent increase from the same time period in 2019.
The downturn in revenue for Q3 was largely driven by American and Asian equities, which declined 28 percent and 26 percent respectively, DataLend notes.
These declines were offset slightly by equities in Europe, the Middle East and Africa, where revenue increased 9.8 percent year on year in Q3, and fixed income in the Americas, where revenue increased 4.7 percent.
Nancy Allen, the global product owner at DataLend, says: 鈥淥ver the first half of this year, North American equities experienced increased fees relative to the same period in 2019 driven by a number of special names, including four of the top-five revenue-generating securities and a number of COVID-related specials.
鈥淗owever, as the year progressed, short positions in US equities dropped to significant lows as markets rebounded and the S&P reached a record closing high. As a result, we saw lower fees and on-loan balances in the lending market, which drove a considerable decline in revenue.鈥�
Varta AG, Nikola Corp, Carnival Corp, Canopy Growth Corp, and Inovio Pharmaceuticals generated $106 million for the global securities lending market in Q3, compared to $284 million earned by the top-five securities in the same period in 2019.
This figure represents a significant decline from Q3 last year when loans revenue for Beyond Meat, 2019's top earner, brought in $120 million over the three-month period on its own.
In total, the global securities finance industry generated $1.77 billion in revenue in the lender-to-broker market in Q3, equaling a 17 percent year-over-year decrease from the $2.13 billion generated for lenders in Q3 2019.
Year-to-date, lender-to-broker revenue has totalled $5.67 billion, a 14.7 percent decrease over the $6.65 billion generated for lenders in the first three quarters of 2019, says DataLend.
Revenue in the broker-to-broker market has totalled $1.58 billion in 2020 through the end of Q3, a 4.6 percent increase from the same time period in 2019.
The downturn in revenue for Q3 was largely driven by American and Asian equities, which declined 28 percent and 26 percent respectively, DataLend notes.
These declines were offset slightly by equities in Europe, the Middle East and Africa, where revenue increased 9.8 percent year on year in Q3, and fixed income in the Americas, where revenue increased 4.7 percent.
Nancy Allen, the global product owner at DataLend, says: 鈥淥ver the first half of this year, North American equities experienced increased fees relative to the same period in 2019 driven by a number of special names, including four of the top-five revenue-generating securities and a number of COVID-related specials.
鈥淗owever, as the year progressed, short positions in US equities dropped to significant lows as markets rebounded and the S&P reached a record closing high. As a result, we saw lower fees and on-loan balances in the lending market, which drove a considerable decline in revenue.鈥�
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