Global securities lending revenues rose 6 per cent YoY during H1 2022 to US$4.8 billion, driven by elevated levels of volatility, according to recent data from EquiLend.
The US-based securities finance trading, post-trade and market data specialist reported record volumes over Q2 2022 on its NGT trading platform, with trades executed on NGT rising 14 per cent YoY to 7.5 million. This corresponded to US$7.9 trillion in loan value, an 8 per cent increase on Q2 2021, while balances on EquiLend’s ECS Loan Market were up 19 per cent YoY.
EquiLend’s head of trading solutions Mike Norwood indicates that these year-on-year increases reflect double-digit percentage point volume growth for Q2 in the Asia-Pacific (APAC), EMEA, the US and Canada.
For equities securities lending activity, EMEA continued to be the standout region, with volumes rising 32 per cent YoY for Q2. For APAC, equities lending volumes were up 24 per cent relative to Q2 2021, driven particularly by stronger activity in Japan where onshore activity hit record trading levels of 23,500 executions on the NGT platform.
Looking more closely at higher-value activity, loan trades at fees above 50bps made up one-fifth of overall activity based on trade count for Q2. Lending activity in corporate debt rose on NGT over the period in line with the broader bond market sell-off and corporate debt underperformance relative to sovereign debt.
For the ECS Loan Market, Norwood indicates that balance sheet utilization continued to drive growth on the market, powered by strong general collateral flows (GC) on the back of firms’ risk-weighted asset (RWA) compression requirements.
Demand for ETFs remained buoyant, as it did on NGT, despite a slower issuance in the corporate debt market which impacted demand for fixed-income ETFs such as LQD and HYD.