Finadium Reports On Trends In US Equity Financing Costs

Finadium has released a new report on trends in US equity financing costs for hedge funds and other borrowers. This report is a quantitative look at the costs of securities borrowing in US equities over the last year. We analyze

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Finadium has released a new report on trends in US equity financing costs for hedge funds and other borrowers. This report is a quantitative look at the costs of securities borrowing in US equities over the last year. We analyze how costs have moved across multiple capitalizations and sectors. Using recent survey of institutional asset managers as a base, Finadium projects how current costs can be an indication of fees to come as assets seeking leverage ultimately recover. It also compares securities lending rates against the interest rates implied in single stock futures pricing.

Highlights of the report include:

– Large capitalization stocks can no longer be uniformly considered easy to borrow, or general collateral; we found 26 securities in March 2009 in the S&P 500 that were hard to borrow.

– In spite of low trading volumes, some single stock futures on OneChicago now offer better financing rates than what prime brokers can provide their large clients.

– Only a few hedge funds have begun to position themselves proactively for the new securities lending market by employing technology or hiring equity finance professionals.

D.C.

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