Securities lending revenue set for biggest high since 2012

Increasing market volatility has contributed to revenues of over $8 billion in the global securities lending industry.
By Paul Walsh
The securities lending industry is set to record its highest revenue levels since 2012, according to data from IHS Markit.

Data from Markit has tracked over $15 trillion of assets in lending programmes which have generated $8.1 billion of revenues for the year to 20 December.

This exceeds the $7.9 billion achieved over the whole of the last year and puts the industry on track to generate over 6% more revenue than in 2015.

Revenue growth was attributed to lenders being able to achieve better pricing for their loans as the weighted average fees achieved year to date stood at 43.8 basis points (bps), 1.1bps higher than those achieved in 2015.

In addition, increasing sales were also attributed to growth concerns, market volatility as well as ‘shock’ political decisions.

Global Custodian reported in July how the UK’s decision to leave the EU led to large jumps in securities lending.

In the immediate aftermath of Brexit, UK bank stocks fees jumped 200% from an average of 25 bps on 23 June to a high of 75 bps on 28 June according to statistics from DataLend.

Figures from IHS Markit also noted that despite high earning figures, overall performance was not evenly spread across all markets and asset classes.

Among North American traders, stocks were credited as the largest contributor to the revenue haul, which generated 40% of global securities revenue, looking set to beat this tally by around 8%.

European equities revenues however stood at roughly $115 million below the same point last year with sales looking set to miss last year’s total by 7%.