IHS Markit: global secfinance revenue at $900mn, up 38% in August YoY

  • August revenues increased by 38% YoY
  • APAC equity revenue rebound in-tact
  • All-time high monthly revenue for Taiwanese market
  • ETP & ADR borrow demand remains robust

Global securities finance revenues totaled just over $900 million in August, a 38% year-on-year (YoY) increase. Global equity special balances, defined in this note as balances with a fee greater than 500bps, declined by 10% month-on-month (MoM), however balances with a fee greater than 2,000bps increased by 35%.

The general uptrend in borrow demand for APAC equities, global ETFs and ADRs remained intact in August, while a few specials boosted returns for US equity lenders.

August is typically a quiet month for capital markets, however, some dynamic forces pushed against the seasonal impact for 2021. One tailwind for revenues all year has been the expirations of lock-up agreements for investors in IPOs and SPACs.

Lock-up expiries continued to play a role in August as reflected on the leader board for US equity revenue generators. The usage of exchange traded products in institutional long portfolios and for short hedges continues to boost returns, though demand for some fixed income products has declined.

Borrow demand for corporate bonds continues to increase with four consecutive months of YoY increases in intrinsic income. As the drivers of lending returns, which have been anticipated since the start of the year, continue to play out, along with some new themes, Q3 is on pace for a 13% YoY revenue increase.

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