Banner year for EM equity lending continued in Q3
Lack of specials demand challenged US equity revenues
Corporate bond demand robust, though revenue uptrend slowing
Ten years ago, the third quarter of 2008 delivered $2.9bn in global securities lending revenue, a high-water mark which no third quarter has managed to equal since. The pickup in market volatility in 2018 (after an anemic 2017) has yielded a welcome uptrend in lending revenues this year, however. Extending the trend, the $2.5bn in Q3 revenue was the most since 2008 and represents a 6% increase vs Q3 2017. The growth in industry revenues has been boosted this year by high quality collateral needs, increased EM equity demand, particularly in Asia, demand for corporate bonds and some special situations for equity lending.
Adding the Q3 returns to the $5.8bn in H1 revenues reveals that the first three quarters of 2018 have had the highest post-crisis securities lending revenue. For some context, that is still 27% lower than the first three quarters of 2008.
The full report is available at https://ihsmarkit.com/research-analysis/securities-lending-q3-review.html