Report: APAC overtakes EU for seclending revenue, Japan leads and China “hugely encouraging”

With the ongoing US-China trade negotiations, Britain leaving the European Union, civil unrest in Hong Kong and a new type of virus spreading across the globe, stocks are trading in uncertain ranges as the market grapples with the ultimate impact of all these events. A recent report by PASLA (Pan Asia Securities Lending Association), along with RMA (Risk Management Association) and EquiLend provides a sense of where markets are heading.

Growing Asian markets, including growth in the corporate bond market, has enabled APAC to overtake European Union trading in revenue terms for the first time. The perception has been that the newer markets of Korea and Taiwan — which have, respectively, seen year-on-year market gains — are the main drivers of this dynamism, yet Japan retains its capital crown.

Maintaining its position as the second largest global exchange after NYSE/AMEX, contributing 30% to 50% of yearly regional profit, the Tokyo Stock Exchange remains the backbone of Asian markets, despite the perception that “new markets will always present the most attractive opportunities to investors as drivers of growth”, according to the report.

China is a rapidly growing and developing market, where the pace of reform and levels of engagement are “hugely encouraging”, and the country remains “one of the most exciting opportunities to navigate as we look forward”.

Indonesia too is highlighted, as the market evolves and product mix grows, including expansion of its securities lending program. Into the development mix is also the Philippine Stock Exchange, which announced in late December the approval of securities lending and short selling.

“The Asia Pacific securities lending markets can be a challenge to navigate due to vastly different regulatory regimes and infrastructures between markets,” said Fran Garritt, director, Securities Lending and Global Markets Risk at RMA, in a statement. “Our User Guide covers 14 key markets across the region in detail and will help all interested market participants better understand the nuances of this key region in the global securities lending market.”

The 14 markets covered are Australia, China, the China/Hong Kong Stock Connect, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand. The user guide covers the current and future state of the Asia Pacific securities lending markets, regional innovations, illustrative market data, among other topics, and targets agent lenders, broker-dealers, CSDs, CCPs, exchanges, beneficial owners, hedge funds, lawyers, regulators and consultants with an interest in the Asia Pacific securities lending markets.

Read the full report

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