S&P Global released its July securities finance revenue snapshot.
- July was the highest revenue generating month of 2022
- The US hard to borrow equity market pushes revenues higher
- Fixed income continues to see strong demand
- Corporate bonds are in for an impressive 2022
Global securities finance revenues totaled $1.215 billion, making July the highest revenue generating month of 2022. In comparison with June, revenues increased 6%. Demand for equities, especially those in the US, fueled the 40% increase YoY.
Average balances across all securities remained flat YoY with only corporate bonds and EMEA equities seeing any meaningful growth. Average fees increased significantly in Americas Equities and Corporate bonds. Equity revenues increased 44% YoY and 8% MoM making July the highest revenue generating month so far for the individual asset class.
EMEA equities experienced a 12% decrease in fees YoY despite an impressive 54% increase in utilization. ETPs, Government and Corporate bonds all saw increases in revenues and average fees YoY. ADRs continued to experience a decline in revenues YoY but there was a reasonable recovery when compared MoM (increase of 40%).
Americas
July was a standout month for Americas equities. Revenues increased by a phenomenal 103% YoY to $605 million, average balances increased 6% YoY at $698 billion and average fees topped 1% for the first time this year (91% increase YoY and 13% increase MoM). To top it off, average utilization also increased by 15% YoY. Americas equities continues to be the largest revenue contributor to the Equity asset class comprising 62% of all revenues. This region continues to benefit from numerous hard to borrow high fee stocks that continue to drive revenues higher MoM (also reflected by the increase in average fees).
EMEA Equity
European equity revenues increased 4% YoY to $101 million. Despite revenues declining 26% MoM, average balances declined by a more modest 17% at $243 billion. Average utilization remained elevated, +54% YoY, and Germany overtook France as the highest revenue generating market during July. Varta Ag in Germany continued to be the highest revenue stock in the region generating $6.82m during the month. Revenues in the UK increased 16% YoY and were stable MoM.
APAC Equity
Revenues in Asian equities were down 8% YoY to $165m. Average balances and average fees also saw a decline. Australia was the standout market in Asia with revenues increasing 74% YoY and 8% MoM. Three stocks in Australia generated over 30% of the market’s returns alone (Brainchip Holdings Ltd, Core Lithium Ltd and Lake Resources Nl). Taiwan continued to be the highest revenue generating market in the region, accounting for circa 30% of all Asian equity revenues for the month. Average fees increased 8% YoY to 2.74% which is the highest level seen this year. The value of average on loan balances were down 12% YoY, which is a net positive when compared to the 21% decrease in the value of the TWSE 50 over the same period. South Korea experienced a slight increase in revenues when compared to June (+7%) even though they declined 24% YoY.
Corporate Bonds
Corporate bonds continued their impressive run generating $81m collectively during July (+77% YoY). July was the highest revenue generating month of the year for this asset class. Corporate bond revenues for 2022 have now equalled those for the whole of 2021 ($513m). Average balances were up YoY by 10%, average fees were up 61% YoY and utilization was up 28% YoY.