- Quarterly revenues push higher marking the best Q2 in recent history
- US equity specials generate highest quarterly specials revenues on record
- Fixed income assets continue to benefit from elevated fees
- Balances decline as recessionary fears ease
In the securities finance markets, revenues of $3.605 billion were generated over Q2. This represents an increase of 7% year-over-year (yoy) and an increase of 6% quarter-on-quarter (qoq). Average fees remained robust over the quarter with a Q2 average across all securities of 56bps (+20% yoy) representing a 3bps increase on Q1.
Balances declined both yoy (-11%) and qoq (-1%) along with utilization (-14% yoy and -5% qoq). As a result of rising equity markets over the quarter, lendable supply increased by 3% when compared with Q1.
In summary, the second quarter of 2023 was very strong for securities finance markets. Revenues increased across the majority of asset classes both yoy and qoq despite ever-increasing valuations in equity markets and a slight decline in inflationary concerns. The first half of the year has generated near record revenues for market participants.
With central banks closing in on their inflation goals and interest rates starting to bite, Q3 will be critical in deciding whether securities finance revenues will experience an all-time high during the remainder of 2023.