The most recent report from DataLend indicates that the global securities finance industry encountered a 16% year-over-year decrease in revenue, with lenders generating US$895 million in May 2024. This presents a substantial drop from the US$1.06 billion in revenue generated in May 2023.
Additionally, global broker-to-broker activity also saw a 3% year-over-year decrease, resulting in $247 million in revenue for the same month.
DataLend attributes this decline to persistent issues that were evident in April, citing slower US and EMEA markets as the primary contributing factors to the decrease in global equity lending revenue.
Specifically, US equity revenue experienced an 18% year-over-year decrease, driven by a 23% decrease in fees. Similarly, equity revenues in EMEA saw a significant 38% downturn, with fees dropping by 32% year-over-year.
Conversely, APAC equities emerged as a “bright spot” amidst the overall revenue decline, with DataLend reporting a 16% increase in revenue, supported by a 20% improvement in fees. Taiwan experienced a notable 61% increase in balances, while Japan and Hong Kong saw increases in fees by 43% and 19% respectively, contributing to the positive performance in the region.
The report also highlights a 13% year-over-year decrease in global fixed income revenue, largely attributed to the flat performance of government debt and a considerable 35% drop in corporate debt revenue. Across different ratings buckets, corporate debt revenues experienced declines, with investment-grade performance down by 22% and high-yield revenues falling by 10%.
Regarding specific securities, the top five earning securities in May were Lucid Group, Trump Media & Technology Group, Beyond Meat, ImmunityBio, and EnbridgeNPV, collectively generating US$75 million in revenue for the month.
These findings illuminate the challenges faced by the global securities lending market, as various regions and asset classes have experienced revenue declines. While APAC equities have shown resilience, the overall trend indicates a broader contraction in the industry.
As the global economy continues to navigate through uncertainties and market fluctuations, it is imperative for industry stakeholders to closely monitor these developments and adapt their strategies to mitigate the impact of revenue declines.
Source: DataLend