DataLend: $1.77 Billion in Revenue Generated in Lender-to-Broker Securities Lending Market in Q3 2020

DataLend: $1.77 Billion in Revenue Generated in Lender-to-Broker Securities Lending Market in Q3 2020

DataLend: $1.77 Billion in Revenue Generated in Lender-to-Broker Securities Lending Market in Q3 2020

October 1, 2020

NEW YORK (October 1, 2020)—The global securities finance industry generated $1.77 billion in revenue in the lender-to-broker market in the third quarter of 2020, according to DataLend, the market data division of fintech EquiLend.

The $1.77 billion figure represents a 17% year-over-year decrease from the $2.13 billion generated for lenders in Q3 2019. Year to date, lender-to-broker revenue has totaled $5.67 billion, a 14.7% decrease over the $6.65 billion generated for lenders in the first three quarters of 2019. 

Lender-to-broker securities lending revenue is calculated as the amount paid by borrowers, typically broker-dealers on behalf of their hedge fund clients, to temporarily borrow equity and fixed income securities from long-holders of these assets, known as beneficial owners. 

Global broker-to-broker activity, where broker-dealers lend and borrow securities from each other, totaled an additional $494 million in revenue in Q3, a 22.5% decrease year over year. Revenue in the broker-to-broker market has totaled $1.58 billion in 2020 through the end of Q3, a 4.6% increase from the same time period in 2019. 

The downturn in revenue for Q3 was largely driven by American and Asian equities, which declined 28% and 26% respectively. These declines were offset slightly by equities in EMEA, where revenue increased 9.8% year on year in Q3, and fixed income in the Americas, where revenue increased 4.7%. 

Nancy Allen, Global Product Owner, DataLend, says: “Over the first half of this year, North American equities experienced increased fees relative to the same period in 2019 driven by a number of special names, including four of the top-five revenue-generating securities and a number of COVID-related specials. However, as the year progressed, short positions in U.S. equities dropped to significant lows as markets rebounded and the S&P reached a record closing high. As a result, we saw lower fees and on-loan balances in the lending market, which drove the considerable decline in revenue.” 

The top-five revenue-generating securities in the global securities lending market in Q3 2020 were Varta AG, Nikola Corp, Carnival Corp, Canopy Growth Corp and Inovio Pharmaceuticals Inc, which together generated $106 million in lending revenue during the quarter. This represents a significant decline from the $284 million earned by the top-five revenue-generating securities in Q3 2019, when Beyond Meat stock loans alone earned lenders $120 million. 

About DataLend

DataLend is the securities finance market data division of EquiLend. DataLend tracks daily market movements and provides analytics across more than 52,000 unique securities in the $2.2 trillion securities finance market.

About EquiLend

EquiLend is a global financial technology firm offering trading, post-trade, market data, regulatory and clearing services for the securities finance, collateral and swaps industries. EquiLend has offices in New York, Toronto, London, Dublin, Hong Kong and Tokyo.

Christopher Gohlke

Christopher Gohlke
Marketing & Communications, EquiLend
+1 (212) 901-2217