November securities lending revenue fell 4% to $781m

The global securities finance industry generated $781 million in revenue for securities lenders in November 2023, according to DataLend, the market data service of fintech EquiLend.

The figure represents a 4% decrease from the $811 million generated in November 2022. 

Global broker-to-broker activity, where broker-dealers lend and borrow securities from each other, totaled an additional $215 million in revenue in November, up 3% year-over-year. 

Month-over-month, the $781 million in revenue generated for lenders in November represented a 4% increase from the $751 million generated in October 2023. 

“November saw a continuation of macro trends with a stark drop in EMEA lending revenue accounting for the overall decline,” said DataLend.

“Total revenue in the region was down 38% year-over-year with fees and balances declining 18% and 19% respectively. Equities saw a bigger dip than fixed income with lending revenue declining 48%.  

“In contrast to lagging equity performance in EMEA, North America and APAC both experienced 11% year-over-year growth in equity lending revenue.”

DataLend said the acquisition of cloud-computing firm VMware (VMW) by chipmaker Broadcom (AVGO) helped spur a resurgence in U.S. “specials” (loans at 500+ basis points).

Lending in VMW generated over $50 million in lending revenue, contributing to a 45% growth in “specials” month-over-month. 

Fixed income saw a decline in revenue across all regions. Sovereign debt securities lending experienced a 12% reduction in year-over-year revenue, while corporates fell 8%. 

The top five earning securities for lenders in November were VMware Inc. (VMW US), Sirius XM Holdings Inc. (SIRI US), Cassava Sciences Inc. (SAVA US), Lucid Group Inc. (LCID US) and CAVA Group (CAVA US).

The five securities in total generated over $113 million in revenue for the month.

In the third quarter of 2023, the global securities finance industry generated $2.65 billion in revenue for lenders, according to DataLend. The figure represents a 1% increase from the $2.63 billion generated in Q3 2022.

Global broker-to-broker activity generated an additional $680 million in revenue during Q3, a 6% decrease year-over-year.

Strong lending revenue in the APAC region, up 27% from Q3 2022, helped offset dips in both North America (3% decline) and EMEA (12% decline) in the quarter.

While global equity performance ticked down 1%, fixed income securities brought in a 7% increase in revenue.

This improvement was fueled by continued growth in corporate bonds, up 24% in Q3 year-over-year.