Monthly Securities Finance Market Review: October 2023
Equilend’s Head of Trading Solutions, Mike Norwood, shares his monthly market review for securities finance, highlighting trends seen throughout October. The following data has been measured and derived from Equilend NGT.
Monthly Trends
Securities lending activity, as measured by trade counts over Equilend’s NGT platform, saw 2,687,710 trades executed equal to $2.30 trillion of market value in October, up 8% month over month and 9% year over year. Volatility as measured by the VIX and V2TX both continued their trend from late September and remained elevated throughout the month.
Global Borrowing and Lending
Global markets were down, and yields were up for the 3rd consecutive month as resilient job market figures and slowing inflation stood in contrast with weak PMI in the U.S., Europe and China with heightened geopolitical uncertainty. Central bankers paused rate hikes, but coupled with low manufacturing numbers brings increased expectations that rates may trend lower rather than higher, although U.S. messaging at least has remained steady. Market uncertainty allowed an opportunity for hedge funds to become more active with increased shorts in October.
Securities lending saw increased volumes month over month across the board (equities +11% and fixed income +19%), with APAC and Canada leading the way as fixed income volumes continued to increase more rapidly than equity. October was a new high for fixed income trades across NGT, with 740k executed (+35% year over year), representing 28% of total volumes. Both corporate (+12%) and sovereign debt (+7%) experienced strong volumes across all global regions.
Looking at equities, we saw an 8% increase month over month in non-GC trade activity and 15% gains in broker-to-broker volumes. Canada (+13%), Australia (+15%) and Finland (+28%) were standouts as all sectors experienced increased demand.
Sectors Focus
Within global equities, NGT’s most in-demand sectors were:
October saw a strong and variable month as we head to the end of the year, with several positives for markets, considering we are still in the crosswinds of variable economic conditions, rate uncertainty, high inflation and multiple global conflicts carrying weight.
Follow securities finance trends, trading analysis and commentary with Equilend’s Monthly Trading Commentary across 2023.
Subscribe on LinkedIn for monthly updates
Who We Are
Equilend is a global financial technology firm offering Trading, Post-Trade, Data & Analytics, RegTech and Platform Solutions for the securities finance industry. Equilend has offices in North America, EMEA and Asia-Pacific and is regulated in jurisdictions around the globe. The company is Great Place to Work Certified™ in the U.S., UK, Ireland and India and was named Best Post-Trade Service Provider Globally, Best Market Data Provider Globally and awarded for its Diversity & Inclusion in the Securities Finance Times Industry Excellence Awards 2023.
Michael Norwood
Head of Trading Solutions
michael.norwood@equilend.com
