Insight
March 2026
Mike Norwood
Monthly Securities Finance Market Review: February 2026
EquiLend’s Head of Trading Solutions, Mike Norwood, shares his February securities finance market review, highlighting how sector rotation, artificial intelligence-driven dispersion, and shifting macro conditions shaped activity across EquiLend NGT. The following data has been measured and derived from EquiLend NGT.
NGT Maintains Strong Growth Amid Market Rotation
Securities lending volumes demonstrated resilience in February as markets navigated AI disruption fears, sector rotation, and geopolitical tensions. Volumes recorded on EquiLend’s NGT platform reached 3,525,152 trades executed versus $4.36 trillion in notional, representing 25% year-over-year growth. Daily average trades also remained strong, up +3% for equity and +6% for fixed income month-over-month, despite February’s shorter calendar.
Markets entered February with pronounced sector rotation driven by AI disruption concerns. The S&P 500 fell 0.8%, while Nasdaq dropped 3.3%, its worst performance since March 2025. In contrast, the Equal-Weight S&P 500 rose 3.5%, reflecting a shift toward “HALO” assets (hard assets, low obsolescence) in energy, utilities, materials, and industrials.
Sector Borrowing Reflects AI Bifurcation and Rotation
By trade notional, Information Technology remained at the top of global sector rankings, with strong lending demand driven by the sector’s underperformance in equity markets. The bifurcation between AI infrastructure beneficiaries (semiconductors, data centers) and disruption concerns (software, services) created dispersion trading opportunities.
The top traded securities—MSTR, LITE, CHTR, AMCR, and SMCI—highlighted elevated borrowing demand for high-volatility AI-adjacent names as investors positioned for further downside or hedged existing long positions. Industrials and Financials ranked second and third globally, supported by “HALO trade” dynamics and private credit stress (Blue Owl, UK MFS collapse).
Regional sector leadership diverged:
- Canada concentrated in Energy and Materials amid commodity hedging
- EMEA was led by Industrials and Healthcare
- APAC activity centered on Industrials and Technology
In APAC, strong equity performance earlier in the year prompted profit-taking, with Japan up 10.5%, South Korea up 22.6%, and Taiwan up 12.3%. Borrowing demand reflected hedging of concentrated semiconductor positions, and shorting of China-exposed names, as the MSCI China Index declined 5.8%.
Across the U.S., EMEA, and Canada, specials priced above 251 bps represented 18-30% of equity trades, while deep specials above 501 bps accounted for 12% of U.S. activity.
Fixed Income Delivers Exceptional Growth
Fixed income outpaced equities with trade volumes up +4% month-over-month and daily averages up +6%, with clear flight-to-quality dynamics. Corporate bond activity surged +8% month-over-month and sovereign debt +15% month-over-month as private credit concerns and equity volatility drove demand for high-quality liquid assets.
Regional gains were pronounced: U.S. and EMEA led growth, while fixed income volumes rose across all regions except Canada and South America. Central bank policy divergence (RBA raising rates, BoE signaling cuts, Fed on hold), and the U.S. 10-year Treasury yield falling 29 bps to below 4% supported government bond repositioning activity.
Regional Dynamics: Growth in U.S. and EMEA, Calendar Effects in APAC
The United States maintained dominance with 2.5 million trades (71% of global) and $3.2 trillion notional (75% of global), with equity notional surging +12% MoM despite declining indices. EMEA posted gains of +6% trades and +10% notional, with daily average equity notional up +16%, aligned with STOXX 600 record highs. APAC volumes declined -20% due to February’s shorter calendar and holiday slowdowns, despite strong equity performance (Japan +10.5%, Korea +22.6%, Taiwan +12.3%), with Japan at 24% and Hong Kong at 19% of international equity demand.
Looking Ahead
The +25% year-over-year trade growth signals sustained momentum, with fixed income accelerating (+4%, month-over-month) and equities demonstrating resilience through rotation. Strength in the U.S. and EMEA, combined with the underlying demand in APAC once calendar effects normalize, positions NGT for continued expansion.
Several catalysts are likely to support activity in the coming months, including market volatility, regulatory developments such as OCC Ovation in the third quarter of 2026, and the planned European T+1 settlement transition in 2027.
Heading into March, the outlook remains positive with AI bifurcation sustaining dispersion trading, geopolitical uncertainty (U.S.-Iran tensions, trade policy) supporting hedging demand, central bank policy divergence creating cross-border opportunities, and sector rotation driving elevated specials activity across Technology, Financials, Industrials, and resource sectors.
Within global equities, NGT's most in-demand sectors were:
Stay tuned for the latest securities finance trends, trading analysis and commentary with EquiLend’s Monthly Trading Commentary.
You may also like:
Monthly Securities Finance Market Review: February 2026
EquiLend’s Head of Trading Solutions, Mike Norwood, shares his February securities finance market review, highlighting how sector rotation, artificial...
Read More
APAC Securities Lending Trading Activity: Growth, Friction, and the Automation Imperative
APAC securities lending trading activity has undergone a structural shift over the...
Read More
Monthly Securities Finance Market Review: January 2026
EquiLend’s Head of Trading Solutions, Mike Norwood, shares his January securities finance...
Read More