Monthly Securities Finance Market Review: Feb 2023

Mike Norwood

Mar 2023

Mike Norwood, Head of EquiLend Trading Solutions, gives his analysis of a short month of year-on-year gains and active global trading, with MEME stocks back in focus.

Trading Analysis: Feb 2023

EquiLend’s NGT platform saw 2,384,816 trades executed v. $2.21T in February. The topline figure was 0.4% lower than January but up 2% over February 2022. Drilling deeper, this stat actually represented a 6% increase in average daily volumes given the shorter month as securities lending trading activity responded to broader market pressures.

This increase YOY was seen in recognition of continuing inflationary pressures and the likelihood that the US Federal Reserve will need to continue raising rates, along with other central banks. These elements coupled with consumer confidence levels dropping and subpar earnings, contributed to the impression that many names are overpriced. Growth names outperformed with information technology being one of the only sectors finishing the month to the positive.

Equity and Fixed Income Trading Analysis

Equity and fixed income trading was active globally with all regions (bar APAC equity) posting gains relative to January. Continuing the trend over the last year, fixed income, particularly corporate debt was particularly active as 454,080 trades were agreed (+23% from last year) with 5 of the top 10 highest fixed income trade counts ever recorded occurring in the last month, including 36,828 executed on Feb 2 representing a new all-time high. Investment grade corporate bonds represented 75% of that activity.

Securities Finance: Top Performing Sectors

Industrials, consumer discretionary, and healthcare remained the top 3 sectors followed by information technology and healthcare. Meme stock activity returned considerably in Feb with familiar names TSLA, V, GME, AMC, WOLF, KMX and NWL, BBBY and BYND the most active names.

MEME names drove further activity. AMC had a unique trade driver behind the demand with their recent announcement which would serve to dilute the available shares whereas the other meme names were fundamentals driven. A quiet month for convertible or merger arbitrage space led to strictly equity fundamentals driving market demand.

Overall, we saw activity picking up the pace towards the end of February after a couple of relatively quiet months. It remains to be seen whether or not it will persist, but until there is more certainty on the inflation front from the FED, ECB and other global financial institutions, it is likely to remain a volatile marketplace and so far we have seen elevated demand through the first week of March.

Follow Securities Finance Trends, Trading Analysis and Commentary with EquiLend’s Monthly Trading commentary across 2023.

Who We Are

EquiLend is a global financial technology, data and analytics firm offering Trading, Post-Trade, Data & Analytics, RegTech and Platform Solutions for the securities finance industry. EquiLend has offices in New York, New Jersey, Boston, Toronto, London, Dublin, India, Hong Kong and Tokyo and is regulated in jurisdictions around the globe.