Monthly Securities Finance Market Review: October 2023

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 markets were down, and yields were up for the 3^rd 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.