Monthly Securities Finance Market Review: May 2024

EquiLend’s Head of Trading Solutions, Mike Norwood, shares his monthly market review for securities finance, highlighting May trends and some all-time highs seen for fixed income. The following data has been measured and derived from EquiLend NGT.??

Equities Flat While Global Trading Volumes Are Up, Led by Fixed Income???

As we move closer to the half year mark, the picture is positive for overall trading volumes even with continued inflationary pressures and central bank policy, with fixed income having a true golden season. Observations from analysis of trading data over EquiLend’s NGT platform for May indicate relatively flat performance month over month for equities, with May figures showing 2,712,190 trades agreed, equal to $2.84 trillion, down 1% month over month but up 7% year over year. U.S. equity markets posted gains for the month, and U.S. Treasury yields were down as inflation slowed, but remains stuck above 3%. Volatility was muted and led to softening demand in the securities lending markets.?

Fixed Income Explodes with Unprecedented Growth??

As covered in our recent Q&A with SFT, global inflation and interest rate speculation have continued to drive the strong trading performance seen in recent months. The fixed income high performance we attribute to increased electronification of the sector, partially driven by regulation. In keeping with the theme of further electronification of the market, year-over-year figures showed strength, with total trade counts up from 2023 across all segments excluding the U.S. and South American equities (down -2% and -23%, respectively). Equity volumes were slightly lower while fixed income continues to drive higher volumes with significant increases for the U.S. +%24, EMEA +57%, CAD +8%, APAC +55% and South America +60% in daily trade counts compared to May 2023.??

Yield pressures continue to drive borrowing demand, and the fixed income market has a lot of room to run in achieving STP levels compared to their counterparts on equity trading desks.??

Trading by Sector for May: The Global Picture?

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 across 2024.

Click on the report below to download our Monthly Trading Statistics.