Page 8 - Securities_Lending_Market_Report_-_June_2022

8 Securities Lending Market Report | June 2022 9

Introduction

We started 2022 concerned about inflation and the expectation that rates
Securities Lending was nervousness over the Russian troop movements on the Ukrainian
would need to rise at some point towards the middle of the year. There
border and the focus was firmly on the CSDR go live in February and what
that might mean for the industry. The climate story was also front and
centre with ESG a hot topic and this was all coupled with hope that 2022
Biannual Market Review world would move closer to a pre-pandemic norm.
would be the year when people got back into the office properly and the

Fast forward 6 months and we see Russia at war with the Ukraine in what
is shaping up to be a long and drawn-out conflict and not the quick strike
Russia possibly anticipated. The energy crisis borne out of the war due to
the unprecedented sanctions regime that has been placed on Russia is both
H1 2022 forcing central banks to raise rates more aggressively than we have would
have ever expected and also making the climate agenda harder to meet in
the short term as countries resort to old energy sources. Oh, and yes, CSDR
went live, and the mandatory buy-in component was postponed.
If you had said to me 6 months ago that heating bills in the UK could top
£5,000 a year for the average household and that it would cost more than
£100 to fill up an average car with fuel, I would have said you’re crazy. But
that is exactly where we are, and this situation is not unique to the UK and
is being similarly felt around the world.
So, what has this meant for the Securities Finance industry? We will get
into more specifics shortly but ultimately the Securities Finance business
is having a very strong year. According to the data vendors this year is the
best H1 since 2008 as almost all asset classes enjoy increased demand and
wider spreads.

So, let’s take a more in depth look at what is driving returns.

Simon Tomlinson – Global Head of Securities Finance Trading
Grant Mansfield – EMEA
Serge Micallef – APAC
Dennis Cahill – North American Fixed Income
Phil Zywot – North American Equity and Corporates