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Securities Lending Market Report | December 2023

APAC NEW PAPER

Securities Borrowing

& Lending Guide:

>>> APAC continued to be a good place to lend securities with some interesting developments in the region in the second half
of 2023. Revenues were up 20% year on year in Q3 with a further increase of 7% in Q4 with the large majority of markets
Kingdom of Saudi Arabia
contributing to the positive story.
Despite a general easing of fees across some markets, Japan Speaking to prime brokers in the region on a recent visit,
has performed well, with the market witnessing an increase in sentiment continues to be bullish with China remaining critical,
activity, particularly in the Banking and Shipping space. JP Azora despite this market enduring significant bouts of volatility.
Bank was downgraded by S&P and was re-instated a SELL by For the 2-3% share of the Chinese retail market which prime Contact us to find out more about our work
a lot of the major players. Regional banks have been hit hard brokers can access synthetically, this small allocation translates ISLA Members Can Access Here in the Middle East - regtech@islaemea.org
over the year and directional demand has been high with 89% into 50-60% of P&L. In Hong Kong, the long term problems
utilization and 17 million shares on loan. with the Chinese property sector led to Country Garden
Holdings to continue to be a good earner for those lenders
Taiwan continues to be the leading market across our holding the security.
discretionary and exclusive programs on a pure intrinsic fee
basis, particularly in the semi-conductor and pharmaceutical/ The long-awaited decision from the Philippines to allow for
healthcare sectors. With supply in this market increasing short selling has been announced, meaning that we should see
significantly, it doesn’t look to be slowing down. this market finally open for securities lending in 2024.
There has been a lot of focus on South Korea in the second Towards year-end we saw a lot of activity in Japanese
half of the year after the MSCI confirmed they would not be Government Bonds (JGBs) as collateral as brokers looked to
included in their developed markets index. South Korea was cheapen up their cost of balance sheet over the turn of the year.
a major plus point for securities lending in Q3 with revenues
nearly doubling year on year. EcoPro was the top earner in Asia
in Q3.Then a full short sell ban was announced in November.
This news came as a surprise and caught many off-guard, as
it had generally been expected that we would see a general
loosening of the prior existing partial ban post the elections in
April 2024. As a result, securities lending revenues dried up
in late Q4 and as we head into 2024 the future of securities
lending revenues in South Korea is a little unsure. The industry,
led by PASLA, is heavily engaged with onshore stakeholders to
contribute to the discussion about best practice in monitoring
short selling. Given this, we suspect prime brokers will shift
resources to Taiwan.