Chair: Andrew Neil, associate editor, Global
Nancy Allen, global product owner of DataLend
Steve Kiely, head of securities finance sales and
relationship management – EMEA, BNY Mellon
Jørgen Krog Sæbø, chief treasurer,
Stevce Mojanovski, equity finance trader at Danske
Dan Murphy, global head of equity finance, Stockholm,
Per Strömberg, equity finance, Handelsbanken Capital
What have agent lenders been doing to maximise client revenues
in the Nordics?
Steve Kiely: The
Nordics are not that dissimilar from the rest of continental
Europe. We're concentrating on high-yielding stocks –
intrinsic value lending. Most are focused on the 20% of the
loans that make up 80% of the revenue.
also encouraging clients to enter into a term contracts so they
can preserve their liquidity and get that extra pick-up.
Collateral is not king any more. Collateral is only queen, term
Neil: Jørgen, do you see these trends within in your own
absolutely. Term trades are increasingly popular and
profitable. It used to be one-month and now its three-month
term trades. We’re definitely seeing more
evergreen structures. It may not be a big proportion of our
trades, but we're seeing increased demand for them.
Per Strömberg: I
agree. When it comes to maximising revenues we do see the
market turning towards longer term trades. It started with the
term on cash for different reasons, but now it's more term
equities and term fixed income.
Neil: Are these trends reflected in the data you have,
interesting when we look at the Nordics and how the region fits
into the global securities lending picture. As of September,
the average lendable securities in the region totalled
daily, which is approximately 7%
$3.6trn lendable European securities. To date, the average
on-loan in the Nordics is approximately $34bn, which is again
roughly 7% of the on-loan that we've seen across
In the second half of 2015 the Nordic market was roughly 60% to
65% general collateral (GC). So far in 2016, that percentage
has dropped to 30% on average, so we've definitely seen an
increase in specials trading this year.
Dan Murphy: The
Nordics has a lot of specials to offer compared to mainland
European countries, which are concentrated in certain sectors
and certain markets. The returns are a result of very
name-specific and sector-specific stocks. In Finland its
construction and mining. In Denmark we’ve seen
shipping and construction. Norway has produced energy specials
and in Sweden it’s been IT and industrials.
Fingerprint, for example, has generated significant revenue for
those lending out positions.
expect most mainstream indexes to be filled mainly with GC
stocks, but probably only about 50% of the names in the HEX
Index could almost be guaranteed to be GC borrows, the rest of
them are specials. Participants in this region are in quite a
has been a specials-driven revenue year. We've done
particularly well in the US. Although volumes have shrunk
somewhat, the specials have made up the revenue. In part, the
volume declines are due to equity volatility at the start of
this year and shrinking balance sheets in general which has
subdued equity finance demand.