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Country Profiles: Up and Coming Markets

15 March 2017

Beyond the major lending markets there are several others on the verge of becoming established including Malaysia, Indonesia, India and the Philippines

Read more: India Philippines Malaysia


Malaysia is the seventh largest market in Asia Pacific in terms of equity lending revenues, according to IHS Markit data. It is certainly one to watch, with revenues jumping 40% over the year. Although the total remains low by regional standards at $32m it is over 10 times that generated five years ago.

Last year was also a strong year in terms of average balances, growing 30% to $933m, from inventories that increased by a similar percentage to $9bn. This was achieved with fees staying flat at 3.2%. The most revenue generated for lenders came from Maxis and

 "There has definitely been an increase in business in Malaysia," says Rakesh Patel, head of equities, Asia-Pacific, HSBC. "It is the one ASEAN market that really pops, in terms of an increase in activity. It is certainly an interesting market going forward."

It is uncertain whether the rapid progress can be sustained, at least in the short term, as interest peaked during the year. "The outstanding notional values came up quite quickly last year – but in the meantime it seems that the demand has reduced a little," says prime broker based in the region. "There is a functioning market in place now."

Bursa Malaysia offers two securities borrowing and lending models: central lending agency (SBLCLA) and negotiated transaction (SBLNT). In the SBLCLA model Bursa Malaysia acts as the central lending agency for all SBL transactions between authorised lenders and borrowers. The SBLNT provides an on-shore route to agree transactions an over-the-counter basis and report to its representatives.


India is at the early stages of securities lending relative to other Asia markets, but it is evolving and starting to mature and become more open to international market participants.

"India looks very interesting, having gone through a de-monetarisation phase," says HSBC’s Patel. "Hedge funds and clients I speak to think India looks like a worthwhile opportunity to explore. India is at the early stages of securities lending relative to other Asia markets. But as an equity market it is maturing, it’s evolving, which will hopefully follow through into the lending."

India is a very large market but one where the authorities have not wholeheartedly accepted the merits of SBL. A separate source who requested to remain anonymous says: "The Indian authorities have been relatively averse to having instruments for shorting capability onshore so it has been challenging from a securities lending perspective. As the market evolves they will understand that lending adds to liquidity, so it ends up being a good thing for everyone. India is at the early stages of that now."


Indonesia remains one of the region’s most exciting opportunities. Its untapped liquidity profile and economic growth expectations make it an attractive frontier market for investors, according to Dane Fannin Head of Capital Markets, Asia-Pacific, Northern Trust.

While it does not have a securities borrowing and infrastructure in place, this makes for a viable offshore model. In addition, "we are aware that regulators have been consulting with their counterparts in other markets to progress Indonesia’s market further, says Fannin.

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