In step with its dedication to contribute to the expansion and improvement of capital market in Nigeria and Africa, Nigerian Alternate Restricted (NGX) mentioned it should proceed to collaborate with market stakeholders to boost securities lending transactions and supply an environment friendly and liquid marketplace for buyers.
The Alternate additionally mentioned that securities lending presents vital advantages to buyers in a bull or bear market – both as lenders or debtors.
Talking through the NGX Securities Lending Discussion board 2022 in collaboration with Stanbic IBTC which held in Lagos through Zoom, the Divisional Head, Capital Markets on the NGX, Jude Chiemeka, said that securities lending transactions have develop into an essential component of capital markets all around the globe. He added that in at this time’s capital markets, securities seldom lie unutilized, noting that if not being purchased and bought in outright market transactions, securities are often lent to events desirous to borrow them, or used as collateral to boost short-term finance.
Quoting a 2021 report performed by Worldwide Securities Lending Affiliation (ISLA), Chiemeka mentioned the overall worth of securities made accessible globally by institutional buyers inside lending programmes stood at $34trillion with about $2.9 trillion on-loan globally throughout all asset lessons; 48 per cent Authorities Bonds, 39 per cent Equities, 6 per cent, Company Debt Securities, 4 per cent, ETFs 3 per cent, Different Mounted Earnings in December 2021.
He additionally identified that the worldwide securities lending business generated $9.28 billion in income for lenders in 2021, in response to DataLend – a 21.2 per cent improve from 2020, including that this exhibits the massive potential accessible in securities lending transactions.
“Domestically, Nigerian Alternate Restricted (NGX), in response to the necessity for market enlargement and improvement, launched many merchandise – securities lending being one among them – to provide buyers (retail and institutional) a big selection of asset lessons to select from. Because the Securities Lending and Borrowing (SLB) companies was formally launched within the Nigerian market in December 2015, uptake has steadily risen, although not as strong as envisaged. In accordance with a report by Nigerian Alternate Restricted, in 2020, the market recorded spectacular transactions, with about 7.4 million models value N95.2 million traded. In 2021, whereas the amount in traded equities fell to about 6.8 million models the worth grew to N513 million”, he mentioned.
The Divisional Head defined that from the lender’s perspective, the advantages of securities lending embody the flexibility to earn further revenue by means of the charge charged to the borrower to borrow the safety whereas including that from the borrower’s perspective, it permits them to take positions like quick promoting. It additionally provides buyers extra choices to take totally different views in the marketplace.