Finadium Podcast: S&P Global Market Intelligence’s Kabin George on key lessons from securities lending data in 2026

We speak with Kabin George, Managing Director, Product Management and Operations, Securities Finance at S&P Global Markets Intelligence, on the big changes in securities lending data year over year, including:

• Growth dynamics in Asian markets
• Rate gaps between securities loans and repo
• Market concentration
• How asset managers are using securities lending data signals
• The latest on hedge funds, quant trading and securities lending data

Transcript

SPEAKER_01 0:00

I'm Martin Siegold, Senior Consultant with Vanadium, and I'm joined today by Kabin George, Managing Director Product Management and Operations Securities Finance at SP Global Market Intelligence. Cabin is joining me to discuss the trends that SP Global is seeing in securities lending in 2026 and how they'll impact market participants. Thanks for joining me, Kabin. Thank you, Martin. It's nice to see you. I'm looking forward to our conversation. Okay, great. So let's jump in. If you could just start by telling me a bit about what SP Global offers around securities lending data and what your role involves.

SPEAKER_00 0:37

Yeah, absolutely. So SP Global Market Intelligence, Securities Finance provides securities lending data to a community of our customers. We provide a combination of data analytics and also solution tools. Our target audiences are predominantly the securities lending participants in the market, the agent lenders. We provide data to beneficial owners, we provide data to borrowers and also to the hedge fund community. And the data is used widely for various purposes. We have roughly around 20 years of historical data with lendable volumes going up to 50 trillion and loan volumes going up to around 4 trillion plus of loan volumes and covering around multiple asset classes. The data is used for rate discovery, data is used for investment insight, and data is also used as an alternative alpha generation tool also for some of our hedge fund community. So it's used for a wide range of purposes. And my role is I am responsible for the product roadmap, I'm responsible for the product development and innovation. And I've got a global team that ensures that we build products for our customers that caters to their requirements.

SPEAKER_01 2:01

Excellent. So, Kabin, let me start by asking: what big picture movements do you see happening in securities learning from your data? Are 2026 revenues looking as strong as 2025 after a weaker 2024?

SPEAKER_00 2:15

Yeah, interesting, actually. It's been a good start with regards to the global securities finance revenue in 2026. I'd say the revenue totaled to roughly around 3.8 billion in Q1. That's almost a 32% euro over year growth. Supported primarily by, I would say, higher balances. Roughly it's around 3.7 trillion of lending volumes, which is what we call it as notional lending volumes. So almost 29% euro over year growth, and which was all indicated by a stronger borrow demand uh uh related to more than a fee expansion, which is roughly around at 41 bips, which is just a 2% euro over year growth. Um, let's say the first quarter of 2026 was marked by the geopolitical risk and shifting market dynamics. Uh, US equities started strong, voilyed by this Goldilocks or steady environment. Uh, growth was steady enough to support risk assets, but would say not so robust to trigger any aggressive policy tightening. Or, you know, uh, and there was investor rotated away from these mega cap tech stocks to cyclicals like financials and consumer staples and materials. In general, it was a moderate growth, stable inflation, no aggressive changes to interest rates, etc. Then February brought some heightened volatility with precious metal and energy markets swinging sharply among uncertainties, shifting monetary policies. Obviously, we had large cap large cap tech pressure by AI-driven disruptions. And then March was a standout market revenue reaching at around 1.5 billion. I would say it's roughly around a 36% euro over year growth. The growth was fueled by heightened market volatility, driven by geo increased geopolitical risk, shifting interest rates, expectations, and rising hedging activity. Average fees, I would say, increase all across all six shifties. And then maybe just go a bit into equities and fix the gap. So it across the board, I would say, significantly through this first quarter. Uh average fees reached around 44 bits during the month, and balances remain significantly higher on a year-to-year basis. And I saw it see it across the board also. Equities obviously remain the engine of the revenues. All equities produce roughly around, I would say, 2.9 billion in Q1, which is a 35% euro over year growth. At an average, balance is around 1.7 trillion, which is 37% euro over year growth. Fees were marginally lower, which is just around on flat versus euro over year growth, but utilization grew, which means there was more demand coming up from a broader participation across participants. Similar, we saw similar revenues coming up in ETS also with higher balances of 35% euro over year growth and higher fee to actually at roughly around 8% euro over year growth. Fixed income also strengthened. Government bonds earned around 680 million actually, which was around a 27% over year growth. That's our 1.6 trillion balances with very high utilization of 29-21%, which is quite unprecedented a bit on the fixed income especially of the Govis. Government bond markets experienced heightened volatility in March owing to the geopolitical escalation, and sharp moves in energy prices reshape inflation expectations and interest rates outlooks. So not following the norm, solar bonds largely sold off during periods of market stress, reflecting investor concerns about the changing dynamics in the world, and also the central bank's ability to ease uh selling pressure. Similar things we saw in the corporate bond, the credit space, also driven by higher imbalances, which was roughly around 420 billion, a 20% year over year growth, despite a fee compression. And again, it's the same reason. So in I I would say this is a great start to what it has been a phenomenal year of 2025, also, where balances were revenue were roughly around a 15 billion north of 15 billion, which is almost a 27% euro over year growth. So I do see a continuation. I mean, if we look into 2025, I think U3 was the standout year, and Asian and markets were the standout year, and we see that continuation going around in 2026. So many a reason combination of recent has given a good start to Securities Finance Revenues.

SPEAKER_01 6:41

Very interesting. And um, which regions are seeing the most traction and why do you think that is? All right, good question, Martin.

SPEAKER_00 6:48

Um I would say I'll I'll start maybe with the Asian equities. Surprising, I know we normally go and speak about US equities and the American markets, but Asian equities was a clear growth leader, roughly around uh I would say around uh 938 million, actually. I would say uh this is the Q1 revenue, which is almost a 58% uh euro over year growth, combined balances of around 360 billion, which is a 47% euro over year growth. Fees were also phenomenal, roughly and averaging around 110 bips, which is a 7% euro over year growth. So biggest demand for it, supply available, fees are higher. I think it's and I see it's as I mentioned it before, it was a continuation of a growth that we saw in 2025, supported by higher trading volumes, sharper price moves, and increased long short activity. The region benefited from some of the structural catalysts, like Japanese interest rate normalization, too, and the relative adjustments in the collateral and funding rates. Balance continues to grow, and special activity grew up in 55% by around 55% year on year across the region. This is a continuation of what we saw in Q1. Japan, Hong Kong, Taiwan, South Korea continue to post strong revenues and experience sustained demand, resulting in some of the strongest monthly revenues, especially seen in Taiwan and South Korea. Australia also experienced a notable increase in demand in commodity and mining stocks becoming increasingly in focus. And they probably Australia posted an impressive 62% increase in Q1. Another followed by Europe, actually. Europe revenues grew faster, fastest in percentage team or percentage terms at almost 63% euro over year growth at 340 million, but around 270 balance, which is a 43% euro with year growth, and fees at a slight increase of 14% euro over year growth. I would say Europe's acceleration sharply as energy sensitivity, sensitivity, rising yields contributed to some of these increased balances and special activities. Um special revenues was roughly around, I would say, around 44 million, which is around 28% of late Q1's equity revenues, combination of it coming out from the Scandinavian markets, also owing to the seasonal trades then. And when it comes to US, yes, it's still the king revenue generated around 934 million, which is a 7% euro over year growth. Um it's a relatively lagout compared to what was in Asia and Yemia because they drew drove the revenues. The levels were fell materially around 19%, even though the balance is surged. But there is still some special activity that is happening in US regions, actually. And I could see across equities and fixed income ETFs. So in general, it's been um it's been slightly a different. I mean, and we do see the trends also slightly coming up in 2025. You see the continuation of the trend in 2026 too. That's correct, but okay.

SPEAKER_01 9:58

So I'm quite to switch gears a little bit now, Kevin, and just talk about some of the rate differences between repo and securities lending that we've seen for the same ISINs. How is that looking as we move into 2026?

SPEAKER_00 10:15

The rate caps between a repo and the stock loan securities lending for the same ISIN are still showing up as we move to 2076. I'm not saying it's the I'm saying it's more of a rule of thumb, but I'm not saying it's the case of all the cases. There are divergence, there are convergence also. But the key point to me is that these two markets are pricing. I would put it as I was talking to someone else recently, it's pricing the same bond, but not often pricing the same trade. That's what I put it as, actually. Uh, when you see you see a big repo and stock loan discrepancy in some of the ISINs, and it's reflected sometimes in our data set also. And it could be many multiple reasons. And I would could be like, let's look into it. The reason for trade, maybe. Is the borrow driven by directional shorting, which is more stock loan heavy, or is it more of funding or hedging uh heavy, which is be more of repo? Is it owing to balance sheet constraints like quarter ends, CCP netting, internal limits, or cost of collateral in stock lending that is driving repo? It's one term, another one effective callable or open so stock loan embeds in embeds stock loan rates embeds into it, like pricing, recalls, return opportunities, lifecycle events. Repo is often different, it's like a different close out role, closed out convention, and may be of better offer for term funding. So the rate is not strictly comparable unless we normalize the terms and the forward start structures, rights of substitution, etc. And that's what some of our product does, actually, where our users have got the ability to do a light to light comparison, an apple to apple comparison, where you can do it with the same structures. And also different some supply pools too, Martin. Actually, uh repo supply is often often dealer intermediated and can be uh and and and then stock loan supply could be constrained by a beneficial owner, lending inventory, restrictions on lending, like do not lendless, concentration limits. Um, and I will say also the supply that's case where the ISINS can be abandoned in one place, but not abandoned other places. So you can see if something trading at GC in one market and other one at specials. And regulatory constraints and the cost of collateral is another driver. We do sometimes see it also because at the moment we have differentiated both of them separately in our products. We have got stock loan rates and we've got repo rates. So that's where you see the convergence when we don't use trades from here to calculate the implied rate there. We try to make it this, we try to distinguish so you can see exactly as what is in the market. So the answer to your question, yes, there is divergence. We do see there are, if you ask me to pick up an example, I can pick up in a matter of minutes some examples straight away on where the repo is trading at cheesy and the stock loans trading as precious, but because of these reasons that I mentioned. But I do see convergence happening also in certain areas, especially when more these markets are coming together. I think more of transparency will also help in came in in seeing the differences between the rates. So, I mean, I I I hope that answered your question, Martin.

SPEAKER_01 13:25

Very much so, and I think this is just such an important part of collateral optimization as we start to move forward with bringing in a wider range of inputs into some of these decisions around how to deploy particular assets and how to generate the the best returns. So a lot of interesting information there. Absolutely. In terms of uh market concentration, how much concentration are you seeing across market participants and how's this changing? Is it the same or is it different than in previous years?

SPEAKER_00 13:54

Uh I I would say see at the let's say stock loan, the lendable touched 50 trillion, which was the first, actually, where and and was with it it was a milestone moment for our securities finance industry. Actually, we were the first uh vendor who produced these results where the lendable touched 50 trillion and loan balances touched around 4.6 trillion dollars. And it's come back, actually, even though after the market sell-off, you can see that it's gone up again. Um, and it's touched back again the 50 trillion mark. The repo is roughly around 3.2 trillion. So we could see more and more participants coming into uh the stock loan uh pseudo securities finance. Uh uh uh um we see more beneficial owners in the past who were uh hesitant to start lending and started lending. It's a combination of reasons, it's also to do the fact that there are more um uh tools that they can use now to ensure that their lending pro the program is lending uh according to their parameters that is set. Uh they have got independent providers who could provide this information to them. So it's I think the market's a bit more other firms are feeling a bit more in the comfort to start getting into the lending pool. So we see there is more diversification now happening out there rather than concentration. Now there are also a new sector of retail investors coming into there. You know, you've got big retail uh investors lending pool coming up, and uh and and and we see a big increase in the lendable that is supply that is coming up there too. Um so retail trade investors, retail uh uh uh institutional investors are uh uh are all adding more into the supply pool. And we in in SP Global, we have a method of we do quarterly refreshers. We try to ensure that we gatekeep what data gets into it, actually, and when it gets into it, and we try to make it in such a way that in order to avoid volatility and noises, we just do like quarterly refreshes. And every quarter we are adding billions and billions of new supply data that's coming in from our participants. So I would say I wouldn't put, I don't think to me, there's a concentration acting. I think it's it's it's it's spreading across more and more participants are joining this. So it's quite exciting times in that way.

SPEAKER_01 16:14

Yes, absolutely. And I think that retail dynamics are a big part of the picture, and um, you know, with meme stock trading, and uh, we've definitely seen growing volumes in that area as well. So I think that's gonna be a big trend going forward. Exactly. And then how are wider investment managers or portfolio managers using the power of data to take investment decisions and then refine their entry and exit points in portfolio construction?

SPEAKER_00 16:42

Um very interesting uh question. Um, securities lending data is used to predict, I would say, up to an extent, what is the sentiments of a company? Uh, I mean, you do have the the traditional fundamental measures that is there, but securities finance data or short-term trust data is used as an alternative data set also to predict stop price movements, you know, forward returns, etc. Uh, in the cont investment world in modern day, the challenge is no longer trying to get access to data, but it's more of how you can extract differentiated data or differentiated signals from this increasingly crowded space. Um, edge funds use short interest as the structured sentiment factors to detect crowding positioning shifts and short squeeze risk also. Uh, signals are generated by systematically uh exploring statistical relationship between short interest, price behavior, changes, and the fundamentals of the firm. So that's how many of those quantitative hedge funds and lock-on funds are using the data now. Uh, and I'll just put something like you know, funds use short interest to identify crowded trades and asymmetric opportunities, like high short interest stocks can signal two different things. Either the market expects fundamental weakness, so it's a good short candidate, or the trade is getting crowded and vulnerable to a short squeeze, which is a possible long opportunity. Similarly, low short interest may indicate a consensus optimism that you know the fundamentals of the firm is good. So expecting the prices to go up, or there is a lack of attention onto it, and we expect the prices to go further up on this particular company, the share price to go on this company. In addition to this, the daily securities lending has been on market for some time, and some of the high-frequency funds are increasingly interested in intraday data also to explore this. So we've got closer business firms are getting more sophisticated, they want real-time data, or let's say near-time data, or as soon as possible. It's very different to the traditional settle short positions, and especially with this heightened market volatility, actually. Um, but like trades, I mean, the trades are booked. Uh, I mean, that said, say, for example, they don't want trades to be included that was one week ago or one month ago. They just wanted to know what are the new trades that were booked out there. So there is a more and more flow or requirement, because they want to see more where's the flow, there's more requirement to get near time data. And I think it was well demonstrated actually in the last year during the tariffs that happened in Q2, um, where the SP 500 plunged almost 12%, uh, and similar to all the other indices, the major large caps, because of tariff uh announcements that was made and the volatility that happened. And in once, I mean, I uh um the spikes in the borrowing activities, particularly in the first week or the first part of Q2, suggested bearish and a defensive sentiment, as well as a rush for protection. And these violent swings in indexes and the market sentiments meant that uh near or real-time data helped to produce more accurate hedges, better short protection, and stronger marker signals for all users accessing the data. Um, and and so we can see that more of it, more and more of them getting sophisticated. And I would just not say many of them are not using it for alternate data. They're also using this as a core data, also, especially in calculating shots and events, finding out short squeezes that's happening. There is also demand coming up now for more granular data, especially on transactional level, where people are using the performance, I would say, uh, of the most shorted bucket can be significantly improved by reducing short exposure to stocks where short sellers are making are less profitable and by increasing exposure to stocks where short sellers are being more profitable, actually. So that transaction level information is also getting a lot of transaction uh traction. And not just securities finance, they're investing, they are diverging it because SP Global has got a wide range of data sets available. People are looking into earnings indicators, earnings releases, and coming up with some sort of like an indication of a score on whether there's a positive or a negative sentiments coming up. ETFs also data is now new data is being used in rethinking how the signals are constructed, particularly in structures like ETFs, and also in evaluating future ETF performances, whereby um sentiments can be calculated for any ETF using a bottom-up approach, combining all the constituents, the weights, and coming up with a true short sentiment of a true short factor of an ETFs. Similarly, using upcoming dividends and dividend forecasts also, we can use a comp what they have what we have seen is that they're not just using one data, they're using a combination of data to decide when to enter, when to exit, how to create portfolio constrictions and for any contrarian ideas, also. So it's getting more and more sophisticated. sophisticated and there is a big big big appetite to get more and more data in this space. So uh we we we concentrate a lot on that and we uh we we ensure that we provide the right offerings also to our customers in this space yeah so a more wider range of more granular more real-time data as a way to generate alpha in more faster moving and volatile markets absolutely that's correct Martin how how do you think that helps in creating demand for stock loan does it does it increase does it help to increase demand? Yeah of course because more what what we always see is that more the hedge funds can take informed decisions the buy sites can take because they are the end of the food chain of the securities lending community and if they can get more they can take more informed decisions in making hedging or making short activity more that creates a demand to to uh to borrow instruments and more there is a demand for it more there is lending revenue that grows across the board between the lender to the borrower and back to the asset owner so these data helps hedge funds in our portfolio managers in taking more informed decisions and and and we always maintain the fact and it's been proven systematically many times also and through many of our research papers that it generates more demand and more revenue for the supply side. Very interesting well Kabin it's been great to speak with you today thank you for the conversation thank you so much Martin for this and it was great speaking to you and thank you once again for the opportunity to speak in Funidia.