Lender Supply Poll Results

A couple of weeks ago I posted a poll asking for your views on the supply side of the business.  The poll was prompted by a couple of reports from US based consultants that suggested a considerable pullback amongst Beneficial Owners participating in securities lending programmes.  I asked readers to indicate whether supply had increased, decreased or stayed the same over the past year.  There were 35 respondents to the poll, so not that much smaller than either of the research pieces.  Obviously the difference is that this was an open and anonymous poll and the respondents haven't been validated or questioned.  In any case, the objective of running these polls isn't for scientific accuracy, but rather to elicit a common sense, gut -feel reaction from the people in the industry

I am writing this while away from the office, so I won't be able to add the graphic representations for a couple of days.  The results of this survey are as follows:

Location and number of respondent:
UK - 13
US - 12
Unidentified - 3
France -2
Switzerland - 2
Israel - 1
Ireland - 1
Holland - 1

Change in supply over the past year:
Reduced by less than 25% - 51%
Reduced by 25% or more - 23%
Stayed the same - 11%
Increased by up to 10% - 9%
Increased by more than 10% - 6%

The UK and US are the only markets where there were enough responses to look for trends.

UK - 7 of 13 respondents said the supply has reduced by 10% or less.  3 replied that things were pretty much the same.  Two had the view that supply had dropped by more than 25% and one noted that supply had actually increased by up to 10%.

US - A wide variation here, but decidedly bearish overall.  Five respondents showed a supply drop of up to 10%, followed by four respondents indicating a drop of over 25%.  Looked at another way, 75% of US based respondents showed a drop and a third of these were by more than 25%.  There were two people that thought the supply had gone up by up to 10% and one lucky soul indicated a supply increase of over 10%.

A decidedly more negative view came from the US, so confirming the validity of the commentary from the consultants.  Of course there is potential for further Beneficial Owners to drop out, but at the same time, others could return. 

I maintain that if there are significant departures from the lending community that the impact is likely to be concentrated within certain markets or sectors.  Most at risk would be the US with small and mid-cap stocks as well as some fixed income supply being more reliant on US based institutions being active lenders.  For other markets a departure by some represents additional opportunities for others.

Thanks to everyone that took the time to participate.