Icap, the world's largest interdealer broker, has expanded the range of securities available on its electronic securities lending platform i-Sec to include exchange-traded funds and exchange-traded commodities.
According to Icap, this is the first time European ETFs have been made available on an electronic lending platform, bringing together supply and demand in a single marketplace. Currently, i-Sec enables screen-based access to securities lending in equities from France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, the UK and Japan.
'This initiative is the result of strong demand from the ETF community,' says Roy Zimmerhansl, Icap's head of securities lending. 'We believe i-Sec offers an efficient distribution and access network for ETFs for the first time and that this will help drive further growth in the sector.'
Manooj Mistry, head of equity ETF structuring at Deutsche Bank, says: 'The launch of ETFs on i-Sec will benefit both investors and traders by creating a more transparent and liquid ETF securities lending market.'
Andrea Morresi, head of sales at iShares Europe, adds: 'ETF investors can generate meaningful revenue from lending their positions. The centralised market for lenders and borrowers that i-Sec offers will make lending ETFs more efficient and scalable.'
According to Deutsche Bank, turnover in European ETFs increased by 88 per cent last year, with assets under management growing by 22 per cent. This surge of interest from investors and traders has generated further demand for borrowing ETFs, offering investors an opportunity to add incremental returns by lending their ETFs.
Electronic lending through i-Sec allows both borrowers and lenders to broadcast their search or available portfolio easily to a wider range of interested parties, and the transparency of screen-based trading, the visibility of market depth and the availability of negotiating tools on the system help firms to obtain optimal terms for their transactions.
Icap is a voice and electronic interdealer broker and a source of global market information and commentary for professionals in the international financial markets. The group is active in the wholesale markets in interest rates, credit, energy, foreign exchange and equity derivatives, and has an average daily transaction volume exceeding USD1.5trn, more than 60 percent of which is electronic.