Vodia Group has released a new report on securities lending programs for retail investors with fully paid, non-margin accounts. With over US$9 trillion in holdings, retail investors are looking, cautiously, at securities lending to generate additional portfolio returns while minimizing risk. New programs at the largest brokers are seeking to facilitate these loans, with important consequences for prime brokers and the securities lending market. In light of this growing trend, Vodia Group has ranked nine top retail brokers and two additional prime brokers by their ability to deliver cost-effective retail inventory to hedge funds and other short sellers. Please see the attached press kit for the full ranking.
According to Josh Galper, Managing Principal of Vodia Group and author of the report, âretail asset holders have over $3.6 trillion in fully paid US equities, which adds 57% to the existing pool of available securities lending US equity inventory. Adding the hard to borrow assets of retail investors to the pool of outstanding US equity securities loans would increase supply by 20%, which would come just in time as hedge funds and 130/30 managers are increasing demand. Without new supply, costs for short sellers will increase leading to capacity constraints on hedging strategies.â