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Opportunities and Challenges for Hedge Funds in the Coming Era of Optimization
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25
Australia, South Korea, Taiwan and Singapore. Hong
Kong makes up the balance of the Asian assets at
$224 billion (21%).
The spreads on these lendable equities follow the
supply pool—those nations with the largest supplies
tend to realize lower spreads whereas those with
more limited supply register higher figures. This is
illustrated in Chart 19. North American lendable
equities posted an average spread of 55 basis points,
European lendable equities showed an average spread
of 88 basis points and Asian equities registered an
average of 111 basis points.
Strong spreads on lendable equities contrast with
low and falling spreads on lendable bonds. This has
created a platform for another type of unbundling of
securities lending services in the years post-crisis.
Chart 19: Breakdown of Lendable Equity Assets By Region: Q1 2014
Asian
Equity
Hong Kong
Equity
Japan
Equity
Canada
Equity
USA
Equity
Nordic &
Benelux
Western
Europe
0
20
40
60
80
100
120
140
Source: Markit
Southern
Europe
97
68
100
63
48
89
123
119
Asia: 111 BPS
NAM: 55 BPS
Europe: 88 BPS
Basis Points