Security-based Loan Market


To gain a deeper understanding of the United States securities-backed lending industry, including the market size for the past fifteen years and key players with their portion of the market. Additionally, obtain a list of U.S. lenders that offer securities-backed loans, including more than just the key players.

Early Findings

  • According to a 2018 report published by Doxim in 2018, the market size of outstanding securities-backed lending as about $200 billion. The data did not clarify if this was global data, U.S. based, or some other geographical focus. The same report stated that the biggest players in the market are Merrill Lynch/Bank of America ($40 billion), Morgan Stanley ($30 billion), UBS, and Wells Fargo.
  • Goldman Sachs is growing in the securities-based lending industry.
  • A 2018 report by Brown Brothers Harriman estimates both the available securities and the percent of those taken as loans from March 2008 till March 2018. Although it is never stated, it appears that the data provided is global data.
  • Sample data from the report is as follows: 2008 had approximately $21 trillion in securities available to lend but only about 14%, or $2.94 trillion ($21 trillion * 0.14) was lent; in 2013 there was approximately $13 trillion in securities available to lend but only about 13%, or $1.69 trillion ($13 trillion * 0.13) was lent; and in 2018, there was approximately $20 trillion in securities available, with about 10%, or $2 trillion ($20 trillion * 0.10) actually lent.
  • Based on the above report showing outstanding global loans of approximately $2 trillion, we can likely assume that the $200 billion figure provided by Doxim is a U.S.only amount.
  • A report from the National Association of Insurance Commissioners (NAIC), seems to contradict other reporting by stating that the global value of securities on loan for the first half of 2018 was $2.6 trillion, with the U.S. accounting for about 55% of that, or $1.43 trillion ($2.6 trillion *0.55). However, it is not clear if this is the same industry as security-based lending. The description states that securities lending is the "lending of securities by institutional investors, such as insurance companies, to mostly banks and broker-dealers. It requires that the borrower post collateral in the form of cash or security." Although similar, this appears to be lending to other financial institutions while security-backed lending appear sot be lending to individuals.
  • Based on the above definition, it does not appear that the information in contradictory as securities lending and securities-based lending appear to be two different things.
  • In 2013, Morgan Stanley had $14.9 billion in securities-based loans. That had increased to $40.1 billion in September 2017.

Proposed next steps:

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Our initial research did not uncover any publicly available data on the size of the U.S. securities-based lending market, other than an estimated figure for 2018. We propose continuing the research by attempting to estimate the U.S. market size of the industry for 2014-2017 using the estimated 2018 market size as a starting point. We would do this by looking for data on market growth for the last 4-5 years and then using that data to estimate the market size for each year. Although we know that the market size from 2005 onward is desired, we believe the best approach is to start with the last 4 years to determine data availability.
Additionally, we propose compiling a list of some of the top 10-12 lenders in the industry in the United States. This list would include Merrill Lynch/Bank of America, Morgan Stanley, USB, Wells Fargo, and Goldman Sachs that were already identified, plus an additional 5-7 lenders. We propose identifying "top" as those with the largest outstanding balance of securities-based loans in the United States. For each we would provide the name of the lender and the total amount of outstanding loans for 2018 (or the most recent available year).
Finally, once we have a list of some of the top 10-12 lenders in the industry, we propose providing the value of outstanding securities-backed loans for each pubic company from 2005-2017 (2018 would have already been provided in the previous research). For any companies that are not public, we would provide any estimated figures found, but it is unlikely that a year-by-year analysis would be available.