Íø±¬³Ô¹Ï lending in 2025: A banner year in the making
28 October 2025
Matt Chessum, executive director, equity analytic products at S&P Global Market Intelligence, provides an overview of performance for 2025 and how current trends could push the market to new post-financial crisis highs
Image: Shutterstock
As we navigate through the final quarter of 2025, the securities lending market is on track to deliver its second-highest revenue year since the 2008 financial crisis. The first three quarters have already generated a remarkable US$11.07 billion in total lending revenues, with the market demonstrating exceptional resilience amid significant economic and geopolitical challenges.
Q1: Setting the stage for volatility
The year began with a complex economic landscape characterised by persistent inflationary pressures in the eurozone and skepticism regarding China's growth stimulation efforts. President Trump's proposed tariffs on imports from Canada, Mexico, and China sparked fears of a global trade war, introducing market volatility that would become a defining feature of 2025.
Despite these challenges, securities lending revenues reached US$2.89 billion in Q1, representing a 5 per cent year-over-year (YoY) increase. Asian equities emerged as a particularly strong performer, with revenues growing 34 per cent compared to the same period in 2024. Exchange traded funds (ETFs) demonstrated even more impressive growth, with a 108 per cent YoY revenue increase, reflecting their growing importance as tactical instruments during periods of uncertainty.
Q2: Escalating tensions drive increased activity
The second quarter saw global equity markets facing significant turmoil as the US administration's tariff announcements took effect. April began with heightened volatility, sending the S&P 500 down 4.6 per cent in its worst weekly performance in three years. However, strong earnings from tech giants helped markets recover, with the S&P 500 rebounding over 6 per cent in May.
This volatility translated into robust securities lending activity, with total revenues climbing to US$3.74 billion, reflecting a 22 per cent YoY growth. All asset classes reported positive growth during this period, with ETFs again standing out as revenues surged by 60 per cent to US$264 million. American depositary receipts (ADRs) experienced even more dramatic growth, with revenues expanding by 109 per cent to US$153 million.
The lifting of the short selling ban in South Korea contributed to strong performance in Asian equities, while demand for microprocessor and semiconductor stocks, potentially affected by US trade policy, drove rising revenues and fees. In fixed income markets, corporate bond revenues increased both YoY and quarter-over-quarter, totaling US$256.4 million.
Q3: Record-breaking performance
The third quarter of 2025 delivered the strongest quarterly returns of the year and the second highest quarterly revenues ever, with securities lending activity generating revenues of US$4.45 billion, a remarkable 48 per cent increase YoY across the securities category. The Federal Reserve's first rate cut since 2020 helped US indices reach historic highs, with the Dow Jones exceeding 46,000 and the S&P 500 surpassing 6,600.
Asian equity revenues increased by 80 per cent to just under US$1 billion, with Hong Kong and South Korea serving as the main drivers after significant increases in average fees and balances. Americas equities also experienced one of their strongest quarters, surpassing US$1.9 billion in revenues. Technology-focused and leveraged ETFs continued to drive strong exchange traded product (ETP) revenues, while fixed income assets benefited from increases in balances during the period.
The three defining themes of 2025 so far
1. The AI revolution
The artificial intelligence sector has been a dominant force in securities lending throughout 2025. Coreweave alone generated an astounding US$757.1 million in lending revenues by the end of Q3, highlighting the intense market interest in AI infrastructure providers. Other AI-focused companies like Quantum Computing and Circle Internet Group also featured prominently among the top revenue-generating stocks.
The January breakthrough by DeepSeek triggered significant tech stock volatility, creating opportunities for securities lending as investors repositioned their portfolios. Throughout the year, AI-related ETFs have seen substantial borrowing activity, reflecting both long-term investment conviction and short-term tactical positioning around key technological announcements and earnings reports.
2. Policy uncertainty
Trade tensions and monetary policy shifts have created a backdrop of persistent uncertainty throughout 2025. President Trump's tariff policies have introduced volatility across global markets, particularly affecting sectors with international supply chains. This uncertainty has driven securities lending demand for companies potentially impacted by trade restrictions, especially in the semiconductor and manufacturing sectors.
Central bank actions have further contributed to market fluctuations. The Federal Reserve's rate cut in September — its first since 2020 — triggered significant market movements and portfolio rebalancing, benefiting securities lending activity. Similarly, the Bank of Japan's announcement regarding unwinding ETF holdings created borrowing demand for Japanese equities as investors anticipated market impacts.
3. M&A resurgence
The revival of merger and acquisition activity has emerged as a significant driver of securities lending revenues in 2025. The formation of Paramount Skydance through one of the year's highest-profile media mergers generated substantial lending revenue, with the stock joining Coreweave to produce over US$550 million in combined revenue during Q3 alone.
This resurgence in deal-making has created numerous opportunities for securities lending across sectors. Arbitrage strategies around announced deals have driven borrowing demand, while speculation about potential acquisition targets has led to increased activity in sectors undergoing consolidation.
Figure 1
Looking ahead
As we enter the final quarter of 2025, the securities lending market is positioned to deliver its second-highest annual revenue since 2008. The combination of technological transformation, policy-driven volatility, and corporate consolidation has created an ideal environment for securities lending activity.
While maintaining a cautious outlook given ongoing geopolitical tensions and potential economic headwinds, market participants can expect continued strong performance across asset classes. Asian markets are likely to remain particularly active as regional dynamics evolve, while technology and AI-focused securities should continue generating substantial lending revenues.
The combination of these three key themes, AI advancement, policy uncertainty, and M&A activity, will likely define the remainder of 2025, potentially pushing annual securities lending revenues to new post-financial crisis highs if current trends persist.
Q1: Setting the stage for volatility
The year began with a complex economic landscape characterised by persistent inflationary pressures in the eurozone and skepticism regarding China's growth stimulation efforts. President Trump's proposed tariffs on imports from Canada, Mexico, and China sparked fears of a global trade war, introducing market volatility that would become a defining feature of 2025.
Despite these challenges, securities lending revenues reached US$2.89 billion in Q1, representing a 5 per cent year-over-year (YoY) increase. Asian equities emerged as a particularly strong performer, with revenues growing 34 per cent compared to the same period in 2024. Exchange traded funds (ETFs) demonstrated even more impressive growth, with a 108 per cent YoY revenue increase, reflecting their growing importance as tactical instruments during periods of uncertainty.
Q2: Escalating tensions drive increased activity
The second quarter saw global equity markets facing significant turmoil as the US administration's tariff announcements took effect. April began with heightened volatility, sending the S&P 500 down 4.6 per cent in its worst weekly performance in three years. However, strong earnings from tech giants helped markets recover, with the S&P 500 rebounding over 6 per cent in May.
This volatility translated into robust securities lending activity, with total revenues climbing to US$3.74 billion, reflecting a 22 per cent YoY growth. All asset classes reported positive growth during this period, with ETFs again standing out as revenues surged by 60 per cent to US$264 million. American depositary receipts (ADRs) experienced even more dramatic growth, with revenues expanding by 109 per cent to US$153 million.
The lifting of the short selling ban in South Korea contributed to strong performance in Asian equities, while demand for microprocessor and semiconductor stocks, potentially affected by US trade policy, drove rising revenues and fees. In fixed income markets, corporate bond revenues increased both YoY and quarter-over-quarter, totaling US$256.4 million.
Q3: Record-breaking performance
The third quarter of 2025 delivered the strongest quarterly returns of the year and the second highest quarterly revenues ever, with securities lending activity generating revenues of US$4.45 billion, a remarkable 48 per cent increase YoY across the securities category. The Federal Reserve's first rate cut since 2020 helped US indices reach historic highs, with the Dow Jones exceeding 46,000 and the S&P 500 surpassing 6,600.
Asian equity revenues increased by 80 per cent to just under US$1 billion, with Hong Kong and South Korea serving as the main drivers after significant increases in average fees and balances. Americas equities also experienced one of their strongest quarters, surpassing US$1.9 billion in revenues. Technology-focused and leveraged ETFs continued to drive strong exchange traded product (ETP) revenues, while fixed income assets benefited from increases in balances during the period.
The three defining themes of 2025 so far
1. The AI revolution
The artificial intelligence sector has been a dominant force in securities lending throughout 2025. Coreweave alone generated an astounding US$757.1 million in lending revenues by the end of Q3, highlighting the intense market interest in AI infrastructure providers. Other AI-focused companies like Quantum Computing and Circle Internet Group also featured prominently among the top revenue-generating stocks.
The January breakthrough by DeepSeek triggered significant tech stock volatility, creating opportunities for securities lending as investors repositioned their portfolios. Throughout the year, AI-related ETFs have seen substantial borrowing activity, reflecting both long-term investment conviction and short-term tactical positioning around key technological announcements and earnings reports.
2. Policy uncertainty
Trade tensions and monetary policy shifts have created a backdrop of persistent uncertainty throughout 2025. President Trump's tariff policies have introduced volatility across global markets, particularly affecting sectors with international supply chains. This uncertainty has driven securities lending demand for companies potentially impacted by trade restrictions, especially in the semiconductor and manufacturing sectors.
Central bank actions have further contributed to market fluctuations. The Federal Reserve's rate cut in September — its first since 2020 — triggered significant market movements and portfolio rebalancing, benefiting securities lending activity. Similarly, the Bank of Japan's announcement regarding unwinding ETF holdings created borrowing demand for Japanese equities as investors anticipated market impacts.
3. M&A resurgence
The revival of merger and acquisition activity has emerged as a significant driver of securities lending revenues in 2025. The formation of Paramount Skydance through one of the year's highest-profile media mergers generated substantial lending revenue, with the stock joining Coreweave to produce over US$550 million in combined revenue during Q3 alone.
This resurgence in deal-making has created numerous opportunities for securities lending across sectors. Arbitrage strategies around announced deals have driven borrowing demand, while speculation about potential acquisition targets has led to increased activity in sectors undergoing consolidation.
Figure 1
Looking ahead
As we enter the final quarter of 2025, the securities lending market is positioned to deliver its second-highest annual revenue since 2008. The combination of technological transformation, policy-driven volatility, and corporate consolidation has created an ideal environment for securities lending activity.
While maintaining a cautious outlook given ongoing geopolitical tensions and potential economic headwinds, market participants can expect continued strong performance across asset classes. Asian markets are likely to remain particularly active as regional dynamics evolve, while technology and AI-focused securities should continue generating substantial lending revenues.
The combination of these three key themes, AI advancement, policy uncertainty, and M&A activity, will likely define the remainder of 2025, potentially pushing annual securities lending revenues to new post-financial crisis highs if current trends persist.
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