shangri-la hotel toronto - securities lending · shangri-la hotel toronto tuesday, june 6, 2017 7th...

SHANGRI-LA HOTEL TORONTO Tuesday, June 6, 2017

7TH ANNUAL CASLA CONFERENCE ON CANADIAN

SECURITIES LENDING

PRESENTATION: WHAT’S NORMAL?

Benjamin Tal Managing Director and Deputy Chief Economist CIBC

June 2017Benjamin Tal

What’s Normal? What’s Normal?

Canada: Share of Low-Paying Jobs - Rising 1

Source: Statistics Canada, CIBC

55%

56%

57%

58%

59%

60%

61%

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Share of Below Average Wage Jobs

Surprise Indexes Show 2017 Starting Strong 2

Source: Bloomberg, Citi, CIBC

-15

-10

-5

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017

Major Economies

Developing

Economic Surprise Index readings at Start of Year

Slower Speed Limits: GDP Bar is Lower for Full Employment 3

0

2

4

6

8

10

12

0.5

1.0

1.5

2.0

2.5

3.0

2002 2004 2006 2008 2010 2012 2014 2016 2018

Canada United States Euro area China (Right)

Potential GDP (Real, %)

Chinese Growth is Likely to Slow in the Years Ahead 4

0

2

4

6

8

10

12

14

0 5 10 15 20 25 30Per Capita GDP (Current International $, 000's)

Per Capita GDP (%

China Since 1990

Regression of Japan and Korea Development Paths

Shale Marginal Supplier in the Medium Term 5

Source: BP, CIBC

0

20

40

60

80

100

120

20 40 60 80 100$/bbl

Production (mn bbl/d)

Middle East

Cdn Oil Sands

Global Oil Demand 2018

North American Shale

The Infrastructure “Bonanza” 6

Source: CIBC

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Estimated infrastructure jobcreation per year

Total US job creation in 2016

Windfall from Income Tax Cuts Will Boost Savings… Not Consumption 7

Source: Department of the Treasury Internal Revenue Service, CIBC

0

10

20

30

40

50

60

70

80

Top 10% Rest

Distribution of Windfall from Income Tax Changes (%)

0

10

20

30

40

50

60

70

80

Cons. Savings

Uses of Income Tax Windfall (%)

Cash Repatriation –Positive for Valuations… Not So Much for Employment 8

Source: US Senate Staff Report, CIBC

-10

0

10

20

30

40

2003 2004 2005 2006 2007Stock Repurchases Employment

Change for Top 15 Companies Receiving 2004 Repatriation Holiday (%)

Repatriation Tax Holiday

Tax Equivalent Tariff 9

Source: CEA, CIBC

0.0% 0.5% 1.0% 1.5% 2.0%

Bottom 10%

Top 10%

% of after tax income

income deciles

Consumer Spending in China to Rise at Double the US Rate (L), Leaving it $1.4 tn Higher in 2020 (R ) 10

Source: BEA, National Bureau of Statistics of China, CIBC

0

1

2

3

4

5

6

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

1.4Trillion

USD

Chinese Household Consumption(Trillions of USD)

0

1

2

3

4

5

6

7

8

9

US China

Forecasted Nominal Household Consumption Growth

(2016-2020, Annual Rate, %)

2017 Canadian Growth: Refueled by Oil & Gas 11

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

13 14 15 16E 17F 18FProduction CapEx

Energy Sector Contribution to GDP Growth (%-pts)

~1% swing

Broadly-Based Growth 12


0

10

20

30

40

50

60

70

80

16Q1 16Q2 16Q3 16Q4

Share of Positive Growth Industries in GDP

%, 4-qtr ma

Operating Profits Point to Business Investment Turning Back Positive 13


-25

-13

0

13

25

-50

-25

0

25

50

Non-Financial Op Profit (L) Non-Res Bus Invesment (Real, R)

YoY %

Still Foggy 14

• BAT

• NAFTA

• Trade by Twitter

• Regulatory Policy

• Tax Changes

Something Happened in 2016 15

Source: Teranet/National Bank of Canada, CIBC

50

70

90

110

130

150

170

190

210

230

06 08 10 12 14 16

Index 2006=100

House Price Index - GTA

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

81 86 91 96 01 06 11 16

y/y chg

Average Sale Price - GTA

PRESENTATION: A DATA-DRIVEN PERSPECTIVE

Chris Benedict Director, DataLend

Securities Lending:

A Data Driven Perspective

A Data-Driven Perspective

Chris Benedict, Director, DataLend

© Copyright 2017 EquiLend Holdings LLC. Proprietary and Confidential. For discussion purposes only.

AGENDA

1) GLOBAL PERSPECTIVE

2) MARKET TRENDS

3) CANADIAN PERSPECTIVE


INTRODUCTION

SECURITIES LENDING DATA IS BIG DATA

• 3.25 MILLION TRANSACTIONS PROCESSED DAILY

• 45,000 UNIQUE SECURITIES ON LOAN

• 150,000 UNIQUE SECURITIES IN INVENTORY

• 23 TERABYTES OF DATA

DATALEND COVERS: • $2.1 TRILLION OF ON LOAN ASSETS

• $16.7 TRILLION OF LENDABLE ASSETS


GLOBAL PERSPECTIVE


$9,159,863,746 Global Revenue in 2016

*as of 31st March 2017

$491,727,524 Canada Revenue in 2016


GLOBAL $2,050,681,040

UNITED STATES

$955,529,458

EUROPE

$548,688,102

ASIA PACIFIC

$370,171,977

OTHERS

$38,887,452

Q1 2017 REVENUE

CANADA

$137,404,051

(JAN 1 – MAR 31)


UNITED STATES 8.8 trillion 1.14 trillion 32 bps 955m

CANADA 1.2 trillion 138 bn 39 bps 137m

EUROPE 3.9 trillion 506 bn 42 bps 549m

ASIA PACIFIC 1.7 trillion 163 bn 88 bps 370m

OTHERS 287 bn 27 bn 58 bps 39m

SUMMARY: Q1 2017 (Jan 1 – Mar 31)

LENDABLE ON LOAN FEE REVENUE

EQUITY 10 trillion 899 bn 68 bps 1.53bn

FIXED INCOME 5.9 trillion 1.08 trillion 18 bps 517m

TOTAL 15.9 trillion 1.97 trillion 40 bps 2.05 bn


REVENUE: Q1 2016 vs 2017 (Jan 1 – Mar 31)

R

EG

ION

UNITED STATES 1.10bn 955m -145m

CANADA 121m 137m 16m

EUROPE 602m 549m -53m

ASIA PACIFIC 417m 370m -47m

OTHERS 54m 39m -15m

TOTAL 2,294m 2,050m -244m

Q1 2016 Q1 2017 ∆


REVENUE: Q1 2016 vs 2017 (Jan 1 – Mar 31)

AS

SE

T

EQUITY 1,933m 1,533m -400m

FIXED INCOME 361m 517m 156m

TOTAL 2,294m 2,050m -244m

Q1 2016 Q1 2017 ∆


MARKET TRENDS


m

100 m

200 m

300 m

400 m

500 m

600 m

700 m

800 m

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

RE

VE

NU

E (

US

D)

REVENUE - GLOBAL TOP 50 EARNING SECURITIES

584bps

228bps

583bps 498bps

268bps


RISE OF NON-CASH COLLATERAL GLOBALLY

%

10 %

20 %

30 %

40 %

50 %

60 %

70 %

Cash vs Non-Cash collateral as a % of Total On Loan

CASH NON-CASH


RISE OF TERM TRADES GLOBALLY

0%

5%

10%

15%

20%

25%Term Trades as a % of Total On Loan

REST OF WORLD CANADA


GLOBAL SOVEREIGN DEBT ON LOAN VALUE

bn

200 bn

400 bn

600 bn

800 bn

1,000 bn

US

D


CANADIAN PERSPECTIVE


REVENUES BY ASSET – CANADA

Q1 2016 Q1 2017 ∆ Equity 105.6m 114m 8.4m

Common Shares 104.7m 112.3m 7.6m

Other equity issues 0.9m 1.7m 0.8m

Fixed Income 15.3m 23.2m 7.9m

Sovereign 9.8m 13.4m 3.6m

Agency / Provincial 2m 5m 3m

Corporate 3.5m 4.8m 1.3m


CANADA EQUITY ON LOAN AND REVENUES BY FEES

39b

5b

2b

AVERAGE ON LOAN Q1 2017

12%

85%

3%

79m

23m

12m

TOTAL REVENUE Q1 2017

70%

20%

10%


REVENUE – HOT CANADIAN SECURITIES Q1 2017

Security Name Sector Revenue

Home Capital Financial Services $18m

Badger Daylighting Industrial Goods $3.3m

Prometic Life Sciences Health Care $1.67m

Canopy Growth Health Care $1.58m

Boardwalk REIT Real Estate $1.54m

Hudson’s Bay Consumer Discretionary $1.24m


CANADA – EQUITY VS FIXED INCOME ON LOAN (USD)

0

20

40

60

80

100

120

11/1/2016 12/1/2016 1/1/2017 2/1/2017 3/1/2017 4/1/2017 5/1/2017

Bill

ions (

US

D)

Industry Lender-to-Broker On Loan Value FI Industry Lender-to-Broker On Loan Value EQ


SUMMARY


Q1 2016 Q1 2017 ∆

TOTAL REVENUE 2,294m 2,050m -244m

EQUITY REVENUE 1,933m 1,533m -400m

SOVEREIGN REVENUE 212m 372m 160m

TRADES VS NON-CASH 52% 62% 10%

TERM TRADES 17% 23% 6%


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consent of EquiLend; shall not constitute investment advice by EquiLend, or any representative thereof; is not warranted to be accurate,

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thereof shall be an advisor or a fiduciary of a visitor to this website. EquiLend is not responsible or liable in any way to the reader or visitor,

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SHANGRI-LA HOTEL TORONTO Tuesday, June 6, 2017

7TH ANNUAL CASLA CONFERENCE ON CANADIAN

SECURITIES LENDING

shangri-la hotel toronto - securities lending · shangri-la hotel toronto tuesday, june 6, 2017 7th...

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