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Equity Lending Survey

31 July 2014


Lenders and borrowers are invited to rank their top counterparties across eight service categories

Read more: Equity lending Survey securities lending

Lenders and borrowers are invited to rank their top counterparties across eight service categories in a secret ballot with a new voting system, designed to capture an accurate picture of the industry

This year the methodology has been thoroughly overhauled to hugely reduce the amount of time it takes to fill out the survey. Counterparties will not be able to view who has ranked their firm.

The full methodology is set out below.

The survey is divided into two main sections. One section is to be completed by borrowers that want to rate their lenders, and the other section is to be filled out only by lenders that want to rate their borrowers. 

Please click on the relevant link to fill out the survey:

BORROWERS RANKING LENDERS:  PLEASE CLICK HERE

LENDERS RANKING BORROWERS:  PLEASE CLICK HERE

Top securities lending industry participants assembled in London on March 12 to discuss ways to improve and streamline the annual Global Investor/ISF equity lending survey.  

The results of last year's survey can be viewed here.

Global Investor/ISF is also launching two other related surveys soon. Follow the links to fill out these surveys: Equity Lending Technology Survey (launched July 31) and Fixed Income Lending Survey (launched August 5).

EQUITY LENDING METHODOLOGY

The Global Investor/ISF Equity Lending Survey 2014 is designed to identify excellence in the industry.

Respondents – lenders or borrowers – are asked to rank their counterparties. There is a separate survey questionnaire for each side of the trade.

Respondents are asked to rank their top counterparties in each of the categories (see below) separately for each region.

A global entity is asked to rate its counterparties for every relevant geographical region: Europe, Middle East and Africa (Emea), the Americas and Asia Pacific.

The region is defined by where the underlying securities are listed (not where either the respondent or counterparty is based). Therefore, global entity Lender X is asked to rank its top counterparties, in each category, for every region where the equities it trades are listed.

Overall scores are defined as ones where all the category scores are combined (there are global overall scores and regional overall scores)

Global scores are defined as ones where scores from all regions are combined (there are global overall scores and global category scores).

All entities that meet the qualification criteria are included in the appropriate tables regardless of whether the entity actively participated in the survey (i.e. helped to circulate the survey in the industry).

MARKET DIVISION BY SCALE

Only the largest 32 borrowers and 32 lenders are eligible to be ranked in the survey. Likewise, these same two groups are the only entities eligible to rank their counterparts.

There is also a distinction between group one and group two entities. Group one consists of the largest 15 counterparts and group two the remainder.

Both group one and group two counterparties are asked to fill out an identical survey. All respondents are asked to rank seven group one counterparts in order of excellence exhibited in that category (from the list of 15 group one counterparties). Similarly, all respondents are then also asked to rank their top five group two counterparties.

However, the rankings given by group two respondents have a lower weighting than those of group one when calculating the total scores (see details below).

The largest borrowers/lenders and the division between group one and two are defined by trading volume over the last 12 months, determined by Global Investor/ISF with advice from Markit and SunGard. The largest entities are determined on a global, not regional, basis (i.e. a firm is put in the same group for every region, even if its business is heavily bias towards a particular region). All trades are converted into US dollars and aggregated to calculate the total volume.


RESPONSE VALIDATION

A global entity is only allowed to rank its counterparties once for each region (i.e. two people from Bank X cannot rank its counterparties in the same category and same region). A global entity can rank its top counterparties in each category, for either one, two or all three regions.

If Global Investor/ISF receives multiple responses from the same entity for the same region we will ask the global head of the business to choose which should be used (Global Investor/ISF reserves the right to make the decision after reasonable efforts are made to get a decision).

Respondents are encouraged to rank as many counterparties in as many categories as possible. However, there is no minimum number required for the response to be valid and no categories are mandatory.

Responses are not permitted if they are submitted via one of the counterparties being ranked. IP addresses for all responses will be checked.

WINNERS AND HIGHLY COMMENDED

In line with the objective of recognising excellence in the industry, winners will be announced for the lenders and borrowers ranked highest by their counterparties.

In addition, a select group of firms will be declared highly commended. These are the borrowers and lenders that secured the next highest scores after the winners. For both group one and two a list of highly commended firms will also be published.

Winners and highly commended lists will be declared for the firms ranked highest on average for the following methodologies:

• Global overall
• Global categories
• Regional overall
• Regional categories

This list will be replicated for four groups:

• Group one lenders
• Group one borrowers
• Group two lenders
• Group two borrowers

QUALIFICATION

Fundamentally, winners and highly commended lists are calculated by the total amount of points firms accumulate. However, minimum thresholds are imposed to avoid erroneous results.

Winners must be ranked by more than a set minimum number of its counterparties to be eligible for an award (or being highly commended).

Rankings by group one counterparties count as one response. Rankings made by group two counterparties count as half a group one response (i.e. if the qualification threshold was three and no group one entities rank a particular counterparty, that counterparty would need to be ranked by six group two counterparties).

As this is the first year for a radically new methodology, Global Investor/ISF reserves the right to amend qualification criteria after the survey has started. However, all changes from the below will be publically announced.

Group one (borrowers & lenders)

• Regional categories:
Entities must be ranked by at least three of its counterparties for that category in that region (i.e. three group one, six group two or combinations thereof).
• Global categories: Entities must qualify for the category in a minimum of two regions.
• Regional overall: An entity must qualify for a minimum of 30% of the categories in the relevant region.
• Global overall: An entity must qualify in a minimum of two regions overall to qualify globally.

Group two (borrowers & lenders)

• Regional categories:
Entities must be ranked by at least three counterparties for that category in that region.
• Global categories: Entities must qualify for the category in a minimum of two regions.
• Regional overall: An entity must qualify for a minimum of 30% of the categories in the relevant region.
• Global overall: An entity must qualify in a minimum of two regions overall to qualify globally.

CALCULATION METHOD

Respondents are asked to rank their top seven group one and top five group two counterparties. These rankings are then inverted to create scores.

These scores are then added together and the firm with the highest total score is declared the winner (it does not matter which firm is ranked number one by the most counterparts). The counterparties with the next highest scores are declared highly commended.

Being ranked by a group one respondent results in a full score; being ranked by a group two counterpart results in 50% of the inverted score being added to the total.

Group one
All respondents (groups one and two) are asked to rank their top seven group one counterparties for each category, in each region. The rankings are then inverted to provide scores (i.e. a number one rank produces a score of seven).





Group two
All respondents are asked to rank their top five group two counterparties for each category, in each region.





Weighting by importance
When combining category scores – for global overall and regional overall – the categories are weighted by importance. This means that an allowance made for how relatively important each category is considered by the survey respondents (i.e. more significant attributes are given more weight than the less important ones).

In the survey questionnaire, respondents are asked to rank the categories according to how important they consider that attribute to be. These ranks are combined to provide weightings theoretically between 0 and 2 (but are likely to be much less extreme) for each category.

For example, if relationship management is considered very important by respondents and generates a weighting of 1.5, and Bank X achieves a score of 25 in that category, 37.5 will be added to the overall score (1.5 x 25 = 37.5).

These weightings are calculated on a global basis and applied to all overall tables (even if there is a disparity between how important attributes are between the regions).

Therefore the combined scores are calculated as follows:

Regional categories: All scores for the relevant category, for the relevant region, are simply added together.
Global categories: All scores for the relevant category, for every region, are added together.
Regional overall: Regional category scores are weighted by importance and then added together to create an overall score for that region.
Global overall: Global category scores are weighted by importance and then added together to create an overall score for the entire globe.


CATEGORIES & OPERATIONS SUB-CATEGORIES

When respondents rank counterparties they are asked to do so for eight categories including three operations categories. However, the three operations categories are combined into one operational efficiency category for the purposes of creating overall tables (global overall and regional overall). Therefore, when calculating overall scores (combining categories) the operations scores count for one third as much as each of the other categories.

Likewise, when respondents are asked to rank the categories by importance the operations categories are combined into a single operational efficiency category.

VOTING CATEGORIES

For the first time this year, respondents are asked to nominate individuals for our lifetime achievement award as well as on the two new exceptional achievement of the year categories. The most innovative awards are calculated as in previous years.

Lifetime achievement award. (previous recipients are excluded)
Exceptional achievement of the year award: lender. (open to individuals, not banks)
Exceptional achievement of the year: borrower. (open to individuals, not banks)
Most innovative borrower of the year (select from the list of 32 group one and group two lenders)
Most innovative lender of the year (select from the list of 32 group one and group two borrowers)


AWARDS PRESENTED

Ranking awards
Lender
(group one and group two separately)
Global winner: Lender of the Year 2014
• Global category winners e.g. Best Lender Awards 2014: Relationship Management
• Regional winners e.g. Lender of the Year (Americas) 2014

Borrower (group one and group two separately)
Global winner: Borrower of the Year 2014
• Global category winners: e.g. Borrower Awards 2014: Relationship Management
• Regional winners: e.g. Borrower of the Year (Americas) 2014

Voting awards
• Lifetime achievement award
• Exceptional achievement of the year (lender)
• Exceptional achievement of the year (borrower) 

PRACTICALITIES & DISCLAIMER

Respondents may re-enter their survey form after completion. Even if the form is finished and submitted, the respondent may revise their answers until the final deadline. Reactivation codes are available from gisurveys@euromoneyplc.com.

All responses are strictly confidential. Borrowers and lenders will never be able to find out which counterparts ranked them.

As this is the first year of operating a completely new methodology, Global Investor/ISF reserves the right to amend the methodology after the survey process has begun. This will only be done to resolve unforeseen problems calculating results and any changes will be announced.

CATEGORIES

Lenders rating borrowers

1. Breadth of demand – including general international markets, exclusives, corporate actions and emerging markets.

2. Stability of demand – including overnight balance and term balance

3. Relationship management – including senior management engagement, trading desk engagement, sales desk engagement and coordination/communication between internal desks globally

4. Collateral funding/financing capabilities

5. Trading capability – including idea generation, product knowledge and automation

6. Operational efficiency

a. Trading connectivity & automation
b. Trade matching and settlement
c. Dividend collection and fees & billing


Borrowers rating lenders

1. Breadth of supply – including general international markets, exclusives, corporate actions and emerging markets.

2. Stability of supply – including recall frequency and transparency around stability

3. Trading capability – including idea generation, product knowledge and automation

4. Collateral funding/financing capabilities

5. Relationship management – including senior management engagement, trading desk engagement, sales desk engagement and coordination/communication between internal desks globally

6. Operational efficiency

a. Trading connectivity & automation
b. Trade matching and settlement
c. Dividend collection and fees & billing










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