Stanbic IBTC Bank has extended its securities lending services to include fixed-income securities. This significant development marks a new milestone in the Nigerian capital market, providing clients with enhanced opportunities for income generation and increased market liquidity.
According to the bank, institutional clients, both local and international, can now borrow and lend not just equities but also fixed-income securities such as Federal Government Bonds and Treasury Bills, offering them greater flexibility and diversified investment options.
Commenting on the extended securities lending service, Babatunde Majiyagbe, Head, of Investor Services at Stanbic IBTC Bank Limited, said, “In 2023 alone, we facilitated the lending of assets worth N150 million,” Majiyagbe noted. “This reflects the growing trust and demand for our securities lending services and underscores our role in enhancing market liquidity and efficiency.”
While highlighting the importance of extended securities lending, Majiyagbe said, “Expanding our securities lending services to include fixed income securities provides our clients with broader opportunities to generate income and enhances overall market liquidity.
“This expansion not only broadens the scope of our offerings but also provides our clients with a wider range of assets to optimise their investment strategies and achieve their business objectives, enhancing the overall liquidity and efficiency of the Nigerian capital market. This move underscores our commitment to driving innovation and growth in the Nigerian capital market.”
Majiyagbe further explained, “Securities lending facilitates continuous trading and liquidity, which are essential for a vibrant market. Our expansion into fixed-income securities will attract more investors and foster a more robust and resilient capital market.”
Securities lending has been available in the Nigerian market for over a decade, with Stanbic IBTC being the only active securities lending agent throughout this period. The inclusion of fixed-income securities in the lending portfolio is poised to have a transformative impact on the market, contributing to effective market-making, increasing overall market liquidity, and enhancing the efficiency of price discovery mechanisms.
By allowing market participants to take and cover short positions as part of their market-making activity, investment and trading strategies, or for hedging purposes, securities lending supports a more dynamic and liquid market environment. This development is expected to attract more investors and stimulate further growth in the Nigerian capital market.
Securities lending plays a critical role in effective market-making and enhancing the efficiency of price-discovery mechanisms.