First view of lender concentration; Introduces greater transparency into securities financing and mitigates the risk of short squeezes
New York and London -- 24 May 2010: Data Explorers, the leading global provider of securities financing data and daily long and short institutional fund flow insight, today launched its Concentration Ratio analytics. This brings a new level of transparency into securities financing and helps mitigate the risk of short squeezes.
Short selling is once again at the heart of regulatory debate and is central to the discussion at our Securities Financing Forum taking place in New York on Wednesday.
David Carruthers, Market Segment Director, Data Explorers commented: “The biggest risk for every short seller is a short squeeze. For the first time, our Concentration Ratio shows when a few lenders are dominating the market, increasing the probability of a short squeeze. This increased transparency allows market participants to quantify the chances that their shares will be recalled.”
Short squeezes occur when there is not enough stock in the lending market to support short selling activity. A stock loan recall forces short sellers to cover their positions. This raises prices and creates additional losses for short sellers amid further covering.
Data Explorers captures more than three million daily transactions, sourced directly from contributing customers across securities financing, including investment banks, prime brokers, lending agents, beneficial owners and hedge funds. This unique content set enables Data Explorers to identify the concentration of custodians and borrowers responsible for the loans in each security, as well as the market share. When blended with a comprehensive view of fund flow, Data Explorers can help market participants mitigate the risk of short squeezes.
About Data Explorers
Data Explorers is the leading global provider of securities financing data and daily long and short institutional fund flow insight. Based in New York and London, the company’s predictive analytics help clients identify investment opportunities and manage risk by analyzing fund flow, stock loan availability, short interest and stock lending volume. Established in 2002, Data Explorers’ unique content set of more than three million daily transactions is sourced directly from contributing customers across securities financing, including investment banks, prime brokers, lending agents, beneficial owners and hedge funds.