Q2 2025 Securities Finance Market Review

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Q2 2025 was significantly influenced by US trade policies, which continued to dominate headlines. The uncertainty surrounding these policies created a volatile environment for investors. Early in the quarter, stock markets experienced sharp declines as fears of escalating tariffs loomed large. However, a 90-day pause in tariff implementation was announced, leading to a swift recovery in the markets. This temporary reprieve provided some relief to businesses and investors, allowing them to recalibrate their strategies and expectations.

In addition to trade policy impacts, geopolitical tensions contributed to increased defence spending. As conflicts and diplomatic standoffs intensified, governments around the world allocated more resources to their military budgets. This surge in defence spending had a dual effect: it provided a boost to industries related to defence and security, while also raising concerns about the long-term implications for global stability and economic growth.

Central banks around the world took varied approaches in response to the mixed economic data and the ongoing tariff news. Some central banks opted for a more cautious stance, maintaining or slightly adjusting interest rates to navigate the uncertain economic landscape. Others took a more proactive approach, implementing measures to stimulate growth and mitigate potential downturns. These divergent strategies reflected the complex and dynamic nature of the global economy in Q2, highlighting the challenges policymakers faced in balancing short-term stability with long-term growth objectives.

Securities lending markets reacted favorably to the extended period of volatility with quarterly revenues increasing by 22% YoY to $3.7B. Notable growth was seen in revenues for Asian equities, which increased 34% YoY to $728M, ETFs +60% YoY to $264M and ADRs +109% YoY to $153M.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.