IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/21686.html

Market Power in the Securities Lending Market

Author

Listed:
  • Chen, Shuaiyu
  • Kaniel, Ron
  • Opp, Christian

Abstract

We document market power in U.S. equity securities lending and examine its origins and consequences. We develop a dynamic model of securities lending and estimate it on the cross-section of U.S. equities, showing that the dominant custodian-intermediated market structure emerges as a response to short sellers’ information-leakage concerns. Short sellers prefer this opaque market structure over a centralized alternative, particularly for smaller stocks, despite the associated non-competitive fees. This is because their trading strategies become unprofitable if information leaks prematurely. Thus, unlike in standard product markets, the demand side in securities lending values opacity, which is important for regulatory design.

Suggested Citation

  • Chen, Shuaiyu & Kaniel, Ron & Opp, Christian, 2026. "Market Power in the Securities Lending Market," CEPR Discussion Papers 21686, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21686
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP21686
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:21686. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.