Effects of centralization on the Brazilian equity lending market

• Ano de defesa: 2024
• Autor(a) principal: Barbosa, Davi José Lacerda
• Orientador(a): Chague, Fernando Daniel
• Tipo de documento: Tese
• Tipo de acesso: Acesso aberto
• Idioma: eng
• Palavras-chave em Português: Transparência de mercado; Mercados de balcão; Centralização de mercado; Empréstimo de ações; Eficiência de preços
• Palavras-chave em Inglês: Market transparency; OTC markets; Market centralization; Equity lending; Price efficiency
• Link de acesso: https://hdl.handle.net/10438/35636

Centralization has been proposed as way to improve the functioning of equity lending markets. We exploit a unique event in the Brazilian equity lending market, the introduction of an lending platform in 2020. We find that for a large class of assets, centralization has led to a large increase in lending fees, and that this effect is mainly driven by hard-to-borrow stocks. As a proxy for hard-to-borrow, we use stocks excluded from the Brazilian stock market index (Ibovespa). We also find that, similar to other markets, there is limited adoption, with the majority of volume and transactions still occurring in the OTC market after the opening of the platform.