Capital Markets Fact Book, 2021

Capital markets recognize and drive capital to the best ideas and enterprises. Coupled with the free flow of capital, innovation is an integral component to a country for supporting job creation, economic development and prosperity. Markets facilitate the transfer of funds from those who seek a return on their assets to those who need capital and credit to expand.

Clients benefiting from healthy capital markets include not just individual investors but also institutional investors, governments and corporations. Capital, raised through equity and debt, can be used to grow businesses, finance investments in new plant, equipment and technology and fund infrastructure projects. This creates jobs and flows money into the economy. Additionally, individuals and businesses can invest in securities to generate wealth.

The SIFMA Capital Markets Fact Book is an annual reference containing comprehensive data on the capital markets, investor participation, savings and investment, and securities industry.

 

 

Fact Book Highlights

Chapter 1 – U.S. Capital Markets

In 2020, U.S. long-term fixed income issuance reached $12.2 trillion, a 48.1% increase from the previous year. Mortgage-backed securities issuance increased by 96.2% to $4.0 trillion, followed by corporate bonds (+60.4% to $2.3 trillion) and Treasury securities (+32.7% to $3.9 trillion). U.S. long-term municipal bond issuance increased 13.6% to $484.5 billion, while federal agency securities increased 26.5% to $1.3 trillion. Asset-backed securities issuance volume fell 30.0% to $304.3 billion.

Equity issuance, including common and preferred shares, totaled $390.0 billion in 2020, a 71.0% increase year-over-year. Initial public offering (IPO) volume, excluding closed-end funds, was $85.3 billion, up 74.7% from the previous year. Follow-on, or secondary, issuance totaled $258.5 billion, up 77.8% from last year. U.S. merger and acquisition announced deals totaled $1.5 trillion in 2020, a 17.2% decrease from last year, while the value of completed M&A deals decreased by 15.5% to $1.5 trillion.

The U.S. stock markets recorded increases in 2020: the Dow Jones Industrial Average (DJIA) rose by 7.2%, ending the year at 30,606.48; the S&P 500 Index was up 16.3% to close 2020 at 3,756.07; the Nasdaq Composite Index increased by 43.6% to 12,888.28; and the Russell 2000 Index gained 18.4% to end 2020 at 1,974.86. In 2020, the average daily trading volume for equities was 10.9 billion shares, up 55.4% year-over-year.

Chapter 2 – Global Capital Markets

Global bond markets outstanding value increased by 16.5% to $123.5 trillion in 2020, while global long-term bond issuance increased by 19.9% to $27.3 trillion.

Global equity market capitalization increased by 18.2% year-over-year to $105.8 trillion in 2020, while global equity issuance decreased by 52.9% to $826.8 billion.

U.S. gross activity (purchases and sales) in foreign securities increased to $46.1 trillion in 2020, up 24.7% from 2019. Foreign gross activity in U.S. securities increased by 19.6% to $98.3 trillion in 2020.

Chapter 3 – Investor Participation

Federal Reserve Board data showed the value of U.S households’ liquid assets increased by 16.7% to $58.5 trillion in 2020 from $50.2 trillion in 2019. Of total liquid assets held by U.S. households, 44.2% was in equities, 23.4% in bank depos-its and CDs and 19.2% in mutual funds, with the remaining 13.2% split between U.S. Treasury securities; agency & GSE securities; municipal bonds; money market funds; and corporate bonds.

Chapter 4 – Savings & Investment

Total value of U.S. retirement assets increased by 8.1% to $41.8 trillion in 2020, according to Federal Reserve Flow of Funds accounts. Total pension assets rose 76.3% to $29.6 trillion while assets held in individual retirement accounts increased by 12.5% to $12.2 trillion.

Chapter 5 – U.S. Securities Industry

The number of FINRA-registered broker-dealers decreased by 2.3% to 3,435 in 2020.

Pre-tax net income (profits) for FINRA-registered broker-dealers rose to $77.2 billion in 2020, up 75.7% from $43.9 billion in 2019. Gross revenues totaled $362.0 billion in 2020, down 6.7% from the previous year, while total expenses declined by 17.3% to $284.8 billion.

National securities industry employment, as reported by the U.S. Department of Labor, reached 975,600 jobs in 2020, an increase of 0.9% from 967,300 year-over-year.

About the Report

The SIFMA Capital Markets Fact Book is an annual reference containing comprehensive data on the capital markets, investor participation, savings and investment, and securities industry. The Fact Book amasses data from dozens of sources into a single, easily accessible reference tool to analyze key industry statistics.

Credits

SIFMA Research

Katie Kolchin, CFA, Director of Research
Justyna Podziemska
Ali Mostafa