[ I N - D E P T H
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S E C U R I T I E S
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"We have been working hard on giving
clients more transparency and control to
make those governance decisions more
easily, and allow them to recall securities on
loan when there is an important vote.”
KEITH HABERLIN, HEAD OF THE GLOBAL SECURITIES LENDING GROUP, INVESTOR SERVICES, BBH
They believe you cannot exercise your
governance responsibilities if you lend
your securities for short selling. In reality
you can do both, and not lending at
all and giving up the returns you can
generate through securities lending is
unnecessary,” says Haberlin.
"We have been working hard on giving
clients more transparency and control to
make those governance decisions more
easily, and allow them to recall securities
on loan when there is an important
vote. The days where you hand your
portfolio to an agent lender and get a
cheque at the end of the month with
no control over the process is long
gone. There is now the ability to have a
tailored securities lending programme to
balance governance responsibilities while
gaining important returns.”
Enhancing transparency
Both industry and regulatory initiatives
are aiming to improve transparency in
the securities lending market. From April
this year, Europe’s Securities Finance
Transactions Regulation (SFTR) will
take force, requiring firms to report their
securities lending and repo trades on a
T+1 basis.
The regulation will provide substantial
new insight into the operations of the
lending industry, and in an industry first,
give a real-time view of the positions held
by borrowers and lenders. In preparation
for the rules, beneficial owners are
engaging with technology vendors
to establish the necessary set-up for
reporting.
“Beneficial owners are aiming to
increase the transparency into their
lending arrangements, either though
near-time reporting from agent lenders
and custodians, or whether through
mirroring the collateral receipt and
deliver it into their systems,” said Carsten
Kunkel, head of regulatory centre of
excellence, SimCorp.
Spring 2020
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