By Roy Zimmerhansl
Securities lending isn’t for every investor and here are five examples where lending is not an obvious
- There is a minimum size threshold below which the effort to obtain the requisite approvals and
establishing the oversight infrastructure may not be worthwhile.
- Some assets are already available in abundance – think of the S&P 500 passive funds that are
already available for loan – additional new lenders need not apply.
- Some regulators continue to ban domestic investors’ participation. For example, Spanish
institutions are not permitted to lend domestic securities, so lending revenues for Spanish equities
leave the country.
- Small-cap managers may decide not to lend due to concerns over short selling or loss of control
tightly held companies.
- Some products are required to abstain from engaging in lending or repo.