Securities lending remains a tough topic for the press, so tough that it appears difficult for Finadium quotes to be at times accurately represented. Barring when we are able to ask for a quote check, we think we are misquoted or misrepresented about half the time. The latest example came in today’s Financial Times, where Josh Galper was incorrectly quoted as saying that he supported US regulators in adopting ESMA regulations regarding securities lending fee splits. That’s not what he said and we have called the FT to ask for a correction. What he said was that ESMA’s requirement that UCITS funds publish greater details on their securities lending activities was a benefit to investors and that it would be good to have the US follow suit for the benefit of transparency.
This is not the first time that Finadium has advanced the idea of greater transparency for mutual funds and UCITS funds. In nearly every survey of asset managers that we have conducted since 2009, we have commented on this issue in one way or another. We continue to find that greater transparency for investors and potential investors buying mutual funds would provide a benefit to the investment community, not to mention to securities lending. Securities lending has nothing to hide; the business works quite well. The more that participants in the industry are willing to show what they are doing, we think the greater confidence that investors will have in the process.
For all the positive industry movement, securities lending remains something of a negative in the eyes of the press. This is reflected nowhere more intensely than when there are lawsuits. We are disappointed that the press is not taking more time to dig deeper into securities lending matters that can be legitimately complex and more involved than a 500 word article. We also do not think that the current spate of lawsuits are getting the story right and are displeased that our data have been used to support their arguments. While we stand by our reports and survey data, we continue to think that securities lending fee splits to be determined across multiple factors and a one-size-fits-all approach does not work.