Fidelity Investments adds affiliate National Financial Services as agent lender


Q1: I understand you are making some changes to your securities lending program? What can you tell me?
A: That’s correct. In an effort to provide an even greater benefit to fund shareholders and clients, Fidelity is expanding its securities lending program to include National Financial Services, LLC (NFS), a Fidelity-affiliated lending agent, doing business as Fidelity Agency LendingSM. This would be in addition to continuing to use an unaffiliated lending agent for certain security types from the funds.

Q2: Why are you making this change?
A: It’s important to note that all revenue from securities lending, minus lending agent and custodial fees, goes back to each fund to benefit shareholders. This will remain the case. We believe this change will have a positive impact on the securities lending revenue generated for the funds. The fees will be structured to ensure that the funds pay less in agency fees to NFS than they would have paid to the current lending agent under the existing arrangement. Second, the funds will be able to share more information about their holdings with an affiliated agent, which may result in additional lending opportunities and revenue. Additionally, Fidelity has market-leading proprietary automated lending technology that is expected to enhance the funds’ lending program. We believe these benefits will enable NFS to improve lending revenue overall of the funds.

Q3: Why is NFS qualified to be your lending agent?
A: NFS has been a significant participant in the securities lending market for decades and has been operating its own securities lending desk as both a securities lending borrower and lender through its direct lending program. In both of these current capacities, NFS understands the complexities of the securities lending market and has developed technology and expertise to transact both internally with lending clients and externally across the industry. In its new capacity as a lending agent, NFS will be able to advocate for the Fidelity funds and pools, and work to optimize the rates these investments earn on securities loans.

NFS has market-leading proprietary automated lending technology that is expected to enhance the funds’ lending program. Some of the other expected benefits of utilizing NFS as an agent lender include: increased access to lending opportunities and diminished concern about leakage of Fidelity proprietary information.

The full Q&A is available at

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