Finadium’s 2024 survey of asset managers in securities lending presents best practices for program management across major trends in corporate governance, indemnification and proxy voting. Although revenues may be down in 2024, managers report broad satisfaction with their programs so long as other important metrics are met. Meanwhile, programs must also respond to multiple new regulatory priorities and increasing borrower sophistication to mitigate the balance sheet impact of the transaction.
Securities lending remains broadly popular at large asset managers around the world, which creates both opportunities and challenges for the funds themselves and for their service providers. As the perceived risk of bank counterparties and collateral management has fallen, and managers are looking to generate additional revenues for shareholders, firms with existing programs continue to professionalize while funds that exited the market years ago are now returning. Asset management executives support securities lending and expect to continue, especially when they have an internal staff person to liaise with portfolio managers and other stakeholders to build the firm’s confidence in the operations.
Securities lending oversight continues to mature, with more firms than ever viewing lending as a front office function overseen by investment committees. As more assets move into passive portfolios, the ability of a securities lending program to increase basis point returns is a strategic advantage. This increases the visibility of lending and has led to increased education and awareness throughout large asset management complexes.
Since 2008, Finadium’s survey of asset managers in North America and Europe has tracked current operational practices and forward-looking thinking of this sector. This year’s report covers 31 large institutional asset managers with $45.5 trillion in assets. Product lines include Undertakings for Collective Investments in Transferable Securities (UCITS) funds, mutual funds, exchange-traded funds (ETFs), individual accounts and insurance assets.
Asset managers should read this report for ideas on improving their programs, increasing their information exchange with their agent lenders, evaluating internal securities lending desks, and marking their competitive positioning relative to other funds. Agent lenders, custodians, technology vendors, legal advisors and other service providers may also benefit from the results, as they provide a cross-sectional view of the asset manager experience and buying appetite for securities lending-related services.
A direct link to the report for Finadium research clients is https://finadium.com/finadium-report-desc/asset-managers-on-securities-lending-2024-a-finadium-survey/
For non-subscribers, more information is available here.