February 2019

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US pensions are active participants in the securities lending market, with an estimated 87% of larger plans currently lending securities via a custodian agent lender or third party. Depending on cash and non-cash collateral guidelines, securities lending can add from 1 to 10 basis points to portfolio returns. Appropriate overnight, governance and risk management are an important factor in the safety and consistent revenue generation of these programs.

In this report, Finadium presents the collected data of 78 US pension securities lending programs including most of the largest US state, county and city funds. Our analysis covers revenues, fee splits, collateral policies and assets on loan. We compare current results to our 2013 data collection effort to see how pension plan revenues and behavior have changed over time. These data, published in US pension Consolidated Annual Financial Reports, reveal a different level of disclosure from data collected in daily trade files. As such, they shine their own light on US pension risk tolerances and intentions in the securities lending market.

This report will be useful for US pension professionals looking to benchmark their activities against their peers. Agent lenders, other service providers and regulators may also benefit from the statistics in this report to uncover trends and discuss program management with their clients and stakeholders.

Table of Contents

  • Executive Summary
  • A Brief Post-Crisis History of US Pensions in Securities Lending
    • – Methodology
  • Income, Expenses and Fee Splits
  • Assets on Loan, Collateral and Collateralization Levels
    • – Cash and Non-cash Collateral Policies
  • A Template for US Pension Plan Reporting
  • About the Authors
  • About Finadium LLC

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