Securities lending is a well-established practice with many documented benefits to the broader capital markets. For those lenders engaged in a securities lending program, it is a means to generate incremental returns on long positions. Securities lending generated $9.28 billion in lending revenue in 2021, according to Datalend.(1) According to RMA data, the global securities lending market includes approximately $30 trillion in lendable assets and on-loan balances of $2 trillion. Despite securities lending being a widely adopted practice, misconceptions still exist. The intent of this paper is to address some of these misconceptions.
Myths addressed:
- Short selling leads to market volatility and drives down security prices
- Securities lending lacks transparency
- Securities lending is inconsistent with ESG
The full paper, dated March 2022 but being highlighted now on LinkedIn, is available here.