In a whitepaper on fostering Spanish capital markets competition, Spanish bourse Bolsas y Mercados Españoles (BME) recommended accelerating the regulation of securities lending operations for Collective Investment Institutions (CIS). Spain is the only country in Europe that has not developed securities lending operations by CISs, despite the fact that this has been insistently requested for the last 15 years.
“The use of securities lending operations by investment vehicles enables their managers to achieve additional returns and provides extra liquidity to the market for its proper functioning. Therefore, the limitations to this operation, on the one hand, leave Spanish CISs at a competitive disadvantage with respect to their European peers (which are authorized to do so) and, on the other hand, reduce the liquidity of Spanish capital markets,” according to the report.
Furthermore, financial markets watchdog Comisión Nacional del Mercado de Valores (CNMV), through its chair Rodrigo Buenaventura, has expressed its express support for the necessary regulatory development to be carried out, dispelling doubts about the potential risks of encouraging short selling.
“In the light of the above, the following measure should be put in place: Accelerate the regulation of Securities Lending operations for Collective Investment Institutions: Urgent approval of the corresponding Ministerial Order to allow Spanish CISs to access securities lending operations, without being subject to current legal limitations.”