BlackRock reinforces sec lending regulation
28 June 2012 London
At the end of 2011, it was reported that BlackRock’s iShares ETFs lent out on average 92 percent of the securities that they held.
Yet, in a move that will come as a disappointment to the firm, client concerns around the practise have forced them to impose a 50 percent securities lending limit for each of its ETFs.
Clients complained that, despite BlackRock’s policy of returning 60 percent of the lending revenue back to the fund, a large part of the securities being loaned only offered added counter-party risks to their portfolio.
However, the firm maintains that it has the ability to lend out more, with a source close to the story predicting BlackRock will surely stretch the fifty percent limit if it does not see the revenues it wants.
Yet, in a move that will come as a disappointment to the firm, client concerns around the practise have forced them to impose a 50 percent securities lending limit for each of its ETFs.
Clients complained that, despite BlackRock’s policy of returning 60 percent of the lending revenue back to the fund, a large part of the securities being loaned only offered added counter-party risks to their portfolio.
However, the firm maintains that it has the ability to lend out more, with a source close to the story predicting BlackRock will surely stretch the fifty percent limit if it does not see the revenues it wants.
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