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.
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