New securities lending report from Finadium
19 January 2011 New York
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A new report from Finadium shows that US plan sponsors continue to work on the complex challenge of defining best practices with their securities lending, collateral management and custody providers. Now in its fourth year, the Finadium annual plan sponsor survey is based on interviews and annual reports of 98 US plan sponsors with over US$2.23 trillion in assets. This report is an unbiased look at the attitudes and decision drivers of these institutions in the asset servicing markets today.
Plan sponsors report a new level of nuanced thinking about the importance of securities lending and collateral management. Having learned hard lessons in 2008 and 2009, lending is now seen primarily as an investment product with the risks and rewards that entails, and sponsors have moved on to other questions including revenue allocation and lending from commingled funds. In custody, plan sponsors recognise that reporting, performance measurement and accounting services are not free, and that the bill paid today rarely reflects the true cost of service delivery.
Other highlights from this report include:
Liquidity in cash reinvestment markets is becoming a concern as new regulations constrict the availability of certain types of assets.
Plan sponsors are not against the idea of a securities lending agent lending to an affiliated prime broker, but are conscious of the credit risks this entails and would like greater transparency than they now receive about the process.
There appears to have been a reversal of plan sponsor interest towards separating securities lending and collateral management in the RFP. Bundling custody and securities lending however has become more attractive than in prior years.
More important than revenues, communication and client relationship management are now the most important criteria for what makes a good securities lending agent.
This report contains substantial data on plan sponsor attitudes, decision drivers and future plans in the asset servicing markets.
Plan sponsors report a new level of nuanced thinking about the importance of securities lending and collateral management. Having learned hard lessons in 2008 and 2009, lending is now seen primarily as an investment product with the risks and rewards that entails, and sponsors have moved on to other questions including revenue allocation and lending from commingled funds. In custody, plan sponsors recognise that reporting, performance measurement and accounting services are not free, and that the bill paid today rarely reflects the true cost of service delivery.
Other highlights from this report include:
Liquidity in cash reinvestment markets is becoming a concern as new regulations constrict the availability of certain types of assets.
Plan sponsors are not against the idea of a securities lending agent lending to an affiliated prime broker, but are conscious of the credit risks this entails and would like greater transparency than they now receive about the process.
There appears to have been a reversal of plan sponsor interest towards separating securities lending and collateral management in the RFP. Bundling custody and securities lending however has become more attractive than in prior years.
More important than revenues, communication and client relationship management are now the most important criteria for what makes a good securities lending agent.
This report contains substantial data on plan sponsor attitudes, decision drivers and future plans in the asset servicing markets.
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