Report outlines best practice for oversight
21 May 2012 US
Image: Shutterstock
The Mutual Fund Directors Forum has released a special report entitled Practical Guidance for Directors on the Oversight of Securities Lending.
The report explains the ins and outs of securities lending, including risk management, to help directors make informed decisions about securities lending in their funds.
The paper is based on eSecLending's guidance paper that is aimed at those responsible for creating, monitoring and managing programmes in mutual fund and exchange traded fund groups.
The company assembled a working group that was made up of professionals from across the securities lending industry so that it could develop an educational resource containing practical guidance for US mutual funds, according to eSecLending.
Working group participants included more than 30 representatives from mutual fund companies and related firms and associations. This effort led to a document outlining securities lending best practices.
Its document identifies sound securities lending practices, enhances understanding of the product and highlights issues and concerns that arise when starting, monitoring or changing a lending programme.
Of the Mutual Fund Directors Forum's paper, David Smith, who is its executive vice president said: “In the wake of the market difficulties over the past several years, we’ve heard from members concerned about securities lending programs.”
“With this report, our goal is to provide helpful information that may assist directors in determining how to oversee securities lending activities and in deciding what questions to ask the adviser, their portfolio managers and others involved in the process.”
“Securities lending plays a significant role in today’s capital markets and is believed to improve overall market efficiency and liquidity,” said Susan Ferris Wyderko, president and CEO of the Forum, in a statement.
“In addition, securities lending plays a critical role in certain hedging strategies, acts as a useful tool in risk management and helps facilitate the timely settlement of securities trades. [W]e feel it’s important that we arm our members with educational material on this topic to assist them in their important oversight work.”
The Mutual Fund Directors Forum is a US-based organisation for independent directors of investment companies who are dedicated to improving mutual fund governance.
The report explains the ins and outs of securities lending, including risk management, to help directors make informed decisions about securities lending in their funds.
The paper is based on eSecLending's guidance paper that is aimed at those responsible for creating, monitoring and managing programmes in mutual fund and exchange traded fund groups.
The company assembled a working group that was made up of professionals from across the securities lending industry so that it could develop an educational resource containing practical guidance for US mutual funds, according to eSecLending.
Working group participants included more than 30 representatives from mutual fund companies and related firms and associations. This effort led to a document outlining securities lending best practices.
Its document identifies sound securities lending practices, enhances understanding of the product and highlights issues and concerns that arise when starting, monitoring or changing a lending programme.
Of the Mutual Fund Directors Forum's paper, David Smith, who is its executive vice president said: “In the wake of the market difficulties over the past several years, we’ve heard from members concerned about securities lending programs.”
“With this report, our goal is to provide helpful information that may assist directors in determining how to oversee securities lending activities and in deciding what questions to ask the adviser, their portfolio managers and others involved in the process.”
“Securities lending plays a significant role in today’s capital markets and is believed to improve overall market efficiency and liquidity,” said Susan Ferris Wyderko, president and CEO of the Forum, in a statement.
“In addition, securities lending plays a critical role in certain hedging strategies, acts as a useful tool in risk management and helps facilitate the timely settlement of securities trades. [W]e feel it’s important that we arm our members with educational material on this topic to assist them in their important oversight work.”
The Mutual Fund Directors Forum is a US-based organisation for independent directors of investment companies who are dedicated to improving mutual fund governance.
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