BlackRock eases sec lending requirements
17 November 2015 New York
Image: Shutterstock
BlackRock has lowered its over-collateralisation level for equity loans using equity collateral to between 5 and 12 percent.
The asset manager previously required between 10 to 12 percent but the new figure is still considered to be conservative for the wider market.
According to BlackRock, the additional flexibility is designed to enable its clients to earn additional securities lending returns in funds where there is more borrowing demand, while maintaining a conservative approach to securities lending and rigorous risk management processes.
This adjustment is the result of ongoing reviews to ensure that collateral requirements for loans are appropriate in view of evolving market factors such as volatility and liquidity, and taking normal and stress scenarios into consideration.
A BlackRock spokesperson said: “BlackRock’s priority in managing our clients’ assets is to act as a fiduciary, and in line with this we have adjusted the permissible range of collateral requirements for all BlackRock funds domiciled in Europe that lend securities.”
BlackRock has also removed a 50 percent utilisation limit in Europe for each fund’s net asset value, following recent client feedback.
For the vast majority of funds, removing the utilisation limit is unlikely to affect the value of securities on loan, according to BlackRock.
For iShares exchange-traded funds domiciled in Europe, the average amount lent has been less than 10 percent in the year ending 31 March 2015.
The asset manager previously required between 10 to 12 percent but the new figure is still considered to be conservative for the wider market.
According to BlackRock, the additional flexibility is designed to enable its clients to earn additional securities lending returns in funds where there is more borrowing demand, while maintaining a conservative approach to securities lending and rigorous risk management processes.
This adjustment is the result of ongoing reviews to ensure that collateral requirements for loans are appropriate in view of evolving market factors such as volatility and liquidity, and taking normal and stress scenarios into consideration.
A BlackRock spokesperson said: “BlackRock’s priority in managing our clients’ assets is to act as a fiduciary, and in line with this we have adjusted the permissible range of collateral requirements for all BlackRock funds domiciled in Europe that lend securities.”
BlackRock has also removed a 50 percent utilisation limit in Europe for each fund’s net asset value, following recent client feedback.
For the vast majority of funds, removing the utilisation limit is unlikely to affect the value of securities on loan, according to BlackRock.
For iShares exchange-traded funds domiciled in Europe, the average amount lent has been less than 10 percent in the year ending 31 March 2015.
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