World’s largest pension fund to resume foreign stock lending
15 March 2024 Japan
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Japan’s Government Pension Investment Fund (GPIF) has confirmed it will resume foreign stock lending after it first suspended the practice in December 2019.
In the future, the fund intends to “promptly proceed” with specific practical measures such as the selection of foreign stock lending agents by asset management organisations. However, GPIF does not intend to carry out lending of domestic stocks.
The fund will resume its activities in foreign stock lending (securities loan management) with a number of foreign stock lending initiatives.
GPIF will look to balance the acquisition of lending revenue and stewardship responsibility, take into account the lending ratio, as well as make it possible to respond to the recall of loaned shares.
It will resume its stock lending practices after incorporating new measures, including efforts to avoid empty voting.
In 2022, GPIF conducted research on the impact of its suspension of stock lending on the market. In April 2022, the fund issued a Request for Information (RFI) on quantitative analytical methods relating to the effects of the event in 2019.
GPIF reports that there was no impact on the stock market and stock lending market.
In its statement, GPIF informs that there is a movement to ask entrusted organisations and lending agents to develop an information sharing system. It reports that progress has been made in ensuring transparency, such as the obligation to report transactions to regulators in Europe and the US.
Commenting on the announcement via LinkedIn, the Pan Asia Securities Lending Association (PASLA) says it is “encouraged” by the GPIF’s decision to resume its securities lending activities in non-Japanese securities.
The statement reads: “The outcome of GPIF’s review is a testament to the progress made by the global securities finance industry aligning the enhanced standards in Environmental, Social and Governance (ESG) to address concerns over transparency and stewardship within the investor community.
“GPIF's decision to return to the market will add both liquidity and increased price discovery into the price formation process of these equities. PASLA will continue to support the securities lending industry to integrate ESG factors. We see this as a positive recognition in the market and look forward to building on this with our stakeholders.”
In the future, the fund intends to “promptly proceed” with specific practical measures such as the selection of foreign stock lending agents by asset management organisations. However, GPIF does not intend to carry out lending of domestic stocks.
The fund will resume its activities in foreign stock lending (securities loan management) with a number of foreign stock lending initiatives.
GPIF will look to balance the acquisition of lending revenue and stewardship responsibility, take into account the lending ratio, as well as make it possible to respond to the recall of loaned shares.
It will resume its stock lending practices after incorporating new measures, including efforts to avoid empty voting.
In 2022, GPIF conducted research on the impact of its suspension of stock lending on the market. In April 2022, the fund issued a Request for Information (RFI) on quantitative analytical methods relating to the effects of the event in 2019.
GPIF reports that there was no impact on the stock market and stock lending market.
In its statement, GPIF informs that there is a movement to ask entrusted organisations and lending agents to develop an information sharing system. It reports that progress has been made in ensuring transparency, such as the obligation to report transactions to regulators in Europe and the US.
Commenting on the announcement via LinkedIn, the Pan Asia Securities Lending Association (PASLA) says it is “encouraged” by the GPIF’s decision to resume its securities lending activities in non-Japanese securities.
The statement reads: “The outcome of GPIF’s review is a testament to the progress made by the global securities finance industry aligning the enhanced standards in Environmental, Social and Governance (ESG) to address concerns over transparency and stewardship within the investor community.
“GPIF's decision to return to the market will add both liquidity and increased price discovery into the price formation process of these equities. PASLA will continue to support the securities lending industry to integrate ESG factors. We see this as a positive recognition in the market and look forward to building on this with our stakeholders.”
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