SDR takes dim view of sec lending
24 January 2017 Brussels
Image: Shutterstock
Asset managers must provide annual reports on their securities lending policy under the proposed Shareholder Rights Directive (SRD) because it “can cause controversy in the area of shareholder engagement”.
In its current form, the SRD text, published 13 December, decrees that “it is therefore important that the asset manager reports on its policy on securities lending and how it is applied to fulfil its engagement activities, particularly at the time of the general meeting of the investee companies.”
The SRD is still subject to legal-linguistic revisions and a final vote in the European Parliament before it enters into force.
The directive does not currently require public disclosure of asset managers’ reports, but includes a clause that promises to review this particular element in three years.
According to the International Securities Lending Association (ISLA), the new directive is expected to come into effect “within this quarter”.
Under such a timeline, the review into public disclosure would occur after the UK had formally left the EU and it is currently unclear how such provisions may then affect UK-based asset managers.
Commenting on the SRD, ISLA lamented that, “despite the progress we have seen, there are still perception issues around securities lending in areas where it is not the primary focus”.
ISLA also reaffirmed its commitment to continue to monitor progress and seek to comment if appropriate.
In its current form, the SRD text, published 13 December, decrees that “it is therefore important that the asset manager reports on its policy on securities lending and how it is applied to fulfil its engagement activities, particularly at the time of the general meeting of the investee companies.”
The SRD is still subject to legal-linguistic revisions and a final vote in the European Parliament before it enters into force.
The directive does not currently require public disclosure of asset managers’ reports, but includes a clause that promises to review this particular element in three years.
According to the International Securities Lending Association (ISLA), the new directive is expected to come into effect “within this quarter”.
Under such a timeline, the review into public disclosure would occur after the UK had formally left the EU and it is currently unclear how such provisions may then affect UK-based asset managers.
Commenting on the SRD, ISLA lamented that, “despite the progress we have seen, there are still perception issues around securities lending in areas where it is not the primary focus”.
ISLA also reaffirmed its commitment to continue to monitor progress and seek to comment if appropriate.
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