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Mixed messages over transparency for securities lending
25 November 2011
Transparency means different things to different people in securities finance but whether it can be achieved in the name of regulatory scrutiny remains to be seen. Annabelle Palmer reports
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securities lending
tranparency
BBH
Sungard
Post-crisis regulation is being increased across the global financial sector and securities lending is no exception. In Europe, noise is being made over the economic significance of securities lending, especially with regards to the transparency of exchange-traded funds, while in the US, regulators are reacting to the losses that beneficial owners suffered on their cash collateral reinvestments following the crisis.
But in the absence of any clarity over what transparency actually means for securities finance, the industry is trying to second guess where regulatory focus might fall.
Regulatory change
In the US, Section 984(b) of the Dodd Frank act requires the Securities and Exchange Commission (SEC) to “increase the transparency of information available to brokers, dealers and investors, with respect to the loan or borrowing of securities,” but the legislation fails to give any concrete examples. Chris Kunkle, the RMA’s director of securities lending and market risk, says transparency in...
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