Securities lending may have been a controversial issue in Australia through the global financial crisis, but a new survey commissioned by RBC Dexia suggests it remains a mainstream strategy.
The global survey found that securities lending participants were staying in the market and adjusting their risk parameters rather than suspending their programs.
What is more, it said despite purported large-scale program suspensions, only 17 per cent of all survey respondents suspended participation, while the majority, amounting to 60 per cent, made no changes at all to their programs.
As part of the survey, RBC Dexia questioned beneficial owners and market intermediaries around the world in an attempt to better understand how the global financial crisis was impacting securities lending and received feedback from 86 respondents.
The survey analysis said the results had depicted an environment focused on risk mitigation and capital preservation, with 80 per cent of respondents rating it as highly important and signaling that they would be imposing greater oversight.
Commenting on the survey, RBC Dexia global head of market products Susan Pike said despite some concerns over the short-term outlook for securities lending, the survey had indicated that lenders continued to customise programs to match their risk/reward tolerance rather than withdrawing from the market.
She said it was critical that beneficial owners and asset managers knew what they wanted and expected from their programs.
“The key to success is to actively manage, monitor and review policies and procedures on an ongoing basis,” Pike said.
