Written by Owen Walker, the London FT published an interesting article over the weekend on securities lending, highlighting many of the key issues driving change in our industry today.
The drift towards passive rather than active investment management is driving more investors to think about securities lending as a premium alpha component of their investment strategies. This in turn raises very valid questions about good corporate governance, especially ‘empty’ voting. On this second point, ISLA has never condoned or supported proxy voting and indeed the recent UK Money Markets Code published by the Bank of England, is very clear around this issue.
SFTR will also change the game again with greater regulatory scrutiny. Inevitably, this will attract extra time and expense however the rules will provide some security to fund managers, many of whom are coming back to lending.