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BlackRock rejects U.S. concerns on securities lending agreements 

May 30, 2014
Emily Stephenson, Reuters

BlackRock pushed back on Thursday against a U.S. report that raised concerns about asset managers and securities lending, arguing in a paper sent to regulators that its activities do not pose outsized risks.

At issue are transactions in which entities lend stocks and bonds in exchange for cash or other collateral. Mutual funds often lend securities to hedge funds to generate extra income, for example.

Some banks and asset managers such as BlackRock facilitate transactions for clients. They sometimes agree to compensate clients if a borrower fails to return a security that has become more valuable than the collateral held by the lender.

The Financial Stability Oversight Council (FSOC), a group of regulators that keeps tabs on emerging risks, said in a report this month that these indemnification agreements could be risky for asset managers, which do not face the same capital and liquidity requirements as banks.

Read more: Reuters

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