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Sovereigns keen on securities lending 

October 12, 2016

Mark Dugdale, Securities Lending Times

Sovereign institutions are considering expanding their commitment to securities lending to increase returns and to help alleviate what they perceive as a threat to liquidity in the financial markets, according to a new survey.

BNY Mellon and the Official Monetary and Financial Institutions Forum (OMFIF) surveyed two dozen sovereign institutions with combined assets under management greater than $4.7 trillion.

Their survey, whose results were reported in Mastering Flows, Strengthening Markets: How Sovereign Institutions Can Enhance Global Liquidity, revealed that 75 percent of the respondents are willing to allocate 10 to 15 percent of their balance sheets for securities lending activities, with some respondents reporting they are considering using 60 percent of their assets.

Some 70 percent of the respondents said they expect an additional return of five to eight basis points from these activities.

“Global liquidity has been strained since the financial crisis, driven by market disruption, regulation and policy action,” commented Hani Kablawi, head of investment services for Europe, the Middle East and Africa at BNY Mellon. Read more

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