SEC begins discussions on securities lending, short selling

The future of the securities lending industry could be heavily impacted by talks set to get underway in Washington DC this morning.

US financial regulator the Securities and Exchange Commission (SEC) is hosting a roundtable discussion today and tomorrow which will focus on the opacity of securities lending as well as the practice of short selling.

SEC chair Mary Schapiro said that the financial crisis has changed attitudes towards securities lending and short selling and that concerns about the practices must be addressed.

“Securities lending was once thought to be a way to earn a few extra points of return, with little or no risk,” she said.

“Events of last year reveal the risk was present. As a result, we need to consider ways to enhance investor-oriented oversight of this multi-trillion dollar market.”

Speakers at the discussion include people from a range of disciplines, from academia through to beneficial lenders themselves.

Aaron Gerdeman from Sungard and Chris Jaynes from eSecLending will discuss topics such as electronic platforms and central counterparty usage in securities lending, while Michael Treip from the Financial Services Authority will feature on a panel analysing the disclosure of short selling.