Industry trade groups joined with the Bank of England's Securities Lending and Repo Committee to produce educational materials to help pension trustees understand securities lending.
The SLRC and trade groups, including the U.K.'s National Association of Pension Funds and the International Securities Lending Association, helped to develop an introductory guide, a checklist for investors considering lending securities and a disclosure code of guidance for securities lenders.
Julian Le Fanu, policy adviser for investment regulation and funding at the National Association of Pension Funds, London, said new educational materials on securities lending were deemed necessary by U.K. regulators following the Lehman Brothers Holdings Inc. collapse in 2008. After a review of lending activities in the U.K. market, the regulator found that pension trustees' understanding of the risks involved “was not quite as good as it ought to be.”
The collapse of Lehman, an important player in securities lending, could have left a number of contracts unfilled; however, all lenders were able to recoup would-be losses by tapping collateralization. “The system worked,” said Mr. Le Fanu, who served on the committee that developed the educational materials.
The educational documents are available on the SLRC's website at http://www.bankofengland.co.uk/markets/gilts/slrc.htm.