Esma rules unlikely to impact securities lending

The European Securities and Markets Authority’s new guidelines on ETFs came into force earlier this year, and set new rules on what ETF providers can do with securities lending revenues. But has this made a difference to investors?

Physical-replicating ETF providers have been lending out the securities they hold ever since the first ETFs were launched, but until recently investors had little idea what was being lent out – and how much this activity was earning. That looked like it would change last year. In its proposed guidance on ETFs and other Ucits issues last July, the European Securities and Markets Authority (Esma) stipulated that issuers need to disclose more about their securities lending activities, and make sure