Industry Updates

State Street Global Advisors expands ETF securities lending roll-out

SSGA now has 89 ETFs enrolled in its securities lending programme

Theo Andrew

State Street office building

State Street Global Advisors (SSGA) has expanded its securities lending programme across 67 more ETFs as it looks to boost investor income.

In a notice to shareholders, SSGA said it as expanding the programme across both of its SPDR UCITS fund umbrellas from 25 October.

The firm already had 22 ETFs enrolled in securities lending, taking the total number of ETFs eligible to participate in the practice to 89.

An SSGA spokesperson said: “SSGA believes that a well-managed securities lending programme is a valuable portfolio management tool, which provides an additional source of income for fund shareholders.

“As market perceptions of securities lending programs and appropriate risk controls have evolved since the global financial crisis, SPDR believes that the vast majority of our clients are now comfortable with securities lending and would appreciate the additional revenues associated with a well-managed programme.”

The asset management giant did not disclose how much of the ETF’s assets would be subject to securities lending or how much of the revenue would be received back into the ETFs.

The enrolled ETFs include 29 fixed income ETFs and 38 equity ETFs including the $3.9bn SPDR S&P U.S. Dividend Aristocrats UCITS ETF (SPYD) and the $2.9bn SPDR MSCI World UCITS ETF (SPPW).

State Street’s Securities Finance Agency Lending will act as the lending agent for the programme.

None of the ETFs which have been added to the programme are ESG strategies, which are often said to compromise the sustainable characteristics of the ETF.

In March, Invesco included ESG ETFs within its securities lending programme in a bid to boost the “consistency and price competitiveness of its product range”.

The European Securities and Markets Authority (ESMA) warned in July that any perceived “indirect benefits” from securities lending on ETFs – such as lower trading commissions – do not justify the risks for retail investors.

It came a year after ESMA highlighted concerns about how asset managers split the fees and revenue generated from securities lending.

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