Friday, September 2, 2016

A First Step Toward Permanent Securities Lending Data Collection

Author: David Schwartz J.D. CPA

As we reported in April of 2015, the Office of Financial Research, the Federal Reserve, and the Securities and Exchange Commission launched a joint pilot program to collect better and more complete data on securities lending.  At that time, the OFR, Fed, and SEC created a task force to reach out to agent lenders to collect data on loans, terms, and collateral uses. On August 23, 2016, the task force published the results of their joint voluntary data collection project.  


The task force relied upon data supplied voluntarily by seven lending agents from a single day in each of October, November, and December 2015.  Most but not all participating lending agents were subsidiaries of banks. Despite the limited population and small sample size, according to the report, the dataset of 75 reporting fields yielded substantial new information about securities lending activity, including information concerning securities owners, securities borrowers, attributes of securities loans, collateral management, and cash reinvestment practices.


According to the report, over the three reporting days, an average of $9.4 trillion worth of securities were available for lending; a median figure of $1 trillion worth of securities loans were outstanding or about 11% of the lendable assets; and the collateral received was about equally split between cash ($532 billion) and noncash ($487 billion).


Acknowledging that the pilot data collection was limited in scope and duration, and that comprehensive data are still lacking, the report recommends regular and permanent collection of data covering securities lending activity. 


OFR officials said, "the data collection pilot was a first step in understanding the data available from market participants as well as the complexities involved in collecting and aggregating the data." 


The full report may be read at: A Pilot Survey of Agent Securities Lending Activity.