View more on these topics

Fidelity puts securities lending programme under review

Corporate Bonds Stock Certificate 450

Fidelity Worldwide Investment could become the latest asset manager to scrap its securities lending programme, according to reports.

Fidelity Worldwide chief investment officer Dominic Rossi has told a Government select committee that the practice “does not really make much sense” as it could harm a stock that the asset manager finds attractive, the Financial Times says.

Securities lending, which involves loaning an owned stock to a short seller for a fee, has been criticised recently after it was shown that some asset managers are keeping up to 40 per cent of profits arising from the practice.

New guidelines from the European Securities and Markets Authority demand that Ucits products carrying out securities lending to return all revenues net of operating costs back to the fund rather than them being pocketed by the asset manager.

Rossi told the committee: “The idea that we would lend the stock that we obviously like, otherwise we would not own it, to someone who is then going to short it does not really make much sense.

“It is not in the interests of our clients to have to foster that short selling, nor is it in the interests of the company in which we invest. We do a very limited amount related to dividends and I suspect even that practice will stop shortly.”

Fidelity Worldwide investment director Tom Stevenson added that the asset manager is reviewing the practice, the FT reports.

Standard Life Investments stopped carrying out securities lending during the financial crisis after financial institutions were targeted by short sellers. SLI chief executive Keith Skeoch suggested practice has the potential to “destabilise” the market.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm