9.30.2009 The SEC is considering proposing new rules governing the securities lending market. The rules would be designed to protect institutional investors from major losses and promote more market transparency. The SEC noted the lack of a central public marketplace that displays quotes and also potential conflicts.
The SEC held a roundtable to discuss securities lending issues on September 29 and 30. Roundtable participants will include representatives of corporate issuers, financial services firms, beneficial owner lenders, lending agents, borrowers of securities, self-regulatory organizations, international regulators and the academic community.
Securities lending allows institutional investors such as mutual funds and pension funds to make money off otherwise idle assets by lending out their securities to borrowers who put up cash collateral in exchange for shares. This practice is important for short-sellers, who sell the borrowed shares in a bet that the stock will decline and later buy them back at a lower price before returning them to the lender.
Click http://www.sec.gov/news/press/2009/2009-207.htm for the press release about the roundtable.