After fifteen years of wait by the market, the Spanish Government has approved a new Ministerial Order that authorises the use of securities lendings by the collective investment institutions (CII). This historic measure deletes a regulatory breach that it maintained to Spain as the only country of the European ecosystem without access to this practice, despite the fact that the CII manage 42% of the overall volume of securities lendings. The new regulation will allow to the funds improve its portfolios' return without compromising the protection of the investor, establishing limits, guarantees and internal controls.
The order establishes a detailed normative framework that regulates operations of securities lending, including a regime of guarantees, obligations of internal control for the managers and monitoring by the depositaries. The objective is combine a more efficient management of the portfolios with an adequate protection for the participants and shareholders.
In the magazine Securities Finance Swindle, José Manuel Tassara of León, responsible Agency Securities Finance of Cecabank, considers this reform as an advance key for the Spanish financial system. According to Tassara, when aligning with consolidated work experience programs in Europe, the funds will be able to unblock new sources of income starting from assets that they already possess, improving the efficiency of the portfolios without altering its investment strategies. In addition, emphasises that this measure not only improvement the yields without increasing the risk, but instead that also will inject great liquidity to the market, will stimulate the trading activity and will attract to more participating institutional.
Tassara adds that this reform will level the path for the operational modernisation, promoting the adoption of international best practices and strengthening the position of Spain within the European financial ecosystem. Concludes with a conclusive affirmation: «This decisive step sends a clear signal: Spain has stepped the accelerator and it is giving active way to a financial system more dynamic, competitive and integrated in overall»level.
