The national managers will be able to improve its portfolios' return and attract new investors thanks to the recent opening of this operations, key for the country's financial modernisation.
Ainhoa Jáuregui, chief executive officer of Cecabank.
The Spanish financial sector is of congratulations. After a long wait, the operations of securities lending by Collective investment Institutions (CII) is already a reality in Spain. With the approval of the Order ECM/1155/2025, from 18 October, the CII will already be able to provide to third parties the securities that they maintain in portfolio – stock, bonds, quoted funds, among others - obtaining thus an additional return.
This landmark will have a very significant impact for the financial industry. Spain was the only European Union country that it did not allow this type of operations, which it placed to its investment funds in clear disadvantage when dealing with the direct billing in countries as a Luxembourg, Ireland or France, where the securities lending is a fully consolidated practice for years. The new regulations opens the door to a great competitiveness and efficiency in the asset management. As happens in any market, that one of securities lending is based on the balance between offer —compuesta for assets of central banks, sovereign funds, pension funds, investment funds and insurers, that they sum 39.2 trillions of dólares— and demand —traducida in assets indeed given by value of three trillion dollars, according to data from the International Securities Lending Association (ISLA, 2024). In that context, Spain was regardless of a key source of liquidity and incomes for the institutions and, for ende, for its shareholders.
With this reform, the outlook changes completely. The national managers will be able to optimise its portfolios' return, which it will encourage the entrance of more retail investors, will provide the financing of companies and it will strengthen the competitiveness of the Spanish funds. Similarly, the measure strengthens the efficiency of the capital markets and expedites processes of settlement, in line with the advance towards the cycle T+1.
The securities lending is, in many senses, a quiet tool but decisive. It does not hoard holders, but results indispensable for the good operation of the financial system. When a company provides a shareholding to a counterpart that it needs them to cover positions or fulfill commitments of delivery, is contributing to that the gearing of the market works with less frictions, avoiding mistakes in the settlement and strengthening the stability. All in all, is a structural piece of the financial ecosystem, that allows a better training of prices and contributes resilience to the markets.
In an overall context where the speed of the transactions and the automation of the flows escalade, Spain needed give this step to align with its European counterparts. Nonetheless, the process still is not completely closed. The pension funds have been excluded of this first habilitation, although the Government works in a complementary standard – included in the Draft bill of Digitisation and Modernisation of the Financial Sector – that you would be able to approve throughout 2026.
This point has generated a certain worry in the industry, and with good reason. The pension funds represent approximately 20% of the total volume of securities in loan, according to ISLA. Its incorporation to the Spanish frame would have a significant impact in the depth and liquidity of the market, expanding the extent of this measure and its multiplier effect on the economy. Its volume is very relevant, and its inclusion will result determiner to complete the modernisation of the Spanish financial market.
The measure arrives, also, in a moment of consolidation of the international sector and growing competition. Luxembourg and Ireland concentrate more than 60% of funds UCITS European, partly thanks to its regulatory frameworks' flexibility. The opening of the securities lending in Spain can contribute to withhold and attract talent and capital, offering to the national managers an additional lever to optimise the return without increasing its exhibition to the risk.
From the industry, we want make good use of this landmark not only as a regulatory change, but instead as an opportunity to delete barriers of entrance and help to the institutions to make good use of the potential value of its assets. The starting up of platforms and agencies specialised in securities finance will provide the share of the CII in a sure way, standardised and efficient, ensuring the compliance with standards and a suitable management of the risk.
As a last resort, the securities lending represents a natural development of the Spanish financial market towards a more sophisticated architecture, interconnected and aligned with the international standards. Spain has given a decisive step. It still is path for touring to add fully to the pension funds and spread the frame to other institutions, but the address is clear. Open the market of securities lending is a commitment for the future: for a financial system runnier, more transparent and, above all, more resiliente before the challenges of an economy in constant evolution.
