ETF providers to miss out on securities lending profits

ETF managers are set to lose out on profits generated by securities lending, under new European regulations published today.

New rules announced by the European Securities Markets Authority (ESMA) on ETFs and other UCITs issues state any revenues from securities lending, net of operating costs, should be returned to the fund. Previously, in some cases ETF providers would retain a percentage of revenue themselves. Groups such as iShares, BlackRock's ETF arm, currently only return part of the revenues generated through securities lending to the fund. The new guidelines state: "UCITS entering into efficient portfolio management techniques (EPM) like securities lending activities will have to inform investors c...