SDIA supports RBA's securities lending stance

The Securities and Derivatives Industry Association (SDIA) has welcomed the Reserve Bank of Australia’s (RBA’s) statement on securities lending.

The RBA is proposing to vary its financial stability standard for settlement facilities to require public disclosure of timely and comprehensive securities lending data.

The bank is proposing the ASX CHESS system should be used for disclosing such loans.

SDIA chief executive officer David Horsfield said the move would bring an improved level of certainty and understanding to the market.

“The provision of timely and comprehensive scrip lending data will assist all market participants and investors to better understand the impact of these actions on the market and settlement,” he said.

“While this data is currently available to a limited number of professionals, we see the RBA proposals as a means to bring equality of information to the market.”

Horsfield said the RBA proposals were consistent with the association’s position on the draft short selling legislation.

In its submission to the Federal Government, the SDIA called for the use of the CHESS system to report stock loans.

The current system of relying on broker reporting has significant flaws, the SDAI said in its submission.

“Client failure to disclose short sales or to advise when the short position has been closed, make the broker reports highly unreliable,” the association said.