No objections, just best practices: Regulators reinforce securities lending rules
Securities lending plays a vital role in well-functioning financial markets, improving market liquidity and giving investors the opportunity to generate additional income. As participation grows—particularly among retail investors—regulators are taking steps to ensure the practice remains transparent, well-governed, and aligned with investor protections.
Recent updates in the U.S. and Europe highlight this focus, reinforcing the importance of clarity, oversight, and adherence to industry best practices. These measures are not about restricting securities lending—they are about ensuring it continues to evolve in a way that benefits all market participants.
FINRA fine reinforces the importance of clear disclosures
In the U.S., FINRA fined Apex Clearing over compliance issues in its fully paid securities lending program. The regulator identified areas where disclosures and supervisory controls needed improvement, particularly around ensuring retail investors received fair compensation and fully understood the terms of their securities lending agreements.
This underscores FINRA’s focus on transparency, fair compensation, and strong investor safeguards—all of which contribute to a more trusted and accessible securities lending market.
Dutch regulator underscores the importance of asset protection
In Europe, Dutch regulator AFM fined Saxo Bank following its acquisition of BinckBank, citing asset segregation and risk management concerns. The review found that some investors were exposed to risks, including instances of unapproved securities lending, reinforcing the importance of clear custodial oversight and adherence to client asset protection standards.
As retail participation increases, regulators are working to ensure that investors have full visibility and control over how their assets are used, supporting long-term confidence in the market.
Better oversight, better outcomes
These fines are not an opposition to securities lending. Rather, they reinforce a shared objective: a transparent, well-structured, fair and investor-friendly lending market that benefits all participants. When done right, securities lending can strengthen markets, enhance liquidity, and create new opportunities for investors—provided it’s conducted with the right safeguards.
At Sharegain, we provide an end-to-end Securities Lending as a Service (SLaaS) solution that meets global regulatory obligations while empowering firms to offer a seamless, transparent, and compliant securities lending program.
Find out more here.
With securities lending, as with other investment activities, your capital may be at risk.
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