FROM: Don Pierce, Chief Investment Officer
SUBJECT: Securities Lending Report for FY 2024
RECOMMENDATION:
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Securities Lending Report for FY 2024.
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BACKGROUND:
In accordance with Investment Policy No. 005, Staff presents the Fiscal Year (FY) 2024 Securities Lending Report as prepared by State Street.
SBCERA has maintained a securities lending program managed by State Street since 1989. The goal of the program is to generate additional revenue on separately managed equity and debt securities held by the custodian. Borrowers post collateral when borrowing securities from the program, which in turn, are invested in a collateral fund. SBCERA earns revenue on the returns of the collateral pool over cash (collateral spread) and on the spread paid by borrowers to have access to the securities (lending spread).
Since the program’s inception in 1989, the securities lending program has earned $31.9 million for SBCERA. On a fiscal year over year basis, in FY 2023-24, the program maintained approximately $299 million in lendable securities with $150 million on loan. When compared to the prior fiscal year, this reflects an increase in the average lendable from $273 million and a modest increase in the average on loan from $146 million. FY 2024 showed a slight decrease in the level of utilization from 53.6% to 50.2%. This was mainly due to continued borrower demand throughout the year. While only 6 months into the 2025 fiscal year, we can see an overall increase in utilization continuing into FY 2025.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Eydie Cox
ATTACHMENTS:
Exhibit A: Securities Lending Report for FY 2024