World's largest pension fund halts stock lending to short sellers

TOKYO: Japan's Government Pension Investment Fund , the world's largest pension fund, has suspended stock lending for short selling, calling the practice inconsistent with its responsibilities as a long-term investor.

Short sellers borrow shares and immediately sell them, betting the price will fall before they buy back the shares and return them, pocketing the difference. Elon Musk, the chief executive of Tesla , a popular target for short sellers, was quick to applaud the GPIF's move."Bravo, right thing to do! Short selling should be illegal," the high tech entrepreneur said in a tweet.

Securities lending has emerged as small but significant source of extra returns for funds. BlackRock, the world’s largest asset manager, reported total securities lending revenue of US$597 million in 2017, compared with US$579 million in 2016, according to a securities filing.

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Source: The Straits Times - 🏆 8. / 63 Read more »