September 15, 2026 | By Gene Meshechek, Victoria Phelps
Securities Lending in a new era: Why institutional investors are taking another look
How regulatory reform, market resilience and the pursuit of portfolio efficiency are reshaping securities lending
For many institutional investors, securities lending has long been viewed as a source of incremental income. But today's environment demands a broader perspective.
As investment teams face increasing pressure to improve net returns, control costs and maximize portfolio efficiency, securities lending is increasingly being evaluated as a strategic portfolio tool rather than a standalone operational activity. What has changed is not simply the return opportunity. It is the structure of the market itself. The revived interest in securities lending comes from a wide cross-section of investors: defined benefit and defined contribution plans, insurance companies, endowments and foundations, Taft-Hartley plans, and the consultant community.
“Opting out of lending may no longer be a risk-neutralization decision but rather may be an opportunity cost for these clients.”
Gene Mescheck, CFAGlobal Head of Business Strategy, BlackRock Securities Lending & Financing
The conversation around securities lending has shifted from risk avoidance to opportunity cost
In the years following the Global Financial Crisis (GFC), some institutional investors reduced or eliminated securities lending programs due to concerns around collateral reinvestment, liquidity and counterparty risk. Today, the securities lending market operates under a significantly different framework. Enhanced regulation, greater transparency, stronger risk controls and more sophisticated program oversight have reshaped the industry1.
As a result, many investors are revisiting a fundamental question: What is the cost of not participating in securities lending?
For institutions with large index and passive allocations, securities lending can potentially provide an additional source of portfolio income while helping offset investment management, custody and transaction costs. Beyond potential revenue generation, investors may benefit from access to established lending programs with long-standing operational expertise and track records.
Interest in securities lending is growing across the institutional marketplace, including pension plans, insurance companies, endowments, foundations, Taft-Hartley plans and the institutional investment consultant community. As organizations seek new sources of return and portfolio efficiency, securities lending is increasingly viewed as a strategic portfolio tool rather than a standalone revenue opportunity.
BlackRock manages approximately $7.5 trillion in lendable assets2 and offers both lending and non-lending investment vehicles to accommodate different client preferences. However, we see investor demand continuing to favor lending-enabled strategies, which account for more than 98% of client flows2, underscoring the growing role securities lending plays in institutional portfolio construction.
Want to explore the data, regulatory developments and institutional adoption trends driving the renewed interest in securities lending?
Download the full report, Stronger by design: Securities lending in a new era, to see how today's securities lending market has evolved and what it could mean for many long-term asset owners.
Gene Meshechek, CFA
Global Head of Business Strategy, BlackRock Securities Lending & Financing
Victoria Phelps
Client Strategist, BlackRock Securities Lending & Financing
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