EBSA Eases Sec Lending Collateral Rules

October 22, 2003 (PLANSPONSOR.com) - Federal officials have proposed a rule change to expand the permitted collateral for securities-lending transactions as well as allowing securities to be loaned to UK banks and broker dealers.

According to an announcement from the US Department of Labor’s Employee Benefits Security Administration (EBSA), the proposal would combine Prohibited Transaction Exemptions 81-6 and 82-63 into one and expand certain restrictions.

>Among the changes: permission for securities-lending collateral to include:

  • the currency of the United Kingdom
  • the Euro
  • sovereign debt of member countries of the European Monetary Union
  • irrevocable letters of credit by a UK bank.

Comments on the proposal or requests for a hearing should be submitted to the Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5649, US Department of Labor, 200 Constitution Ave., NW, Washington, DC 20210 by email to or by fax to (202) 219-0204.

The proposal is scheduled to be published in the October 23, 2003 Federal Register.

Defined benefit plans can lend securities from their portfolios to banks and brokers dealers as a way to earn additional income and to pay plan fiduciaries for services related to securities lending.