Compliance October 22, 2003

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.
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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.

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