Fees on Securities Lending and Reversible Gold Transactions

1
Fees on Securities Lending and Reversible Gold
Transactions

• http//unstats.un.org/unsd/nationalaccount/AEG/pap
  ers/m3FeesSecuritiesLending.pdf

2
Securities Lending

• Not covered in 1993 SNA
• Delivery of securities, to be returned after a
  given time period.
• A type of reversible transaction.
• Provider of securities receives a fee.
• Often used by pension funds etc. to boost
  returns.
• Receiver of securities is typically a dealer who
  has a short position so the securities are
  on-sold.
• Receiver of securities often will provide other
  securities as collateral.
• Same can be done with gold
• way of increasing returns on gold reserves.

3
Concerns

• Payment for securities dealers is clear
  (financial service).
• This is payment to securities owner (not a
  service).
• Seems to be property income because financial
  asset put at the disposal of another entity.
• It is the legal title to the security, rather
  than funds, that is provided.

4
Concerns

• Does not fit into existing property income
  categories
• Property incomes accrue when the owners of
  financial assets put financial resources at the
  disposal of other institutional units, but
• interest is the return of the creditor from the
  debtor and
• dividends is the return from the share issuer to
  the party that supplies equity funds.

5

• Could create new property income category.
• but minor.
• Could classify by lent instrument (dividends for
  shares interest for debt instrument)
• but different to interest and dividends.
• Could treat as all interest
• but different to interest simple to implement.
• AEG adopted this solution.

6
Reversible Gold Transactions

• Similar arrangement involving gold.
• Gold can be financial asset (monetary gold) or
  nonfinancial asset.
• AEG decided that was interest in all cases.