Illinois Scheme Seeks to Enhance Sec-Lending Program

(February 10, 2012) — The Teachers’ Retirement System of Illinois (TRS) — with $34 billion in assets at the end of December — will seek proposals from outside vendors for potential enhancements to the scheme’s current securities lending program. 

“The decision by the board is an ongoing process to look at our securities lending program,” TRS spokesman Dave Urbanek told aiCIO. “We’ve been looking at it more closely in the last few months, since there’s always a need to increase revenue,” he said.

Last year, the scheme made about $17.7 million in additional revenue with its securities lending program, and both TRS investment staff and its consultant — RV Kuhns & Associates — foresaw further improvements, Urbanek said.

The scheme stated in a release:

“Over the last year, the TRS investment staff has researched ways to enhance or improve the current securities lending program, which has been in place since 1986. One outcome was a desire for a more formal review by an outside firm of the existing market for third-party securities lending and the potential of additional income for TRS from the program…Early estimates indicate that additional revenue from the program could climb by as much as 30 percent if prudent changes are made.”

A formal request for proposal (RFP) for third-party securities lending providers was approved by the TRS Board of Trustees. The TRS investment staff anticipates the RFP process will be concluded by August. “We want to solicit ideas and proposals from custodial banks and others who deal with securities lending,” Urbanek said.