Shaping a dynamic financial system
28 October 2025
Following a 15-year-long push from the market, the introduction of a new Ministerial Order has authorised the use of securities lending for collective investment schemes in Spain. Carmella Haswell reports
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In a milestone move for Spain, the government has released a new Ministerial Order authorising the use of securities lending by collective investment institutions. The news has been met with much encouragement from the market, which has been awaiting this decision for the past 15 years.
Previously, Spanish undertakings for collective investment in transferable securities (UCITS) funds were traditionally prohibited from engaging in the practice, and so this move closes a regulatory gap which had left Spain as the only country in the European ecosystem which did not have this opportunity. According to BME, collective investment schemes (CIS) handle 42 per cent of global securities lending volume 鈥� a clear sign of the market share that Spain has been missing out on.
With the authorisation of the new Ministerial Order, lending of certain securities and assets is now possible for CISs. The decision allows collective investment institutions to offer higher returns to participants and shareholders, without compromising investor protection and the security of their investments.
Farrah Mahmood, director of regulatory and government affairs at the International 网爆吃瓜 Lending Association (ISLA), says the decision is a 鈥渕onumental and long-awaited step鈥� which aligns Spain with its European peers, boosting the competitiveness of the country鈥檚 capital market.
She explained: 鈥淭his success underscores the critical importance of a collaborative approach 鈥� working closely with the Spanish authorities, industry, and key local partners such as Inverco, to secure a framework that enhances liquidity while maintaining robust investor protection.鈥�
The Order in detail
Delving into the details of the Order, securities and other assets comprising the portfolio of financial collective investment institutions may be subject to securities lending transactions, subject to the limits and guarantees established by the Ministry of Economy, Trade and Enterprise (MINECO).
The order develops the rules applicable to securities lending transactions; establishes a guarantee regime for such transactions; and imposes internal control obligations for management companies and investment companies. It also includes the obligations of the depositaries of lending institutions, who must ensure compliance with the rules applicable to securities lending. According to MINECO, the objective of maximising the profitability of CISs through the regulation of securities lending must be combined with sufficient protection for participants and shareholders.
For this reason, the government has introduced a series of rules, requirements, and limits, which constitute the minimum and essential safeguards to ensure that this practice is carried out appropriately, guaranteeing transparency and risk control for the benefit of investors.
Collective investment institutions, under the conditions established in the order, may resort to securities lending transactions, provided that the purpose of resorting to these transactions is to achieve more efficient management of the portfolio in accordance with the criteria.
The market reaction
With securities lending revenues soaring, the timing could not be better for Spain, says Matt Chessum, executive director, equity analytic products at S&P Global Market Intelligence.
Spanish equities have outperformed every month in 2025 by an average of 59 per cent year-on-year, and year-to-date revenues have already surpassed last year鈥檚 total, according to S&P Global Market Intelligence data. With fresh domestic supply entering the market, Chessum says it is 鈥済reat to see鈥� Spanish investors now being able to benefit from the same 鈥渋ncremental and meaningful鈥� returns that other holders of Spanish assets are experiencing.
Long before the Ministerial Order was issued, industry participants and local players have been pushing for the authorisation of securities lending for CISs. The Bolsas y Mercados Espa帽oles (BME) was a great advocate of the move, having released the 鈥榃hitepaper on fostering the competitiveness of Spanish capital markets鈥� in January 2024, which encouraged the use of securities lending operations and pushed for the government to accelerate regulation in this area.
The new Order is fully aligned with the proposals set out in BME鈥檚 white paper, which identified this reform as a strategic priority to strengthen the depth and resilience of the Spanish financial market.
Mariana Longobardo, head of BME market research department, states: 鈥淭he Ministerial Order on securities lending for collective investment schemes represents a decisive step in modernising the Spanish financial framework.
鈥淭his measure, long awaited by market participants and recommended by BME, the OECD, and the CNMV, will allow Spanish CISs to access an operation widely implemented in the main European economies, improving the liquidity, efficiency, and competitiveness of the national capital markets, with the potential to enhance fund returns and encourage the participation of retail investors.鈥�
Similarly, Jos茅 Manuel Tassara de Le贸n, head of agency securities finance at Cecabank, adds that by aligning with well-established practices across European jurisdictions, this reform allows funds to unlock additional sources of revenue from assets they already hold, enhancing portfolio efficiency without altering core investment strategies.
Tassara highlights that beyond improving returns for investors without increasing the level of risk in their portfolios, the measure is expected to inject greater liquidity into the market, stimulate trading activity, and attract a broader range of institutional participants. Further, Tassara says it will also pave the way for operational modernisation, encouraging the adoption of international best practices and strengthening Spain鈥檚 position within the European financial ecosystem.
In the context of transitioning towards the T+1 settlement cycle, scheduled for October 2027, securities lending takes on a key role in reducing settlement failures and strengthening systemic liquidity, says Longobardo. 鈥淭he approval marks a milestone in consolidating a more competitive, efficient Spanish capital market, aligned with European standards.鈥�
Enrique Verd煤, managing director, 网爆吃瓜 Finance at Santander CIB, believes this 鈥済reat achievement鈥� helps to level the playing field for Spain on the back of the Saving and Investment Union goals for Europe. In addition, he anticipates that the Spanish asset management industry will become more attractive and competitive. Enthusiastic about the decision, Verd煤 holds out hope that this will eventually lead to the implementation for pension funds, which is still pending.
Concluding, Tassara notes: 鈥淭his decisive step sends a clear signal: Spain has stepped on the gas and is actively shaping a more dynamic, competitive, and globally integrated financial system.鈥�
Previously, Spanish undertakings for collective investment in transferable securities (UCITS) funds were traditionally prohibited from engaging in the practice, and so this move closes a regulatory gap which had left Spain as the only country in the European ecosystem which did not have this opportunity. According to BME, collective investment schemes (CIS) handle 42 per cent of global securities lending volume 鈥� a clear sign of the market share that Spain has been missing out on.
With the authorisation of the new Ministerial Order, lending of certain securities and assets is now possible for CISs. The decision allows collective investment institutions to offer higher returns to participants and shareholders, without compromising investor protection and the security of their investments.
Farrah Mahmood, director of regulatory and government affairs at the International 网爆吃瓜 Lending Association (ISLA), says the decision is a 鈥渕onumental and long-awaited step鈥� which aligns Spain with its European peers, boosting the competitiveness of the country鈥檚 capital market.
She explained: 鈥淭his success underscores the critical importance of a collaborative approach 鈥� working closely with the Spanish authorities, industry, and key local partners such as Inverco, to secure a framework that enhances liquidity while maintaining robust investor protection.鈥�
The Order in detail
Delving into the details of the Order, securities and other assets comprising the portfolio of financial collective investment institutions may be subject to securities lending transactions, subject to the limits and guarantees established by the Ministry of Economy, Trade and Enterprise (MINECO).
The order develops the rules applicable to securities lending transactions; establishes a guarantee regime for such transactions; and imposes internal control obligations for management companies and investment companies. It also includes the obligations of the depositaries of lending institutions, who must ensure compliance with the rules applicable to securities lending. According to MINECO, the objective of maximising the profitability of CISs through the regulation of securities lending must be combined with sufficient protection for participants and shareholders.
For this reason, the government has introduced a series of rules, requirements, and limits, which constitute the minimum and essential safeguards to ensure that this practice is carried out appropriately, guaranteeing transparency and risk control for the benefit of investors.
Collective investment institutions, under the conditions established in the order, may resort to securities lending transactions, provided that the purpose of resorting to these transactions is to achieve more efficient management of the portfolio in accordance with the criteria.
The market reaction
With securities lending revenues soaring, the timing could not be better for Spain, says Matt Chessum, executive director, equity analytic products at S&P Global Market Intelligence.
Spanish equities have outperformed every month in 2025 by an average of 59 per cent year-on-year, and year-to-date revenues have already surpassed last year鈥檚 total, according to S&P Global Market Intelligence data. With fresh domestic supply entering the market, Chessum says it is 鈥済reat to see鈥� Spanish investors now being able to benefit from the same 鈥渋ncremental and meaningful鈥� returns that other holders of Spanish assets are experiencing.
Long before the Ministerial Order was issued, industry participants and local players have been pushing for the authorisation of securities lending for CISs. The Bolsas y Mercados Espa帽oles (BME) was a great advocate of the move, having released the 鈥榃hitepaper on fostering the competitiveness of Spanish capital markets鈥� in January 2024, which encouraged the use of securities lending operations and pushed for the government to accelerate regulation in this area.
The new Order is fully aligned with the proposals set out in BME鈥檚 white paper, which identified this reform as a strategic priority to strengthen the depth and resilience of the Spanish financial market.
Mariana Longobardo, head of BME market research department, states: 鈥淭he Ministerial Order on securities lending for collective investment schemes represents a decisive step in modernising the Spanish financial framework.
鈥淭his measure, long awaited by market participants and recommended by BME, the OECD, and the CNMV, will allow Spanish CISs to access an operation widely implemented in the main European economies, improving the liquidity, efficiency, and competitiveness of the national capital markets, with the potential to enhance fund returns and encourage the participation of retail investors.鈥�
Similarly, Jos茅 Manuel Tassara de Le贸n, head of agency securities finance at Cecabank, adds that by aligning with well-established practices across European jurisdictions, this reform allows funds to unlock additional sources of revenue from assets they already hold, enhancing portfolio efficiency without altering core investment strategies.
Tassara highlights that beyond improving returns for investors without increasing the level of risk in their portfolios, the measure is expected to inject greater liquidity into the market, stimulate trading activity, and attract a broader range of institutional participants. Further, Tassara says it will also pave the way for operational modernisation, encouraging the adoption of international best practices and strengthening Spain鈥檚 position within the European financial ecosystem.
In the context of transitioning towards the T+1 settlement cycle, scheduled for October 2027, securities lending takes on a key role in reducing settlement failures and strengthening systemic liquidity, says Longobardo. 鈥淭he approval marks a milestone in consolidating a more competitive, efficient Spanish capital market, aligned with European standards.鈥�
Enrique Verd煤, managing director, 网爆吃瓜 Finance at Santander CIB, believes this 鈥済reat achievement鈥� helps to level the playing field for Spain on the back of the Saving and Investment Union goals for Europe. In addition, he anticipates that the Spanish asset management industry will become more attractive and competitive. Enthusiastic about the decision, Verd煤 holds out hope that this will eventually lead to the implementation for pension funds, which is still pending.
Concluding, Tassara notes: 鈥淭his decisive step sends a clear signal: Spain has stepped on the gas and is actively shaping a more dynamic, competitive, and globally integrated financial system.鈥�
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