UniSuper has instructed its custodian, BNP Paribas Securities Services, to suspend its stock lending program effective immediately, as the market is “gripped by panic”.
UniSuper announced that it instructed BNP Paribas to recall all shares currently out on loan, without exception.
The industry super fund’s chief investment officer, John Pearce, said: “In a normally functioning market we’re comfortable lending our shares as we genuinely believe that it adds to market efficiency”.
“The ability to short-sell adds to liquidity and price discovery in an orderly market. However, we are now in a market gripped by panic and we believe that restricting the ability to short-sell is in the best interest of promoting a more orderly market,” Pearce said.
“We are only one fund and the efficacy of our actions will depend on how many other funds follow a similar path. Of course, we are not privy to the thinking of other funds who lend their stock.”