Collateral damage

Securities Lending

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Philip Menco

"It's like running into the path of a steamroller to pick up a nickel lying on the road." With this stark assessment of the risk-reward ratio for pension schemes and insurers, Dick Cohee, deputy administrator at the Jacksonville Fire and Police Pension Fund, explains why his organisation has brought a halt to a previously mundane part of the investment strategy: securities lending. And Cohee is not alone. Fears over counterparty risk following the collapse of Lehman Brothers in September has