Equipsuper has decided to halt its securities lending program, based on concerns of market manipulation by short selling.

Robin Burns, chief executive of the $4.4 billion multi-employer fund, said he believed the program (which has been in place for five years) was no longer in the best interest of members. Burns described the decision as “a matter of principle”, denying it was related to any specific pain the fund itself had experienced in relation to its holdings. “We are not against securities lending or short selling, but we would like to know what the [short sellers’] true positions are,” he said. “Once there is greater transparency and disclosure of all short positions, it is highly likely we will look at lending again.” But according to one securities lending agent, re-entering the lending market may not be so easy. The agent said it was “;cheeky”; for a fund to pick and choose when it would add its revenue and liquidity to the market. “Custodians require a stable supply of stocks on loan, and a fund that pulls out every time there is a negative market move is not a desirable client,” they said. Burns said in the current environment the fund was no longer satisfied with the risk involved in securities lending, and that the returns were not significant enough to affect the fund’s performance. Burns dismissed any suggestion that short sellers were acting in collusion: “;I don’t think they were acting together for one minute,”; he said. Equipsuper’s securities lending program had been co-ordinated by National Custodian Services.