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» Securities Lending and Borrowing (SLB)
» SLB process flow
» Key features of the SLB scheme
» SLBS- Order Matching Platform
» Tenure of Lending
» Schedule of activities
» Risk Management & Collateral
» Position Limits
» Early Recall facility for Lenders
» Early Repayment facility for Borrowers
» Corporate Actions
» Applications of SLB |
| |
| | Securities Lending and Borrowing (SLB) |
 |
| What is SLB? |
| A loan of securities by a lender to a borrower for an agreed period |
| The lender earns lending fee on securities lying idle |
| Maximize returns of the portfolio |
|
| Borrower would use SLB to facilitate SLB trading strategies |
| |
| | SLB process flow |
|
 |
| |
| | Key features of the SLB scheme |
|
| On-line matching |
| On all derivative stocks |
| Anonymous order book |
| Settlement Guarantee |
| Period of lending upto 12 months |
| Facility of early recall of securities |
| Early repayment by borrowers with facility to re-lend |
| |
| | SLBS- Order Matching Platform |
|
| Particulars |
Details |
| Market timings |
9.15 am-3.30 pm |
| Trading Terminal |
SLB - NEAT |
| Market Type |
Normal Market |
| Operating range |
40% |
| Permitted lot size |
1 |
| Tick Size |
Rs 0.01 |
| Trade Price |
Lending fees |
| Eligible Securities |
F&O Securities |
| Series |
01 up to 12 depending on the month
of reverse leg settlement |
|
| |
| | Tenure of Lending |
|
| 12 monthly tenures available
any time |
| Identified by series number
which indicates the reverse
leg settlement month |
| Fixed reverse leg settlement dates being the first Thursday of the reverse leg settlement month |
| |
| Series No |
Month of reverse leg settlement |
| 01 |
Jan-2011 |
| 02 |
Feb-2011 |
| 03 |
Mar-2011 |
| 04 |
Apr-2011 |
| 05 |
May-2011 |
| 06 |
Jun-2011 |
| 07 |
Jul-2011 |
| 08 |
Aug-2011 |
| 09 |
Sep-2011 |
| 10 |
Oct-2011 |
| 11 |
Nov-2011 |
| 12 |
Dec-2011 |
|
| |
| | Schedule of activities |
|
| Activity |
Timings/Schedules |
| Lending Day |
Jan-2011 |
| Lending/Borrowing Session |
9:15 am– 3:30 p.m |
| Custodial Confirmation |
6:00 p.m |
| Final Obligation to participants |
7:00 p.m |
| First leg settlement |
T+1 day |
| Pay-in |
09:30 a.m |
| Pay-out |
11:30 a.m |
| Reverse Leg Settlement |
Reverse leg settlement date ( R ) |
| Pay-in |
09:30 a.m |
| Pay-out |
11:30 a.m |
| Auction for shortages |
R day |
| Auction pay-in & pay-out |
R+1 day |
| Financial close out |
R+1 day |
|
| |
| | Risk Management & Collateral |
|
| Particulars |
Applicable Margins |
| T Day - Borrower |
100% of LF* |
| T day - Lender |
25% of LP** + MTM at EOD |
| |
In case of Early Pay-in of securities
no margins are levied |
From T+1 day to R^
day - Borrower |
100% of LP + VaR + ELM (Cash
segment) + MTM at EOD |
| *LF- Lending Fee (Traded price in SLB) |
| **LP- Lending Price (Previous day closing price in cash segment) |
| ^R- Reverse leg day of the contract |
|
| |
| Accepted form of Collaterals: Cash, Fixed Deposit Receipts and Bank
Guarantees |
| |
| | Position Limits |
|
| Market Wide Position Limit (MWPL) - 10% of the number of shares
held by non-promoters in the relevant security |
| Participant/FII/MF limit - 10% of MWPL or Rs. 50 crores
whichever is lower |
| Client level limits - 1% of MWPL |
| The applicable limits are also displayed on NSE website |
| |
| | Early Recall facility for Lenders |
|
| Enter recall request on the trading terminal by selecting RECALL option |
| Price may be ‘market’ or the fees that the lender is willing to forego for the balance period |
| If order matched, lending fee is levied as margin and details of the successful recall transaction are sent to participant |
| Pay in of the recall fee on RC+1 day & Securities received as pay out |
| End of transaction for the lender |
| |
| | Early Repayment facility for Borrowers |
|
| Participant makes an early repayment of securities in NSCCL’s early repayment account with NSDL/CDSL and subsequently provides details of the same to NSCCL |
| No margins applicable for early repayment and margins for the original borrow transaction are dropped |
| Price quoted may be ‘market’ or the fees expected for the balance period |
| If REPAY(RP) request is successful, on RP+1 day the securities received in the repayment account are allocated towards pay-in and the borrower receives the lending fee as pay out |
| The original transaction ceases to exist after successful completion of the settlement on RP+1 day |
| |
| | Corporate Actions |
|
Dividend
Dividend amount is collected from borrower and passed on to the lender |
Stock split
Position of borrower is proportionately adjusted and the lender receives
the revised quantity on return |
Other Corporate Actions
Transactions are foreclosed 2 days prior to ex-date. |
Shut Period
In case of all corporate actions, a security shall not available for transactions
during the shut period for corporate actions |
| |
| | Applications of SLB |
|
To earn lending fee on your securities
Strategy- Lend securities in SLB and earn additional income |
To Short sell in cash segment
Strategy- Sell security in cash segment and borrow in SLB |
| Arbitrage: To take advantage of reverse arbitrage opportunities |
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