Securities Lending & Borrowing
(SLB)
Securities Lending & Borrowing - Concept
• Securities lending transaction is a temporary loan of securities
between Lender & Borrower.
• Describes the market practice by which, for a fee, securities are
transferred temporarily from one party, the lender, to another,
the borrower.
• Borrower is obliged to return them either on demand or at the
end of any agreed term and also has an option to early return.
• Lender may recall securities at any time within normal market
settlement cycle.
• It promotes market efficiency and liquidity
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Market Participants
 Lender
–
–
–
–
–
Insurance Companies
Banks
HNI’s
Mutual Funds
Retail
 Borrower
–
–
–
–
Short sellers, especially long term shorts
Cash & derivatives arbitragers
Market makers
Retail
 Approved Intermediary
– Clearing Houses
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Why participate in Securities Lending &
Borrowing ?
 Lender’s Motivation
– It provides lender incremental return on an idle portfolio
 Borrower’s Motivation
– To cover a short position : avoidance of settlement failure
– Hedging of futures & options positions
– Borrow and lend to reap benefits of the market sentiment
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Salient Features in New SLB Platform
• SLB Contracts up to 1 year (Minimum 26 contracts)
• AI will list contracts with multiple stock return days:
 first Thursday of the month
 one (1) Thursday prior to the last Thursday of the month
 additional three (3) stock return days such that there are
stock return days in the first five (5) consecutive
Thursdays.
•
•
•
•
Early Return and Recall
Base Minimum Capital reduced to NIL
No separate exe – Login same as BOLT
Facility of Early pay-in
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SLB Mechanism
Example of the contracts available for SLB
No. of Contracts
Scrip ID
First Trade Day
Last Trade Day
Stock Return Day
1
RIL02DEC10
22-Nov-10
29-Nov-10
2-Dec-10
2
RIL09DEC10
22-Nov-10
6-Dec-10
9-Dec-10
3
RIL16DEC10
22-Nov-10
13-Dec-10
16-Dec-10
4
RIL23DEC10
22-Nov-10
20-Dec-10
23-Dec-10
5
RIL30DEC10
22-Nov-10
27-Dec-10
30-Dec-10
6
RIL06JAN11
22-Nov-10
3-Jan-11
6-Jan-11
7
RIL20JAN11
22-Nov-10
17-Jan-11
20-Jan-11
8
RIL03FEB11
22-Nov-10
31-Jan-11
3-Feb-11
9
RIL17FEB11
22-Nov-10
14-Feb-11
17-Feb-11
10
RIL03MAR11
22-Nov-10
28-Feb-11
3-Mar-11
11
RIL24MAR11
22-Nov-10
21-Mar-11
24-Mar-11
12
RIL07APR11
22-Nov-10
4-Apr-11
7-Apr-11
13
RIL21APR11
22-Nov-10
18-Apr-11
21-Apr-11
14
RIL05MAY11
22-Nov-10
2-May-11
5-May-11
Example of the contracts available for SLB
No. of Contracts
Scrip ID
First Trade Day
Last Trade Day
Stock Return Day
15
RIL19MAY11
22-Nov-10
16-May-11
19-May-11
16
RIL02JUN11
22-Nov-10
30-May-11
2-Jun-11
17
RIL23JUN11
22-Nov-10
20-Jun-11
23-Jun-11
18
RIL07JUL11
22-Nov-10
4-Jul-11
7-Jul-11
19
RIL21JUL11
22-Nov-10
18-Jul-11
21-Jul-11
20
RIL04AUG11
22-Nov-10
1-Aug-11
4-Aug-11
21
RIL18AUG11
22-Nov-10
15-Aug-11
18-Aug-11
22
RIL01SEP11
22-Nov-10
29-Aug-11
1-Sep-11
23
RIL22SEP11
22-Nov-10
19-Sep-11
22-Sep-11
24
RIL06OCT11
22-Nov-10
3-Oct-11
6-Oct-11
25
RIL20OCT11
22-Nov-10
17-Oct-11
20-Oct-11
26
RIL31NOV11
22-Nov-10
31-Oct-11
3-Nov-11
27
RIL17NOV11
22-Nov-10
14-Nov-11
17-Nov-11
Settlement Cycle
Activities
Proposed Timings
Trade Day
Securities Lending & Borrowing session
09:15 a.m. – 03:30 p.m.
Custodial confirmation
by 06: 00 p.m.
Final obligations download
07:00 p.m.
Trade day +1
Pay-in of securities/funds
9:30 a.m.
Pay- out of securities/funds
11:00 a.m.
Fund or securities shortages
Financial closeout
Early return/recall day + 1
Pay-in of securities/funds
9:30 AM
Pay-out of securities/funds
11:00 AM
Fund or securities shortages
Financial closeout
Stock return day
Pay-in of securities
9:30 AM
Pay-out of securities/funds
11:00 a.m.
Buy-in auction for failure of borrower to return securities
12:00 noon to 1:00 p.m.
Auction obligations download
2:00 p.m.
Stock return day + 1
Pay-in of securities for auction settlement
9:30 a.m.
Pay-out of securities/funds for auction settlement
11:00 a.m.
Application Process
Application to BOISL
Member agreement with BOISL (Part A#)
Deposit additional base capital for margins
Fulfill all conditions specified in SEBI / BOISL Circular
Member agreement with Clients (Part B#)
and complete all KYC Formalities
Activation of the members
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SLB Snapshot
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For further information, contact us @
Contact Person
Contact No.
Email id
Ms. Shikha Chauhan
2272 8749
shikha.chauhan@bseindia.com
Mr .Ojas Shah
2272 8504
ojas.shah@bseindia.com
Ms. Sandeep Kaur
2272 8132
sandeep.kaur@bseindia.com
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