SLB is defined as the temporary exchange of securities with an
obligation to redeliver the same securities in the same number
and at an agreed premium on a future date.
The potential lenders and borrowers can be the brokers, banking
companies, financial institutions, investment finance companies
and other person approved by NCCPL and SECP.
All potential lenders/borrowers shall have to be the Clearing
Members of NCCPL.
The motivation for lenders is to earn income/return on their Idle
The borrowers may utilize SLB functionality for the
following purposes:
To avoid delivery failure in ready/future market ; and
To borrow SLB Eligible Security before affecting the short sale
To Manage Delivery Failure of Ready/Future Market
SLB facility provides effective solution for managing delivery failures
as per the following process:
Clearing Member (“CM”) may borrow securities on Trade Day from
SLB market after normal ready market sell for proprietary and
client as well. In such case the delivery obligation for such CM shall
be zero on the relevant settlement date;
NCCPL may also borrow securities upon receiving written request
from CM on the settlement date i.e. on T+2 from SLB Spot Market.
In such case relevant lenders shall be required to deliver lend
securities on spot basis to NCCPL;
Accordingly, NCCPL shall deliver such borrowed securities to the
respective buyer(s);
To Manage Delivery Failure of Ready/Future Market
In case of borrowing by NCCPL, the delivery defaulter CM shall
remain responsible for the settlement of such SLB Contract in the
capacity of borrower; and
In case where securities are not available in the SLB Spot Market,
then normal squaring-up/close-out process will be initiated in
accordance with the NCSS Procedures.
To Facilitate the Market Participants
Affecting Short Sales
In case of short sale, CMs shall be required to borrow securities
from SLB Market before affecting short sale.
Short sale and corresponding borrowing transactions shall be
settled on net basis on T+2, through NCSS whereby delivery
obligation becomes zero on settlement date.
SLB market is available in parallel to the Regular Market.
SLB is operating through an automated platform will be provided,
by NCCPL as an Authorised Intermediary, to SLB Participants
(lenders and borrowers) for placing offers and bids for SLB
Eligible Securities to be lent and/or borrowed.
The Premium of lending and borrowing is determined by the
market forces on demand & supply basis. However, such Premium
is capped to KIBOR+8%.
The SLB transactions are carried out on an undisclosed basis in the
SLB Market.
The valuation of SLB transactions are done at the immediate
preceding price of the SLB Eligible Securities exist in Ready
market at the time of execution.
SLB Contract period is 22 working days. On 23rd day SLB Contract
shall be forced released.
Only borrower may release SLB contract at any given point of time
during 22 working days.
SLB Contracts shall be force released on a day before the start of
Spot Period of a particular SLB Eligible Security
The settlement of the SLB transactions shall be on T+2.
On Settlement Day of SLB Transaction, the lender shall be
required to deliver lended securities and borrower shall be
required to pay the total amount of borrowed securities. However,
in case of corresponding sale, the money obligation of such
borrower will be netted-off in NCSS;
Accordingly, 50% value of the lended securities shall be held by
NCCPL and remaining 50% amount shall be paid to the lender (such
amount may either be received from the borrower directly or received
from the corresponding ready market buyer);
At the time of release of SLB Transaction (SLB-R), the lender shall
be required to pay 50% amount of the lended securities (along
with the Premium adjustment, if any) and receive the lended
At the time of release of SLB-R Transaction the borrower shall be
required to deliver the borrowed securities.
Accordingly, NCCPL will pay 100% amount to the borrower, after
the adjustment of premium.
SLB Participants shall not be allowed to lend and borrow the same
security(ies) i.e. SLB Participants shall not allowed to further lend
any borrowed security(ies).
The borrower/lender shall pay VaR based exposure margins in the
form of Cash only, of the borrowed securities to the NCCPL against
SLB Transactions on pre-trade basis.
The mark-to-market losses shall be collected from
borrower/lender on daily basis in the form of Cash only.
Special Margins shall be collected from borrowers in Cash only.
Upon settlement of SLB Transaction by the Borrower, the exposure
margins, special margins and mark to market loses shall remain applicable
on till settlement of SLB-R Transaction.
Upon settlement of SLB Transaction by the Lender, only mark to market
losses on open position upto 50% shall remain applicable till settlement of
SLB-R Transaction.
Following Position limits on SLB Participant shall be applied:
 Market-wide:
20% of free float
 Member-wide:
2% of free float
 Client- wide:
0.5% of free float
Where borrowers/lenders fail to return/deliver securities that have been
borrowed/lent, on the settlement date, the NCCPL shall initiate squaringup or close out process, as the case may be, in accordance with NCCPL
Regulations and NCSS Procedures.
Where lenders/borrowers fails to meet their money obligations and/or fails
to pay margins and mark-to-market losses, they may be considered as
money defaulter and necessary default proceedings in terms of Chapter 13
(Money Default Management) of the NCCPL Regulations, shall be initiated.
Thank you !
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Stock Exchange Road, Karachi – 74000 Pakistan
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