2 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
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 4
Salient Features in New SLB Platform 5 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
Example of the contracts available for SLB No. of Contracts Scrip IDFirst Trade DayLast Trade DayStock Return Day 1RIL02DEC1022-Nov-1029-Nov-102-Dec-10 2RIL09DEC1022-Nov-106-Dec-109-Dec-10 3RIL16DEC1022-Nov-1013-Dec-1016-Dec-10 4RIL23DEC1022-Nov-1020-Dec-1023-Dec-10 5RIL30DEC1022-Nov-1027-Dec-1030-Dec-10 6RIL06JAN1122-Nov-103-Jan-116-Jan-11 7RIL20JAN1122-Nov-1017-Jan-1120-Jan-11 8RIL03FEB1122-Nov-1031-Jan-113-Feb-11 9RIL17FEB1122-Nov-1014-Feb-1117-Feb-11 10RIL03MAR1122-Nov-1028-Feb-113-Mar-11 11RIL24MAR1122-Nov-1021-Mar-1124-Mar-11 12RIL07APR1122-Nov-104-Apr-117-Apr-11 13RIL21APR1122-Nov-1018-Apr-1121-Apr-11 14RIL05MAY1122-Nov-102-May-115-May-11
Example of the contracts available for SLB No. of Contracts Scrip IDFirst Trade DayLast Trade DayStock Return Day 15RIL19MAY1122-Nov-1016-May-1119-May-11 16RIL02JUN1122-Nov-1030-May-112-Jun-11 17RIL23JUN1122-Nov-1020-Jun-1123-Jun-11 18RIL07JUL1122-Nov-104-Jul-117-Jul-11 19RIL21JUL1122-Nov-1018-Jul-1121-Jul-11 20RIL04AUG1122-Nov-101-Aug-114-Aug-11 21RIL18AUG1122-Nov-1015-Aug-1118-Aug-11 22RIL01SEP1122-Nov-1029-Aug-111-Sep-11 23RIL22SEP1122-Nov-1019-Sep-1122-Sep-11 24RIL06OCT1122-Nov-103-Oct-116-Oct-11 25RIL20OCT1122-Nov-1017-Oct-1120-Oct-11 26RIL31NOV1122-Nov-1031-Oct-113-Nov-11 27RIL17NOV1122-Nov-1014-Nov-1117-Nov-11
Settlement Cycle ActivitiesProposed Timings Trade Day Securities Lending & Borrowing session09:15 a.m. – 03:30 p.m. Custodial confirmationby 06: 00 p.m. Final obligations download07:00 p.m. Trade day +1 Pay-in of securities/funds9:30 a.m. Pay- out of securities/funds11:00 a.m. Fund or securities shortagesFinancial closeout Early return/recall day + 1 Pay-in of securities/funds9:30 AM Pay-out of securities/funds11:00 AM Fund or securities shortagesFinancial closeout Stock return day Pay-in of securities9:30 AM Pay-out of securities/funds11:00 a.m. Buy-in auction for failure of borrower to return securities12:00 noon to 1:00 p.m. Auction obligations download2:00 p.m. Stock return day + 1 Pay-in of securities for auction settlement9:30 a.m. Pay-out of securities/funds for auction settlement11:00 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 10