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Securities Lending & Borrowing (SLB)

Securities Lending & Borrowing (SLB). Securities Lending & Borrowing - Concept. Securities lending transaction is a temporary loan of securities between Lender & Borrower.

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Securities Lending & Borrowing (SLB)

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  1. Securities Lending & Borrowing (SLB)

  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. • Itpromotes market efficiency and liquidity

  3. 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

  4. 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

  5. Salient Features in New SLB Platform • SLB Contracts up to 1 year (12 monthly contracts) • Early Return and Recall • Base Minimum Capital reduced to NIL • No separate exe – Login same as BOLT • Facility of Early pay-in 5

  6. SLB Mechanism

  7. Example of the contracts available for SLB

  8. Settlement Cycle

  9. 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 9

  10. SLB Snapshot

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