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Stock Lending & Borrowing Mechanism

A system in which traders borrow shares that they do not already own, or lend the stocks that they own but do not intend to sell immediately. 

Make the best of Securities Lending and Borrowing by fixing your preferred rate of interest and desired tenure.

 

Advantage

  • Generate additional income for idle portfolio.
  • Multiple stocks available for easy securities lending and borrowing.
  • Short sell by borrowing the stocks.
  • Lending and Borrowing transactions guaranteed by NSCCL.

FAQ’s

How many stocks are eligible for SLB segment?

There are current 378 stocks available on the NSE Stock Lending and Borrowing platform. The list is updated on a monthly basis by the NSE.

How can I register as a participant in SLB?

If you have an existing trading account with HDFC securities Ltd., you can avail stock lending or stock borrowing privilege by simply signing the physical copy of the terms and conditions. You can submit the signed copy to the nearest HDFC securities branch or courier it to our customer care department.

How shall I quote the lending fee?

Lending fee is quoted on per share basis. You can base your lending fee for securities lending on the annualized yield you expect or the cost which your borrower expect to pay. For e.g., if you are lending shares for a period of 180 days, you could quote the securities lending fee per share based on the rate of return which you expect.

How can I check the tentative lending fee per share on SLB?

You can visit the below mentioned link of NSE in order to view the current lending fee per share https://www.nseindia.com/live_market/dynaContent/live_analysis/slbs_chain/chainDataBySeries.jsp

What is the difference between Series (A) and (B) under SLB?

Series (A) are the contract that will be foreclosed in the event of AGM/EGM.

Series (B) are the contract that will not be foreclosed in the event of AGM/EGM.

What is the tenure for SLB transactions?

The tenure for SLB transactions is up to 12 months.

What is the settlement date of SLB contract expiry?

The fixed settlement dates are the first Thursday of the respective month.

What is the charge for SLB transactions?

Brokerage at the rate of 15% + GST will be levied on the lending/borrowing fee. Statuary charges will be levied as prescribed by the exchange.

What is the settlement cycle for a SLB transaction?

T Day: The Transaction is executed on T Day between the lender and borrower.

T+1 day: The Lenders are required to deliver the securities for pay‐in on T+1 day. Securities are thereafter transferred to the borrowing participants during pay‐out on T+1 day. The borrower shall bring the lending fee on T+1 which shall be passed on to the lender in the funds pay‐out.

Reverse leg settlement date: The borrower needs to deliver the securities at the time of pay‐in which shall be returned back to the lender during the pay‐out.

Is there any counter party risk involved in SLB transactions at NSCCL?

NSCCL acts as a central counter party providing financial settlement guarantee for SLB transactions. NSCCL has a robust risk management system and collects adequate margins from participants to cover counter party risks.

Will the lending or borrowing of securities under the Securities Lending Scheme will amount to transfer under clause 47 of section 2 of the Income Tax Act in the hands of the lender?

As per the clarification from Income Tax vide their circular no. 2/2008, dated 22‐2‐2008 transactions done in the SLB shall not be regarded as transfer. For further details, please refer circular no. 2/2008, dated 22‐2‐2008 of the Income Tax department.

Is repay and recall option available under SLB?

Currently, repay and recall option is not available under SLB segment with HDFC securities Limited.

What are the various margins applicable to the borrower & lender on T-Day?

a) In case of borrower, 100% of the lending price (T‐1 cash market closing price), lending fee, Value at Risk margins, Extreme Loss Margins (same as applicable in Cash market for buying or selling a security) are levied on the borrower.

b) In case of lender, 25% of the lending price (T‐1 cash market closing price) and mark to market (MTM) at end of day are charged to the lender.

What margins are applicable to the borrower and lender from T+1 to reverse leg settlement day?

a) No margins are levied on the lender.

b) 100% of lending price, Value at Risk margins, Extreme Loss Margins (same as applicable in Cash market for buying or selling a security) and EOD MTM are levied on the borrower.

What action is taken if the lender fails to deliver securities on T+1 day?

The transaction shall be financially closed out at the below rate i.e. higher of:

  • 25% of closing price of the security on T+1 day (closing price for the security in the capital market segment of NSE), or
  • (Maximum trade price of the security in the capital market segment of NSE from T to T+1 day) ‐ (T+1 day closing price of the security in capital market segment of NSE)

What action is taken if the borrower fails to bring the funds/collaterals on T+1?

The transaction shall be cancelled, however, the lending fee shall be collected and passed on to the lender.

What action is taken if the borrower fails to bring securities at the time of reverse leg settlement?

If the borrower fails to deliver the securities, NSCCL conducts a buy‐in auction to acquire the securities on the reverse leg settlement date. If securities are not available in auction, then the transaction is financially closed out at the below mentioned close out rate i.e. higher of:

  • Maximum trade price in the capital market segment of NSEIL from (reverse leg settlement day – 1 day) to reverse leg settlement day, or
  • 25% above the closing price of the security in the capital market segment on the reverse leg settlement day.

What action is taken in case of Corporate Actions?

In case of Corporate Actions other than dividend and stock spilt, transactions are foreclosed 2 days prior to ex‐date or as prescribed by NSCCL from time to time. For dividends the dividend would be collected from the borrower and passed on to the lender at the time of book closure/record date. In respect of stock split, the borrower’s obligation would be revised as per the proportionate spilt and would be passed on to the lender during the reversal leg.

Can NRI Client lend & borrow shares in SLB Segment?

No NRI client cannot lend or borrow shares in SLB segment.

How to place SLB order?

You can place slb order by calling your relationship manager or center dealing desk .Approx time taken for the order placement will be 15 minutes.

For more details, email us on : [email protected]

Miscellaneous services : Transaction alerts through SMS, e-locker facilities, chatbots for instantaneously responding to investor queries etc. have also been developed.

e-CAS facility : Consolidated Account Statements are available online and could also be accessed through mobile app to facilitate the investors to view their holdings in demat form.

e-DIS / Demat Gateway :  Investors can give instructions for transfer of securities through e-DIS apart from physical DIS. Here, for on-market transfer of securities, investors need to provide settlement number along with the ISIN and quantity of securities being authorized for transfer. Client shall be required to authorize each e-DIS valid for a single settlement number / settlement date, by way of OTP and PIN/password, both generated at Depositories end. Necessary risk containment measures are being adopted by Depositories in this regard.

Online instructions for execution : Internet-enabled services like Speed-e (NSDL) & Easiest (CDSL) empower a demat account holder in managing his/her securities ‘anytime-anywhere’ in an efficient and convenient manner and submit instructions online without the need to use paper. These facilities allows Beneficial Owner (BO) to submit transfer instructions and pledge instructions including margin pledge from their demat account. The instruction facilities are also available on mobile applications through android, windows and IOS platforms.

E-account opening : Account opening through digital mode, popularly known as “On-line Account opening”, wherein investor intending to open the demat account can visit DP website, fill in the required information, submit the required documents, conduct video IPV and demat account gets opened without visiting DPs office.

Linkages with Clearing System :  for actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker.

Transposition cum dematerialization : In case of transposition-cumdematerialisation, client can get securities dematerialised in the same account ifthe names appearing on the certificates match with the names in which the account has been opened but are in a different order. The same may be done
by submitting the security certificates along with the Transposition Form and Demat Request Form.

Basic Services Demat Account (BSDA) : The facility of BSDA with limited services for eligible individuals was introduced with the objective of achieving wider financial inclusion and to encourage holding of demat accounts. No Annual Maintenance Charges (AMC) shall be levied, if the value of securities holding is upto Rs. 50,000. For value of holdings between Rs 50,001- 2,00,000, AMC not exceeding Rs 100 is chargeable. In case of debt securities, there are no AMC charges for holding value upto Rs 1,00,000 and a maximum of Rs 100 as AMC is chargeable for value of holdings between Rs 1,00,001 and Rs 2,00,000.