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Securities Lending & Borrowing (SLB)
Securities Lending & Borrowing (SLB)
(SLB)
Securities Lending & Borrowing - Concept
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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.
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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
No. of Contracts Scrip ID First Trade Day Last Trade Day Stock Return Day
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SLB Snapshot
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