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    SLBM

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    kurdiausha29
    Stock lending and borrowing mechanism (SLBM) allows investors to earn additional income by lending shares held in their demat accounts through the stock exchange platform. The mechanism is facilitated by the National Securities Clearing Corporation and involves lending shares for a fixed period in exchange for a lending fee, with settlement guaranteed by the clearing corporation. It provides lenders with a risk-free way to earn incremental returns from their portfolio and borrowers can benefit from taking temporary positions to profit from market movements or hedge other trades.

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    SLBM

    Uploaded by

    kurdiausha29
    22 views11 pages
    Stock lending and borrowing mechanism (SLBM) allows investors to earn additional income by lending shares held in their demat accounts through the stock exchange platform. The mechanism is facilitated by the National Securities Clearing Corporation and involves lending shares for a fixed period in exchange for a lending fee, with settlement guaranteed by the clearing corporation. It provides lenders with a risk-free way to earn incremental returns from their portfolio and borrowers can benefit from taking temporary positions to profit from market movements or hedge other trades.

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    Stock lending and borrowing mechanism (SLBM) allows investors to earn additional income by lending shares held in their demat accounts through the stock exchange platform. The mechanism is facilitated by the National Securities Clearing Corporation and involves lending shares for a fixed period in exchange for a lending fee, with settlement guaranteed by the clearing corporation. It provides lenders with a risk-free way to earn incremental returns from their portfolio and borrowers can benefit from taking temporary positions to profit from market movements or hedge other trades.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    22 views11 pages

    SLBM

    Uploaded by

    kurdiausha29
    Stock lending and borrowing mechanism (SLBM) allows investors to earn additional income by lending shares held in their demat accounts through the stock exchange platform. The mechanism is facilitated by the National Securities Clearing Corporation and involves lending shares for a fixed period in exchange for a lending fee, with settlement guaranteed by the clearing corporation. It provides lenders with a risk-free way to earn incremental returns from their portfolio and borrowers can benefit from taking temporary positions to profit from market movements or hedge other trades.

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    STOCK LENDING AND

    BORROWING MECHANISM
    (SLBM)

    Additional Income on Idle Portfolio


    What is SLBM?

    • It is a scheme of lending and borrowing shares through the exchange platform.

    • It is permitted in dematerialized form only.

    • SLBM is facilitated by the National Securities Clearing Corporation of India (NSCCL), the clearing

    corporation of the National Stock Exchange of India (NSE)

    • All market participants in Indian securities market have been permitted to lend/borrow subject

    respective regulatory guideline

    • Fixed reverse leg settlement dates on the first Thursday of the respective month

    • All the borrowing and lending are Cleared, Settled & Guaranteed.
    Why SLBM?

    • Opportunities To Earn incremental return From Your Long Term Equity Investments/ Holdings

    • SLB is a legally approved medium for lending and borrowing of securities

    • No Risk as the settlement is guaranteed by the NSE Clearing Ltd. (NCL)

    • Timings: 9.15 am to 5.00 pm

    • One will receive Additional Income along with dividend and other corporate action such as
    Bonus, Rights issues Etc.
    Features of SLBM

    • Screen based anonymous trading matching system

    • Early repay and recall, rollover facilities available

    • 440+securities - including F&O, eligible non F&O stocks and ETF are available , Opportunities
    available in SLBM are updated by exchange on regular basis.

    • Monthly contracts & Tenure available up to a period of 12 months

    • Tax advantage
    The lending fee earned from SLB transactions is considered as Business Income (and not as a
    Capital gain)
    Who will be the are participant of SLBM

    • Two parties are involved in the process of securities lending and borrowing, which are ‘Lender
    'and ‘Borrower’.

    • It is an opportunity for the lender to earn a lending fee for the stocks lent and borrower to get
    temporary loan of stocks which they do not own.

    • LENDERS ARE :
    RETAIL INVESTOR |HNI INVESTOR |INSURANCE COMPANIES|BANKS|MUTUAL FUND

    • BORROWERS ARE:
    RETAIL INVESTOR|HNI INVESTOR|ARBITRAGER|SHORT SELLER| MARKET MAKER
    Advantages to Lender & Borrowers

    Lender:

    • To earn Risk-free Incremental Income (Lending Fees) from your idle portfolio

    • Tax benefits - STT and SEBI T/O Tax not applicable.


    Transaction in SLB do not amount to ‘transfer’ under Indian Income Tax Laws so ,NO capital gain
    tax on Fees (as Business Income )

    Borrower :
    • To reap benefits of market sentiments
    • To avoid settlement failure & auction
    • Hedging against Future & Options Position
    How does SLBM work?

    BORROWER LENDER
    Trading Day 125% Margin 0% Margin on EARLY PAYIN
    25% margin on t+1
    Trading Day +1 Shares Received by 11.30am Lending fees received by 11.30am

    Interim Period Repay / recall option Repay / recall option, dividend credit to
    bank
    Expiry Day Payout of Securities & margin released Payin of Securities
    (1st Thursday of month )
    What will Happen In Case of, Securities/Fund Shortage ?

    1. Securities pay-in shortages by the lender in first leg settlement :


    • The transaction shall be financially closed out at the below rate
    • 25% of closing price of the security on T+1 day

    2. Securities pay-in shortages by the Borrower in Reverse leg settlement :


    • 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.
    - 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 security in the capital market segment on the reverse leg settlement
    day.

    3. Fund Shortages by the Borrower :


    • The SLBS transactions shall be cancelled, or such other action as may be decided by NSCCL.
    Accordingly, securities shall be returned to the lenders along-with lending fees.
    • Actions in case of funds shortages shall also be applicable to recall/repay transactions.
    Documents required for SLBM

     Segment Activation One Pager


     SLB Agreement
     Specimen copy of Brokerage modification

    All above documents need to be duly signed by client and Send it to ;


    Account opening team Jodhpur.

    All Dealers are requested to activate their Right for SLBM order access to ;
    chandrakantjparmar@rathi.com
    To know more contact

    privateclientgroup@rathi.com 022 6281 7000


    Disclaimer
    By accepting this material, you acknowledge, understand and accept the following:
    The material in this presentation has been prepared by ARAL and its general background information about ARAL’s activities current as at the date of this presentation. This
    information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, should not be considered
    as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not
    take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the
    information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or
    instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international
    transactions, currency risk. This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to
    ARAL’s businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers
    are cautioned not to place undue reliance on these forward looking statements. ARAL does not undertake any obligation to publicly release the result of any revisions to these
    forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the
    preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and
    contingencies outside ARAL’s control. Past performance is not a reliable indication of future performance.

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