SLBM Services
Stock Lending & Borrowing Mechanism (SLBM)
Stock Lending & Borrowing Mechanism (SLBM)
Stock Lending & Borrowing Scheme is a system in which clients lend or borrow stocks temporarily. They can borrow shares that they do not already own or can lend the stocks that they own. So, it is a system where a specific trader borrows equity shares which they don’t own or lends shares that they own or lends shares that they actually own but without an intention to sell the same. Further, traders can utilize SLBM just for the stocks precisely in the Futures & Option segment.
SLBM is facilitated by the National Securities Clearing Corporation of India (NSCCL), the clearing corporation of the NSE or the National Stock Exchange of India, and by Indian Clearing Corporation Limited (ICCL), the clearing corporation for the Bombay Stock Exchange (BSE). SLBM is available on all derivatives and eligible Non-F&O securities as approved by the exchange(s) from time to time. There is no counterparty risk to either Lender or Borrower since the Clearing Corporations of the Stock Exchanges provide a financial settlement guarantee for all SLB transactions as a central counterparty.
Depository Overview
Financing Transaction
Trader borrows lower volatility stock at comparatively lesser price range and sells it right in the capital market segment.
Arbitrage
One can sell securities short precisely against an offsetting derivatives position to take benefit of dislocation amid cash as well as derivatives markets.
Benefits for Lenders
SLBM provides you an official low-cost platform to better earn risk-free Incremental Income (Lending Fees) from your idle portfolio while protecting all your rights as owner, comprising all corporate benefits and actions on your precise holding, without any Capital Gain Tax implication right on your SLB transaction.
Benefits for Borrower
SLBM offers you a platform to cover your unplanned short position created in the books as well as avoid settlement failure and auction or to support a trading/hedging strategy. At Navkar, we can help you with SLBM services and the attached solutions.