Sub: Review of Securities
Lending and Borrowing (SLB) Framework
The framework for SLB was specified vide circular no. MRD/DoP/SE/Dep/Cir-
14 /2007 dated December 20,
was operationalised with effect from April
21, 2008. Pursuant
to feedback from market participants and proposals for revision of SLB received from NSE and BSE, the
framework is being revised as under:
Tenure for SLB may be increased to 30 days from
the present 7 days.
Corporate Actions during the 30
day SLB contract
The SLB tenure of 30 days will result in
the need for appropriate adjustments for corporate actions. The corporate
actions may be treated as follows:
The dividend amount would be worked out and recovered form the borrower at the
time of reverse leg and passed on to the lender.
split: The positions of the borrower would be proportionately adjusted so that
the lender receives the revised quantity of shares.
corporate actions such as bonus/ merger/ amalgamation / open offer etc: The transactions would be foreclosed
from the day prior to the ex-date. The lending fee would be recovered on a
pro-rata basis from the lender and returned to the borrower.
Time window for SLB
The time for SLB session may be extended from the
present one hour () to the normal trade timings of .
regard to risk management in SLB, it is advised that common risk management practices
shall be followed by stock exchanges for SLB. It is reiterated that the exchanges should ensure
that the risk management framework strikes a balance between ensuring
commercial viability of SLB transactions and ensuring adequate and proper risk
management. Exchanges should satisfy themselves regarding the adequacy of the
risk management system.
in SLB may be taken in the form of cash
and cash equivalents as prescribed in the circular MRD/DoP/Cir-07/2005 dated February
and Depositories are advised to
necessary steps and put in place necessary systems for implementation of the
above at the earliest;
necessary amendments to the relevant bye-laws, rules and regulations for the
implementation of the above;
c.issue necessary instructions to the member brokers/clearing members and
depository participants and also to
disseminate the same on the website.
circular is issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992, to protect the
interests of investors in securities and to promote the development of,
and to regulate the securities market.