| |
All Clearing members of NSCCL including Banks and Custodians referred to as
‘Participant’ are eligible to participate in SLBS. In order to participate in
SLBS, clearing members have to register as Participants in SLBS.
For this purpose, the eligible persons are required to follow the registration
procedure as specified by NSCCL which includes entering into an agreement with
NSCCL as per the format specified.
Participants desirous of lending or borrowing securities can do so either on
their own account or on behalf of their clients. Prior to undertaking lending or
borrowing of securities on account of clients, the Participants are required to
enter into an agreement with each client as per the format specified by NSCCL.
The Participant need to apply to NSCCL for allotment of a “Unique client ID” for
each client with whom they have entered into the agreement for participating in
SLBS.
The formats of Agreement between NSCCL & Participant and Participant & Client
along with the procedure of UCI allotment to clients is available in SLB
Circular NSE/CMPT/10164 dated
January 30, 2008.
 Custodians
Participants (Trading Members)
Securities Available for Borrow /
Lending
Currently, securities available for trading in F&O segment of National Stock
Exchange of India Ltd. (NSEIL) are permitted.
Securities lending and borrowing is permitted in dematerialized form only.
Securities in which there are corporate actions are subject to either
foreclosure of transactions or adjustment depending on the type of
corporate action.
The eligible securities for early recall/repayment are announced by NSCCL along
with the list of eligible securities for SLB.
The tenure of lending and borrowing ranges from 1 month up to a maximum period
of 12 months.
Accordingly the return of securities by borrower is scheduled on the respective
reverse leg settlement day. Each reverse leg settlement date is assigned a
specific series number.
In case the lender wants to recall the securities he has a facility to place a
RECALL order on the order matching platform. The relend order should be for same
series/security and for the same client. The lending fee for the balance period
is at market determined rates hence the lender needs to quote the lending fee he
wishes to forego for the balance period. The RECALL order can also be placed at
market order.
The lender can only enter a RECALL request if he has existing reverse leg
positions. The recall request can be made for partial quantity.
In case the early recall transaction is for a custodial participant, the
custodian transaction has to be confirmed as per existing procedure for
custodial transactions.
In case the borrower wants to repay the securities and further relend them, a
facility to place a REPAY order is provided on the order matching platform. The
relend order should be for same series/security and for the same client. The
lending fee for the balance period is at market determined rates hence the
borrower needs to quote the lending fee he expects for the balance period. The
RECALL order can also be placed at market order. In case the early repayment
transaction is for a custodial participant, the custodian transaction will be
automatically confirmed by NSCCL and the securities transferred in NSCCL
repayment account will be automatically utilized. Before the market places a
REPAY order, the borrower has to first make an early repayment of securities in
the repayment account prescribed by NSCCL. The procedure for transfer of
securities is attached as Annexure.
All obligations are on a gross basis i.e. there is no netting of transactions.
Where the participants have transacted for their client or on their own account
the obligation arising out of such transactions will be on the Participant.
However, where participants have transacted for a Custodial Participant (CP)
client the transaction is subject to confirmation of the respective custodian
and the obligation will be on the Custodians. However, non-confirmation of such
transactions by the Custodian will revert the transaction to the participants
obligation. Obligations for the first leg are downloaded to
participants/Custodians on the T day and obligations for the reverse leg are
downloaded on T+1 day.
The first leg of the transactions across all series including early
recall/repayment transactions are settled on T+1 day on a gross basis.
Transactions under SLBS segment are identified based on different settlement
types as intimated by NSCCL for the first leg and reverse leg settlements. Early
recall and repayment transactions will be identified by separate settlement
types in the obligation file.
Early recall transactions would require custodial confirmation whereas early
repayment transactions will be automatically confirmed by NSCCL.
Lender’s Obligation : The lenders obligation is the securities lent on T day
(Transaction date). The lender is required to deliver the securities by the
scheduled time on T+1 day.
Early Recall Obligation: In case of early recall the lenders obligation
is the lending fee which is transacted for the early recall transaction and is
payable on T+1 day.
Borrower’s Obligation : Borrower’s obligation is the lending fees in cash
form and the lending price (T-1 day closing price in the underlying security) in
cash collaterals payable on T+1 day.
Early Repayment Obligation: The securities transferred by the borrower
shall be automatically utilised toward the respective pay-in.
The pay-in and pay-out of funds and securities is through the designated bank
accounts and securities settlement account respectively. Transactions are
settled on a T+1 day basis for the First Leg, Recall request & early repayment
for all eligible series. Transactions are settled on reverse leg settlement date
of the respective series.
The bank account currently used by Participant for settlement of funds in the
Capital Market segment is the designated bank account for giving effect to funds
debits/credits under SLBS.
Participants are required to maintain accounts with both depositories i.e NSDL &
CDSL. The pool account currently used by Participants in NSDL for effecting
securities pay-in and pay-out in the Capital Market segment is used for
settlement under SLBS.
In case of CDSL, Participants are required to open a separate settlement account
for effecting securities pay-in and pay-out under SLBS.
Participants / Custodians have been provided the facility of crediting the
payout of securities directly to clients account. In order to avail of this
facility, participant/custodian are required to provide a file in the specified
file format available in SLB Circular (NSE/CMPT/10134)
containing details of the beneficiary accounts to which direct credit is to be
given.
The borrowing Participants are required to return the securities borrowed on
reverse leg settlement date of the respective series. The securities are
returned to the lender of the securities by NSCCL on respective reverse leg
settlement date of the series. In the case of borrower failing to return
securities, NSCCL conducts an auction for obtaining securities. In the event of
failure to procure securities in auction the transactions are financially
closed-out on the basis of the close-out
computation formula.
In the event of funds shortage by the borrower, the SLBS transactions are
cancelled and the securities returned to the lenders along with lending fees.
In the event the lender fails to deliver securities, the transaction is closed
out as per the below procedure.
Higher of:
- 25% of closing price of the security on T+1 day (closing price for the
security in the capital market segment of NSEIL), or
- (Maximum trade price of the security in the capital market segment of NSEIL
from T to T+1 day) - (T+1 day closing price of the security in capital market
segment of NSEIL)
In the event the borrower fails to return the securities NSCCL conducts a buy-in
auction in the Capital Market segment of NSEIL.
In the event of no offer in buy in auction/ failure to give delivery for offer
in auction market on the settlement date, the transaction is closed out as per
the below procedure.
Higher of:
- The maximum traded price in the Capital Market segment of NSEIL from
(reverse leg settlement date – 1day) to reverse leg settlement date, or
- 25% above the closing price of the security in the capital market segment on
the reverse leg settlement date.
In all cases of shortages, NSCCL may initiate various actions including
withdrawal of access to the order matching platform, withhold of the
securities/funds pay-out due to the Participant or any other action as may be
intimated by NSCCL.
All transactions in case of corporate actions other than dividend and Stock
spilt will be foreclosed 2 days prior to ex-date.
No Recall and Repay transaction is allowed in case of shorter tenure loans.
In case of dividend, the dividend amount will be collected from the borrower by
NSCCL and will be paid to the lender.
In case of stock split, the position of the borrower would be proportionately
adjusted and the lender will receive the revised quantity on the reverse leg
settlement date.
In case of corporate actions (other than Stock split & Dividend) all existing
positions in SLBS are foreclosed two days prior to the Ex Date. The lenders are
required to repay proportionate amount of lending fees received from borrowers.
The lending fees for the balance period shall be collected on pro rata basis
from the lenders based on the lending fees received by them. The amount so
collected shall be passed on to the borrowers in the ratio of their contribution
to the pro rata lending fees receivable by them based on the lending fees paid
by them. The lending fee will be brought by the lender on the foreclosure
settlement date and will be passed on to the borrower.
However in case of foreclosure where the corporate action is announced upfront
by NSCCL before the transaction has been executed there will be no adjustment of
lending fee. Market participants shall accordingly quote lending fee for the
shorter transaction cycle.
Top
|
|