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Security lending and borrowing mechanism

The Security Lending and Borrowing Mechanism (SLBM) is a system where a trader borrows equity shares that they do not already own, lends shares that they own, or lends shares that they own but with no intention to sell them.

  • Individuals can borrow stocks and short-sell equities that they do not own in the market.
  • It is a hedging tool that is frequently used to balance potential hazards.
  • Possibility of boosting liquidity for traders.
  • Allows investors to earn fees on long-term held equities if they use them as collateral.

  • This tool can be used by sophisticated and experienced traders to boost liquidity.
  • Hedgers who want to reduce their possible risks and losses.
  • Retail investors can use this service to lend their shares and earn fees.

  • Tenure of lending and borrowing is available for up to a period of 1 to 12 months.
  • Mainly securities traded in the F&O segment are eligible for lending and borrowing.
  • Investors can generate additional income from the idle shares in their portfolio.
  • Exchange provides a list of securities for SLB trading every month.
  • The specified reverse leg settlement date is the first Thursday of the corresponding month. Thus, each reverse leg settlement date is assigned a specific series number.
  • All corporate action benefits go to the lender, for those who lend the shares in the SLBM platform.
  • The borrower has the option to repay the obligation before the first Thursday of the month.
  • Exchanges quote lending fees per share. It is usually based on the rate of return expected by the lender, interest rate, and tenure.
  • SLBM is offered through an automated online platform with a facility for trading on price-time priority.
     

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Attention Investors :

Prevent Unauthorised transactions in your account. Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day..... Issued in the interest of investors. | KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. |We do proprietary trading occasionally |Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 01, 2020. |Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month ........... Issued in the interest of Investors.