WHAT IS SECURITY LENDING AND BORROWING SCHEMES IN NSE?

 

If you're an investor who possesses shares that are lying idle in your DEMAT account, then choose the mechanism of securities lending and borrowing. In SLBM, an investor is allowed to borrow or lend shares to other market participants through NSE. In this blog, we'll be discussing about what is SLBM and what are its benefits, but, before that you should be backed by a market expert like Goodwill!

Goodwill is one of the best trading platforms in India that offers a wide range of trading services to its valuable investors. Established in the year 2008, Goodwill has more than a decade of experience in trading and offers exceptional customer support to its valuable investor. To know more details about Goodwill, click here!

 

WHAT IS SECURITY LENDING AND BORROWING?

Securities lending and borrowing is a scheme that enables settlement of securities sold short. SLB also offers an investor to lend the idle stocks through clearing corporation/clearing house of stock exchanges to earn returns. SLB is very popular globally as it provides liquidity in the equity market and also increases the market efficiency.

 

In India, SLB is an exchange traded product. Investors hold certain stocks in their DEMAT account and take advantage of SLB by lending the stocks for a certain fee at stipulated time duration. 

 

FEATURES OF SLBM:

1. Clearing Corporations guarantees the transaction carried out under SLB segment. Remember, these transactions do not carry any counter part risks.
2. You can choose your SLB stocks from more than 370 stocks listed in the NSE SLB platform.
3. SLB contracts are available with a time duration starting from 1 to 12 months.
4. Turnover fees are not applicable. 

BENEFITS OF SLBM:

1. Lenders can earn additional income from the idle portfolio and there is no limitation of minimum quantity that a lender could lend.
2. There wouldn't be any counter party risk as the transactions are guaranteed by the Clearing Corporations.
3. Borrowers can also carry out short selling of securities as it is not available in the derivatives segment.
4. SLB enables borrowers to meet the obligations arising out of physical statement under the derivatives segment and in case of shortage in delivery to avoid the auction in cash segment.
5. SLB also offer arbitrage opportunity to the borrowers if there is a price difference between the cash and derivative segment.

 

INVESTING IN SLBM:

If you're a trader who would wish to borrow shares for short-term or if you're a lender who wish to sell your idle stocks, then choose to adopt SLBM. SLBM is a good option for trading your short-term stocks but while performing SLBM trading you should be backed by an expert like Goodwill.

 

When you choose to trade with Goodwill, you can believe in their exceptional support offered to their valuable investors like free equity deliveries, free DEMAT accounts and free training programs. Goodwill is a brokerage firm that strives hard to make their investors excel in their stock trading. To become a part of the Goodwill community, click here!

 

For more info, visit the official website of Goodwill or make a call on +91 80122 78000 to trade your stocks smartly and efficiently. Stay connected with Goodwill's Facebook Page and get instant live updates on your stocks.