December 23, 2008
Sub. : Revised Securities Lending and Borrowing Scheme (SLBS).
Members of Bombay Stock Exchange Ltd., (BSE) were informed vide Exchange’s Notice No. 20081103-13 dated November 03, 2008 about SEBI Circular No. MRD/DoP/SE/Cir-31/2008 dated October 31, 2008 in respect of review of Securities Lending and Borrowing (SLB) framework.
Accordingly, in continuation of Notice Nos. 20080128-3 dated January 28, 2008, and various other notices issued by BOI Shareholding Ltd ( BOISL) in respect of Securities Lending and Borrowing Scheme, members of BSE are hereby informed that the revised framework of the SLB Scheme will come into effect from Wednesday December 24, 2008.
The salient features of the revised SLB scheme are as under :
Tenure :
The tenure of SLB shall be increased to 30 trading days from the existing seven trading days. Accordingly, the return of securities by borrower shall be due on the T+31 day.
Market timings for SLB :
The timings for SLB session shall be from 9:55 a.m. to 03:30 p.m. instead of the present timings of 10 a.m. to 11 a.m.
The modified settlement cycle for lending and borrowing transactions shall be as under :
Activities |
Timings |
|
T Day |
|
|
Securities Lending & Borrowing session |
09:55 a.m. – 03:30 p.m. |
|
Custodial confirmation |
by 06: 00 p.m. |
|
Final obligations download |
07:00 p.m. |
|
T+1 day |
|
|
Pay-in of securities/funds – 1st leg |
9:30 a.m. |
|
Pay- out of securities/funds – 1st leg |
11:30 a.m. |
|
T+31 day |
|
|
Pay-in of securities of return leg |
9:30 a.m. |
|
Pay-out of securities/funds of return leg |
11:30 a.m. |
|
Buy-in auction for failure of borrower to return securities |
12:30 p.m. (approx.) |
|
Auction obligations download |
4:30 p.m. |
|
T+32 day |
|
|
Pay-in of securities for auction settlement |
9:30 a.m. |
|
Pay-out of securities/funds for auction settlement |
11:30 a.m. |
Margins :
Various margin requirements from the participants have been reduced. The details of revised margin requirements on SLB transactions are mentioned in Annexure-I.
Clearing & Settlement Procedure :
In the present framework, in case of a borrow transaction, the settlement obligation on T+1 day is the lending fees plus the lending price. In the revised framework, as the lending price shall now be adjusted from the available collateral deposits of the member lying with the Exchange, the funds obligation of the borrower in a settlement on T+1 day shall be the lending fees plus cash call (if available collateral is not sufficient towards lending price), if any.
Corporate actions :
In case of corporate actions during the tenure of lending/borrowing the following procedure will be followed by BOISL depending on the type of corporate actions :
1. Dividend :
The dividend amount received on the borrowed shares would be collected from the borrower for the relevant period and passed on to the lender.
2. Stock Split :
In case of stock split, the position of the borrower for the return leg will be proportionately adjusted, and the lender will receive the revised quantity of shares at the time of settlement of return leg of the respective SLB transaction.
3. Other Corporate Actions :
In case of other corporate actions such as bonus/merger/amalgamation/open offer, etc. the transactions shall be foreclosed atleast two working days prior to the ex-date. In such case, the lending fees shall be returned by the lender on a pro-rata basis to the borrower.
The shut down period for all corporate actions in respect of concerned securities shall be intimated from time to time.
Besides the aforesaid, all other norms / circulars / notices issued by the Exchange / BOISL in respect of the said Securities Lending and Borrowing Scheme will remain unchanged.
In case of any clarifications members may contact :
|
Name |
Contact Nos. |
|
Mr.Peter D’Souza – BOISL |
5042 |
|
Mr.Harshit Taskar – BOISL |
5065 |
|
Ms.Avani Kulkarni – BOISL |
5032 |
|
Mr.Surendra Rashinkar – BSE, Clearing and Settlement |
8306 |
|
Mr. Hitesh Shah – BSE, Clearing and Settlement |
8264 |
|
Mr.Sanjay Narvankar – BSE, Clearing and Settlement |
8113 |
R. NATARAJAN
Dy. Chief Manager - BOISL
Encl. : as above.
Annexure - I
Margins on transactions under SLB Scheme have been reduced as under :
1. Lend transactions on T day :
The following margins shall be levied on the participants for their lend transactions :
· Fixed percentage of the lending price shall be collected on an upfront basis by adjusting the same against collateral deposits of the SLB members. The fixed percentage will be 25% as currently applicable, or as may be specified from time to time.
· Mark to Market Margins (MTM).
The Value at Risk margin (VaR) & Extreme Loss Margin (ELM) margins as currently levied shall not be levied on the lender.
No margins will be levied on the lender in case of early pay-in of securities.
2. Borrow transactions on T day :
The following margins shall be levied on the participants for their borrow transactions :
· The lending fees shall be collected on an upfront basis by adjusting the same against collateral deposits of the SLB members.
(The VaR, ELM, MTM and fixed percentage i.e., 25% of the lending price as currently levied on T day, shall not be levied on the borrower on T day).
3. Margins on borrower on the return leg of SLB transaction :
The following margins will be levied on the borrower on return leg of their borrow transactions :
· VaR margin and Extreme Loss Margin.
· Mark to Market margins.
The lending price (i.e. value of shares borrowed) shall be fully collected by adjusting the same from the available unutilsed collateral of the borrower.
All other existing norms/criteria in respect of margins/collateral securities pertaining to SLB Scheme remain unchanged. |