NSE Clearing To Launch 3-Day SLB Contracts From August 17

Starting August 17, NSE Clearing Limited will roll out shorter-duration contracts under the Securities Lending and Borrowing (SLB) framework, offering market participants the ability to engage in stock-lending transactions with a three-day settlement period. These new contracts, categorized as the R3 series, will be introduced on a daily basis, as per a circular released by NSE Clearing on August 14. The facility will be applicable exclusively to securities eligible for trading in the equity derivatives segment.

Under the revised arrangement, the initial leg of an SLB transaction, carried out on the transaction date or T Day, will be settled on the subsequent working day, denoted as T+1. The corresponding reverse transaction will then be settled on T+3, excluding any settlement holidays. This differs from existing SLB contracts, as R3 contracts will not be automatically terminated in the event of an Annual General Meeting or Extraordinary General Meeting involving the underlying security.

Moreover, market participants utilizing these contracts will not have the option to repurchase, recall, or rollover their positions.

The introduction of the shorter SLB contracts does not alter other provisions related to market timings, clearing and settlement procedures, risk management, or the treatment of corporate actions. Instead, it provides investors with a more flexible borrowing and lending option compared to longer-duration SLB contracts. This could prove particularly beneficial for traders and investors who require greater adaptability in managing short-term positions.

For lenders, the mechanism presents an opportunity to generate additional income from securities they already own. Additionally, borrowers can secure access to stocks for shorter periods without the need to enter into more extended SLB arrangements.