Shorter-tenor SLB contracts may boost closing auction participation
Move by NSE, BSE Clearing comes as SEBI pushes for greater participation in new closing auction mechanism
The Securities and Exchange Board of India (SEBI) has introduced shorter-tenor securities lending and borrowing (SLB) contracts to enhance short-term liquidity and encourage participation in the new closing auction session (CAS). These three-day contracts, initiated by the National Stock Exchange Clearing and Bombay Stock Exchange Clearing, allow market participants to borrow securities for a shorter period.
This measure aims to address concerns over low participation and price spikes since CAS's launch earlier this month. SEBI Chairman Tuhin Kanta Pandey emphasized that increasing CAS participation is critical for the mechanism and that SEBI intends to release a draft paper on a reformed SLB mechanism soon.
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