BSE Ltd.Clearing and Settlement
S&P BSE SENSEX
हिन्दी     मराठी     ગુજરાતી


Clearing and Settlement

Eligibility Criteria for SLB Participants:

  1. All categories of investors including retail, institutional etc. will be permitted to borrow and lend securities. All Clearing members including Banks and Custodians referred to as ‘Participant’ are eligible to participate in SLB Platform. In order to participate in SLB, clearing members have to register as Participants in SLB. For this purpose, the eligible persons are required to follow the registration procedure as specified below. Application to ICCL


  2. Application to ICCL
    Member Agreement with ICCL (Part A#)
    Deposit additional base capital for margins
    Fulfill all conditions specified in SEBI / ICCL circular
    Member Agreement with Clients (Part B#) and complete all KYC Formalities
    Activation of the Members


  3. ICCL, CMs and the clients shall enter into a master agreement (in two parts) specifying the rights, responsibilities and obligations of the parties to the agreement. The agreement shall include the basic conditions for lending and borrowing of securities as prescribed under the scheme. In this regard, there would be one master agreement with two individual parts to the same. The first part of the agreement would be between the AI and the CMs and the second part of the agreement would be between the CMs and the clients.


  4. Registered SLB Participants can transact either on their own account or on behalf of their clients. In case of participating on account of clients, the SLB Participants are required to enter into an agreement with each client as per the format specified by AI. The Participant need to apply to ICCL for allotment of a “Unique client ID” for each client with whom they have entered into the agreement for participating in SLB.


  5. The formats of Agreement between ICCL & Participant and Participant & Client along with the procedure of UCI allotment to clients is available in the download section


Eligible Securities

All securities available for trading in F&O segment are permitted. Securities lending and borrowing is permitted in dematerialized form only.

Click on the link for securities available for borrowing:

http://bseindia.com/deri/Deri/ind_stockopt.aspx?L=2&id=hd1&Lid=5

CLEARING:

All obligations are on a gross basis i.e. there is no netting of transactions. Where the participants have transacted for their client or on their own account the obligation arising out of such transactions will be on the Participant. However, where participants have transacted for a Custodial Participant (CP) client the transaction is subject to confirmation of the respective custodian and the obligation will be on the Custodians. However, non-confirmation of such transactions by the Custodian will revertthe transaction to the participants obligation.

Obligations for the first leg are downloaded to participants/Custodians on the T day and obligations for the reverse leg are downloaded on T+1 day.

Lender’s Obligation : The lenders obligation is the securities lent on T day (Transaction date). The lender is required to deliver the securities by the scheduled time on T+1 day.

Recall Obligation: In case of recall the lenders obligation is the lending fee transacted for the recall transaction and is payable on T+1 day.

Borrower’s Obligation : Borrower’s obligation is the lending fees and the lending price (T-1 day closing price in the underlying security) in cash collaterals payable on T+1 day.

Early Return Obligation: The borrower is required to deliver the securities by the scheduled time on T+1 day.



Settlement Procedure:

The pay-in and pay-out of funds and securities is through the designated bank accounts and securities settlement account respectively. Transactions are settled on a T+1 day basis for the First Leg, Recall request & early repayment for all eligible series. Transactions are settled on reverse leg settlement date of the respective series.

Early pay in of securities:

Participants desirous of making early pay-in of securities need to transfer the securities in a separate account opened for the purpose by ICCL in CDSL. While in NSDL the Members/Custodians need to give irreversible delivery out in their POOL account. Early pay-in of security can be made for both - the first leg and reverse leg obligations per existing procedure in Cash Segment. Early pay-in is recognized by the depository for only two days prior to the settlement.

Shortages and Close out

Securities Shortages

In the event of fund shortages by the borrowers the SLBS transactions shall be cancelled as may be decided by ICCL and accordingly, the securities shall be returned to the lenders alongwith lending fees. In the event, lender fails to deliver securities in the settlement the transactions shall be closed-out at higher of the following rates :

25% of closing price of the security on T+1 day (closing price for the security in the equity cash market of BSE Ltd.), or The highest rate of the security from the trading day to T+1 day minus T+1 day closing price of the security.

In the event the borrower fails to return the securities ICCL shall conduct a "Buy-in Auction". The buy-in auction shall be carried out in the Cash Segment of BSE.

In case of non availability of securities in auction or when the auction offer or fails to deliver securities in part or full on auction pay-in day (Stock Return Day + 1), then such transactions shall be closed out at 25% above the closing price of the security in the Cash segment of BSE on the Stock Return Day.

In all cases of shortages ICCL may initiate various actions including withdrawal of borrowing and lending facility of the participant, withhold the securities / funds pay-out due to the participant or any other action as may be decided by ICCL from time to time.

Fund Shortages

Funds pay-in shortages by the Borrower - First leg

If the borrower defaults in payment of the collateral to cover the lending Price, a penalty equal to 2X of the Lending Fee will be collected from the borrower and paid to the Lender.

Treatment for Corporate actions

There will be foreclosure of transactions for corporate actions other than dividend and stock split two (2) days prior to ex date as per the existing procedure.

In case of dividend, the amount received on borrowed shares will be collected from the borrower by ICCL on the book closure/ record date and passed on to the lender.

In case of stock split, the position of the borrower would 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.

Recall/Early return requests will not be permitted during the period of corporate actions.

Adjustment of lending fees in case of foreclosure

All transactions will be foreclosed on a pro-rata basis based on the original Fees at which the order was executed. In case of foreclosure of transactions, ICCL will specify the new settlement number and date for the purpose of pay-in/pay-out of transactions from time to time.

-on to the borrower.

The lending fee will be brought by the lender on the foreclosure settlement date and will be passed on to the borrower. However in case of foreclosure where the corporate action is announced upfront by ICCL before the transaction has been executed there will be no adjustment of lending fee. Market participants shall accordingly quote lending fee for the shorter transaction cycle.

Examples:

Particulars
Security ABC
Original Lending Fees Rs 10
Days to Stock Return Day 60 days
Corporate Action Type AGM
Days to Stock Return Day 30 days
Calculation of Fees on a Pro –rata basis Rs 5
Fees to be Returned to the Borrower from the Lender Rs 5