The SLB mechanism enables an investor to sell a security in the cash market
National Stock Exchange
MUMBAI: The National Stock Exchange (NSE) on Monday decided to extend the roll over facility of its stock lending and borrowing (SLB) scheme to three months from the existing one month. This is expected to help investors and traders to take a slightly long-term view on a particular stock while taking positions in the market.
The SLB mechanism enables an investor to sell a security in the cash market, which they think is overpriced without actually owning them. Instead of squaring off their position at the end of the trading session on the cash market which is otherwise required, the SLB platform provides them the facility to borrow the required quantity of security from an approved intermediary that act as the central counter party to meet the settlement obligation.
Under the current system, a short seller who has used the SLB mechanism to meet delivery obligations is required to return the securities within the first Thursday of the ensuing month. “This is definitely a very positive move. However, I doubt whether this will have any immediate impact on the SLB activities as it is yet to take-off in a big way in India,” said Siddharth Bhamre, head of derivatives at Angel Broking.
( Source : dc correspondent )
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