BSE Clearing Introduces 3-Day Contracts in Securities Lending, Borrowing

New Delhi: BSE Clearing Ltd, the clearing corporation of BSE, on Monday introduced three-working-day contracts in the Securities Lending and Borrowing (SLB) segment, aimed at facilitating inter-exchange arbitrage and improving price alignment across trading venues.

The shorter-tenor contracts, which went live on Monday, are designed to provide greater flexibility for short-term securities borrowing and delivery requirements, while supporting a deeper and more efficient SLB ecosystem.

Under the new contracts, the first leg will be settled on a T+1 basis and the reverse leg on T+3, excluding settlement holidays, BSE Clearing said in a statement.

Initially, the contracts will be available for securities eligible in the Futures and Options (F&O) segment under the “D” series prefix.

The shorter tenor is also expected to facilitate inter-exchange arbitrage and enable market participants to respond more efficiently to temporary market opportunities.

The move builds on the flexibility provided under Sebi’s SLB framework, which allows contracts of different tenures based on the evolving requirements of market participants.

The SLB platform will continue to operate through an automated, screen-based order matching mechanism based on price-time priority.

There will be no foreclosure in the event of an AGM or EGM. The contracts will also not have facilities for repayment, recall or rollover.

“The introduction of shorter-tenor SLB contracts is an important step towards making the securities lending ecosystem more responsive to the evolving needs of market participants,” BSE Clearing MD and CEO Vaisshali Babu said.

By providing greater flexibility in contract tenures, the facility will support short-term securities requirements, facilitate greater price alignment and further deepen participation in the SLB market, Babu added.

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