{"id":245226,"date":"2021-09-03T12:19:20","date_gmt":"2021-09-03T12:19:20","guid":{"rendered":"https:\/\/imarticus.org\/?p=245226"},"modified":"2024-03-22T06:47:28","modified_gmt":"2024-03-22T06:47:28","slug":"what-are-the-features-benefits-of-security-lending-borrowing","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/what-are-the-features-benefits-of-security-lending-borrowing\/","title":{"rendered":"What are the Features &#038; Benefits of Security Lending &#038; Borrowing?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Securities Lending and Borrowing is a system that allows investors to borrow and lend shares to other market players. For many reasons, the platform is a potential alternative to the derivatives market. Short-sellers are the most common SLB borrowers. On the other hand, Lenders are investors who purchased shares for the long term and have them sitting dormant in their demat accounts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In most jurisdictions, securities lending and borrowing is an OTC (over-the-counter) commodity where custodians allow borrowing and lending transactions between institutions. SLB, on the other hand, is an exchange-traded product in India.<\/span><\/p>\n<h2><b>SLB Features<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Clearing Corporations guarantee transactions in the SLB section and hence do not include any counter-party risk.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Contracts with durations ranging from one month to twelve months are available.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Turnover fees from the STT and SEBI are not applicable.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The market value of the equities determines the loan amount pledged as security.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This SLB allows retail and institutional investors to lend and borrow assets.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The securities can be lent by investors who have Ideal Shares in their demat account.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This approach allows investors or traders who have short-sold stocks to borrow the securities.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">National Securities Clearing Corporation Limited ensures that stocks are delivered after the rental period has ended. As a result, there is no chance of the stock being lost.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When the borrower returns the stock, any dividends, stock splits, or bonus shares are paid to the lender of the securities.<\/span><\/li>\n<\/ul>\n<h2><b>Benefits\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Both the lender and the borrower benefit from SLB.<\/span><\/p>\n<h2><b>For Lender<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">SLB delivers an extra return on an idle portfolio for Lenders. So, if you have 1000 shares of xyz that you intend to own for a long time, you can lend them out anytime there is a demand. Where NSCCL is the guarantor, the lender receives loan fees.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The potential to make additional money through the fee charged to the borrower to borrow the security is one of the benefits of securities lending from the lender's perspective. It could also be considered as a way to broaden one's horizons.<\/span><\/p>\n<h2><b>For Borrower<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">From the borrower's perspective, it permits them to engage in activities such as short selling. It also provides investors with more perspectives on the market. As previously said, it aids in the increase of liquidity in the market as a whole. As the difference between the bid and the ask narrows, increased market liquidity tends to tighten spreads, which is favorable to all market players.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A borrower is most likely interested in one of the following opportunities: stock price between two exchanges, reverse arbitrage when futures are at a discount to stock, covering short positions to avoid settlement failure, mispricing in options, and other hedging strategies, SLB could be used to borrow stocks from a lender for a fee.<\/span><\/p>\n<h2><b>Become an Investment Advisor\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Investment advisors provide advice on a wide range of <\/span><a href=\"https:\/\/imarticus.org\/blockchain-possible-answer-trade-finance-modernization\/\"><b>trade finance<\/b><\/a><span style=\"font-weight: 400;\"> topics, including retirement planning, insurance alternatives, and investment techniques. To work as an investment advisor in India, you'll need a degree in finance or banking as well as a SEBI certificate of registration.<\/span><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"size-medium wp-image-261081 alignright no-lazyload\" src=\"https:\/\/imarticus.org\/blog\/wp-content\/uploads\/2016\/07\/CIBOP-01-300x300.jpg\" alt=\"Investment Banking Course\" width=\"300\" height=\"300\" \/><\/p>\n<h2><b>MBA program by Imarticus\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">A <\/span><b>diploma in banking and finance<\/b><span style=\"font-weight: 400;\"> is <\/span><span style=\"font-weight: 400;\">Designed Specifically for Future Investors. Your ultimate doorway to New Age Investment Banking and Finance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Imarticus collaborated with the acclaimed JAIN Online to improve its rigorous <\/span><a href=\"https:\/\/imarticus.org\/NMIMS-MBA-in-New-Age-Banking-and-Finance\/\"><b>diploma in banking and finance<\/b><\/a><span style=\"font-weight: 400;\">, covering every paradigm of New Age Banking Operations<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The program is designed to give you in-depth exposure to essential parts of the <b>trade finance<\/b> Investment Banking sector, <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such as Master Accounting, <strong><a href=\"https:\/\/imarticus.org\/financial-analysis-prodegree\/\">Financial Analysis<\/a>,<\/strong> Principles of Economics and Markets, <strong><a href=\"https:\/\/imarticus.org\/certified-investment-banking-operations-program\/\">Investment Banking Operations<\/a>,<\/strong> and more.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Securities Lending and Borrowing is a system that allows investors to borrow and lend shares to other market players. For...<\/p>\n","protected":false},"author":1,"featured_media":245130,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[22],"tags":[166,1141,1707,2077,2511,2718],"pages":[],"coe":[],"class_list":{"0":"post-245226","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance","8":"tag-banking-and-finance-courses","9":"tag-investment-banking-career","10":"tag-investment-banking-online-training","11":"tag-career-options-after-graduation","12":"tag-best-investment-banking-courses-with-placement-in-india","13":"tag-security-lending-and-borrowing"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What are the Features &amp; Benefits of Security Lending &amp; Borrowing?<\/title>\n<meta name=\"description\" content=\"Securities Lending and Borrowing is a system that allows investors to borrow. 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