NSE Clearing to launch shorter SLB contracts from August 17

NSE Clearing will introduce shorter-tenure securities lending and borrowing (SLB) contracts from August 17, with the reverse leg of trades settled three working days after the transaction. The new R3 series contracts will be generated daily and available only for stocks eligible in the equity derivatives segment. Unlike existing SLB contracts, the R3 series will not be foreclosed during annual general meetings or extraordinary general meetings, and the facility for repay, recall and rollover will not be available.

The move aims to boost participation in the closing auction session (CAS), which has faced concerns over low participation and price spikes since its launch earlier this month, The Hindu Businessline reports citing exchange sources. SEBI Chairman Tuhin Kanta Pandey said CAS is here to stay and greater participation is critical. He said SEBI will soon release a draft paper on a reformed SLB mechanism, adding that a working group is consulting participants.

Market participants said the T+3 contracts could make short-term trades in the closing auction more viable and deepen the SLB market. BSE Clearing has also introduced similar contracts. HDFC Securities MD and CEO Dhiraj Relli said the contracts should be helpful for the closing auction but volumes need to be watched.