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All Clearing members of NSCCL including Banks and Custodians referred to as µParticipant¶ are
eligible to participate in SLBS. In order to participate in SLBS, clearing members have to register
as Participants in SLBS.

For this purpose, the eligible persons are required to follow the registration procedure as specified
by NSCCL which includes entering into an agreement with NSCCL as per the format specified.

Participants desirous of lending or borrowing securities can do so either on their own account or on
behalf of their clients. Prior to undertaking lending or borrowing of securities on account of clients,
the Participants are required to enter into an agreement with each client as per the format
specified by NSCCL.

The Participant need to apply to NSCCL for allotment of a ³Unique client ID´ for each client with
whom they have entered into the agreement for participating in SLBS.

The formats of Agreement between NSCCL & Participant and Participant & Client along with the
procedure of UCI allotment to clients is available in SLB Circular NSE/CMPT/10164 dated January
30, 2008.

 





Securities Available for Borrow / Lending

Currently, securities available for trading in F&O segment of National Stock Exchange of India Ltd.
(NSEIL) are permitted.

Securities lending and borrowing is permitted in dematerialized form only.

Securities in which there are corporate actions are subject to either foreclosure of transactions or
adjustment depending on the type of corporate action.

The eligible securities for early recall/repayment are announced by NSCCL along with the list of
eligible securities for SLB.




The tenure of lending and borrowing ranges from 1 month up to a maximum period of 12 months.

Accordingly the return of securities by borrower is scheduled on the respective reverse leg
settlement day. Each reverse leg settlement date is assigned a specific series number.

 
  

The lender can only enter a RECALL request if he has existing reverse leg positions. The recall
request can be made for partial quantity.

In case the early recall transaction is for a custodial participant, the custodian transaction has to
be confirmed as per existing procedure for custodial transactions.

 


 




In case the borrower wants to repay the securities and further relend them, a facility to place a
REPAY order is provided on the order matching platform. The relend order should be for same
series/security and for the same client. The lending fee for the balance period is at market
determined rates hence the borrower needs to quote the lending fee he expects for the balance
period. The RECALL order can also be placed at market order. In case the early repayment
transaction is for a custodial participant, the custodian transaction will be automatically confirmed
by NSCCL and the securities transferred in NSCCL repayment account will be automatically
utilized. Before the market places a REPAY order, the borrower has to first make an early
repayment of securities in the repayment account prescribed by NSCCL. The procedure for transfer
of securities is attached as Annexure.

c

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 revert the 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.

The first leg of the transactions across all series including early recall/repayment transactions are
settled on T+1 day on a gross basis.

Transactions under SLBS segment are identified based on different settlement types as intimated
by NSCCL for the first leg and reverse leg settlements. Early recall and repayment transactions will
be identified by separate settlement types in the obligation file.

Early recall transactions would require custodial confirmation whereas early repayment
transactions will be automatically confirmed by NSCCL.



  
 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.

 
   


  
 Borrower¶s obligation is the lending fees in cash form and the lending
price (T-1 day closing price in the underlying security) in cash collaterals payable on T+1 day.

 


  
 The securities transferred by the borrower shall be automatically
utilised toward the respective pay-in.






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.

!


"#

The bank account currently used by Participant for settlement of funds in the Capital Market
segment is the designated bank account for giving effect to funds debits/credits under SLBS.







#

Participants are required to maintain accounts with both depositories i.e NSDL & CDSL. The pool
account currently used by Participants in NSDL for effecting securities pay-in and pay-out in the
Capital Market segment is used for settlement under SLBS.

In case of CDSL, Participants are required to open a separate settlement account for effecting
securities pay-in and pay-out under SLBS.

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Participants / Custodians have been provided the facility of crediting the payout of securities
directly to clients account. In order to avail of this facility, participant/custodian are required to
provide a file in the specified file format available in SLB Circular (NSE/CMPT/10134) containing
details of the beneficiary accounts to which direct credit is to be given.








The borrowing Participants are required to return the securities borrowed on reverse leg
settlement date of the respective series. The securities are returned to the lender of the securities
by NSCCL on respective reverse leg settlement date of the series. In the case of borrower failing to
return securities, NSCCL conducts an auction for obtaining securities. In the event of failure to
procure securities in auction the transactions are financially closed-out on the basis of the close-
out computation formula.



c 


In the event of funds shortage by the borrower, the SLBS transactions are cancelled and the
securities returned to the lenders along with lending fees.

In the event the lender fails to deliver securities, the transaction is closed out as per the below
procedure.

Higher of:

@? 25% of closing price of the security on T+1 day (closing price for the security in the capital
market segment of NSEIL), or
@? (Maximum trade price of the security in the capital market segment of NSEIL from T to
T+1 day) - (T+1 day closing price of the security in capital market segment of NSEIL)

In the event the borrower fails to return the securities NSCCL conducts a buy-in auction in the
Capital Market segment of NSEIL.

In the event of no offer in buy in auction/ failure to give delivery for offer in auction market on the
settlement date, the transaction is closed out as per the below procedure.

Higher of:

@? The maximum traded price in the Capital Market segment of NSEIL from (reverse leg
settlement date ± 1day) to reverse leg settlement date, or
@? 25% above the closing price of the security in the capital market segment on the reverse
leg settlement date.

In all cases of shortages, NSCCL may initiate various actions including withdrawal of access to the
order matching platform, withhold of the securities/funds pay-out due to the Participant or any
other action as may be intimated by NSCCL.
#$


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All transactions in case of corporate actions other than dividend and Stock spilt will be foreclosed 2
days prior to ex-date.

No Recall and Repay transaction is allowed in case of shorter tenure loans.

In case of dividend, the dividend amount will be collected from the borrower by NSCCL and will be
paid 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 on the reverse leg settlement date.

#$







 

The transactions will be foreclosed at market determined rates i.e. foreclosure rate of the
respective series. The foreclosure rate will be based on the last closing price of the security in SLB
segment prior to the announcement of corporate action by NSCCL. In case of foreclosure of
transaction, NSCCL will specify the new settlement number and date for the purpose of
payin/payout of transactions from time to time. The lending fee will be bought 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 NSCCL 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.