NSE Clearing to launch shorter-tenure SLB contracts from August 17

NSE Clearing will introduce 'R3' series shorter-tenure contracts in its Securities Lending and Borrowing (SLB) scheme from August 17. The new contracts will have a T+3 reverse leg settlement and will be available for equity derivatives stocks.

NSE Clearing will introduce shorter-tenure contracts under its Securities Lending and Borrowing (SLB) scheme, with the reverse leg of trades to be settled on the third day after the transaction, aimed at providing participants with a shorter contract option.

The new contracts, to be introduced under the "R3" series, will be generated and made available on a daily basis, NSE Clearing said in a circular on Friday.

Contract Specifications and Settlement

The first leg of trades executed on the transaction day will continue to be settled on T+1, while the corresponding reverse leg will be scheduled for T+3, excluding settlement holidays.

The shorter-tenure contracts will be available only for stocks eligible for trading in the Equity Derivatives Segment, according to the circular.

Exclusions and Conditions

Unlike existing SLB contracts, the R3 series will not be foreclosed in case of an annual general meeting or extraordinary general meeting.

NSE Clearing also said the facility for repay, recall and rollover will not be available for the shorter-tenure contracts.

Other provisions relating to market timings, clearing, settlement, risk management and corporate action handling will remain applicable as they are for existing SLB contracts.

Implementation Details

The R3 contracts will be available from the transaction day of August 17, while the security file shared by the exchange at the end of August 14 will include the additional series.

The shorter-tenure contracts shall not be foreclosed in the event of an AGM or EGM. The facility for repay, recall and rollover will also not be applicable to these contracts, NSE Clearing said.

Overview of the Existing SLB Scheme

Under the SLB scheme, securities lending and borrowing is facilitated through an automated screen-based platform, where orders are matched on a price-time priority basis.

Participants quote a lending fee per share, while lending and borrowing contracts can currently have tenures ranging from three days to 12 months.

The scheme also provides lenders with a facility to make an early recall request for securities and allows borrowers to make early repayment and further relend the securities.

Existing contracts are based on fixed monthly tenures with specified reverse-leg settlement dates.

The introduction of the R3 series adds a shorter-tenure option to the existing SLB framework, with the new contracts carrying a T+3 reverse settlement schedule and a separate set of conditions for corporate actions and early repayment or recall. (ANI)

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