Securities Lending and Borrowing (SLB), a new leveraged product would be implemented at all three stock exchanges from Monday (today). The SLB is a new and first of its kind leveraged product in Pakistan which provides a mechanism for temporary exchange of securities with an obligation to redeliver the same securities in the same number at an agreed premium on a future date.
The SLB market would be provided by National Clearing Company of Pakistan Limited (NCCPL) on un-disclosed basis through an automated portal.
This product is designed to earn income/return on idle securities and provides an effective solution to mange delivery defaults. All margins and marked-to-market losses are payable in cash only. According to the NCCPL 57 securities would be eligible in the SLB.
The SLB participants (lenders and borrowers) can be brokers banking and financial institutions, investment finance companies and other persons approved by NCCPL. Two other leveraged products namely Margin Trading System (MTS) and Margin Financing System (MFS) had already been implemented at all the three stock exchanges from March 14, 2011.