InvestorQ : How is the clearing done in case of SLBS transactions? Can you throw some light on how it is done?
Nisha Chandani made post

How is the clearing done in case of SLBS transactions? Can you throw some light on how it is done?

Arti Chavan answered.
2 years ago

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 NSE Clearing 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 NSE Clearing.

Lender's Obligation

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.

Early Recall Obligation:

In case of early recall the lenders obligation is the lending fee which is transacted for the early recall transaction and is payable on T+1 day.

Borrower's Obligation

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.

Early Repayment Obligation

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