SLB volumes hit highs

The volumes of the Securities lending and borrowing (SLB) scheme on the National Stock Exchange has hit its highest level in 41 months. 

The securities lending and borrowing allows long-term investors to loan out their securities to those who may wish to borrow securities to cover a short-position or hedge their exposure in the derivatives segment.  It allows those lending the securities to increase the yield on their long term holdings. 

 

The daily average turnover on the NSE has seen a pick-up , tripling from a low base of Rs.10.73 crore from August last year to Rs.33.37 crore in August 2013, according to data provided by the exchange.

This is the highest level of participation since at least April 2010, according to data from the exchange. 

 

The previous high of Rs.32.91 crore for the exchange was hit in June 2012.

 

Meanwhile, the BSE had average daily turnover from April 2013 to August 2013 is Rs.0.66 lacs. 

 

Recently, the Insurance Regulatory and Development Authority (IRDA) allowed insurance companies to make use of the SLB segment subject to certain conditions. 

 

“Insurer can only lend securities to the maximum extent of 10% quantity in the respective scrips in the respective Funds. These prescribed limits shall be adhered at all the times,” said the IRDA circular. The circular was issued on July 12th.

 

ICICI Prudential Life Insurance announced In August that they had executed the first insurance trade in the segment on August 26th.

 

Stocks outside the derivatives basket and exchange traded funds were also made a part of the scheme in July and September respectively.