The Hindu Business Line : Stock lending: Bourses get lukewarm response

Mumbai, April 21 The Stock Lending and Borrowing Scheme (SLBS), which started on the bourses from Monday, received a lukewarm response with the National Stock Exchange reporting just four transaction worth Rs 1.6 crore. The BSE, which has registered 25 trading members under the scheme, has not reported a single transaction on the first day.

A BSE spokesperson confirmed there was no transaction relating to SLBS on the first day on the exchange.

On the NSE, only Reliance Industries, SBI and RNRL reported trading activity.

The lending fee for each Reliance shares for seven trading sessions (T+6) was quoted as Rs 11, for SBI the lending fee reported was Rs 5 a share and it was 50 p for RNRL shares.

SLBS enables physical delivery of shares that a trader opts for short selling and later promises to deliver by buying from the market.

SHORT SELLING

The exchanges have also allowed short selling from Monday. Traders said short selling witnessed a very low-key start as the institutional participation was not much.

Ms Anita Gandhi, Head of Institutional Business of Arihant Capital Markets, said that institutions may go for lending of shares that were lying idle when there was enough depth in the market but at present were not thinking of going short.

Retail investors were already allowed to go short, but, traders said the new SLBS is not rewarding for retail investors considering their low volumes and the hassles involved.

MARGINING

It was also for the first time on Monday that margining in the cash segment for the institutional investors began.

“Institutional volumes have come down a little bit,” said Mr T.S. Harihar, responding to a question on impact of introduction of margining in the cash segment for the institutional investors.

On Monday, on NSE the turnover was of Rs 14,643.24 crore as compared to Rs 15,139 crore in the cash market in the previous session.

On the BSE too, the turnover was lower at Rs 5,883.10 crore as compared to Rs 6,724 crore earlier.

Mr Bharat M. Shah, Head of Institutional Sales, Ventura Securities, observed that with introduction of margining the institutional traders may shift from low net worth brokers to high net worth brokers since the margin will have to be provided by the brokers to their clients from now onwards.

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