Though securities lending and borrowing (SLB) mechanism is yet to register meaningful volumes, almost 50 brokerages have gone ahead and registered with the stock exchanges to be a part of the new market.
Brokerages that wish to participate in SLB are required to enter into separate agreements with both the stock exchanges (BSE and NSE) and deposit a base capital. Interestingly, domestic brokerages have outnumbered their foreign counterparts in being amongst the first ones to register for SLB.
According to people familiar with the development, domestic entities like Edelweiss Securities, Geojit Financial Services, Prabhudas Lilladher, Sharekhan, BRICS Securities, Nirmal Bang Securities, Networth Stock Broking, JM Financial and Religare Securities are some of the entities that have registered for SLB.
Among the foreign brokerages, DSP Merrill Lynch, HSBC Securities, Deutsche Equities and ABN AMRO Asia Equities have taken the lead. The list also includes many niche brokerages like Marwadi Shares and Finance, BLB and MF Global which are well-known in the arbitrage arena.
It is also believed that on an average around four to five brokerages apply for registration every week with the stock exchanges to participate in SLB. However, if the volumes are an indication, it would be some time before SLB starts generating income for these entities.
As per NSE data, since April 21 (when SLB was introduced) only six trades have been reported in the SLB window. On April 21, there were four trades, while Tuesday and Wednesday witnessed one trade each. There were no trades on Thursday in the SLB window. The volume has also been quite low with no more than hundred odd shares being traded every day.
Read more in The Economic Times article.
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