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What is SBL (Stock Borrowing and Lending)?

Stock borrowing and lending is a system in which traders borrow shares that they do not already own, or lend the stocks that they own but do not intend to sell immediately. Just like in a loan, SBL transaction happens at a rate of interest and tenure that is fixed by the two parties entering the transaction.

There are two categories of SBL:

SBL Term

Stock lenders and borrowers set a clear date for returning the borrowed stocks. Lenders may not recall and borrowers may not return prior to the set date, unless both parties mutually agree to do so.

SBL Call

lenders may recall and borrowers may return on call at any time.

Benefits of SBL

  • Lenders will receive fees for lending stocks without losing the benefits of ownership such as receiving dividends.
  • Borrowers can sell the borrowed stocks and buy them back later at lower prices with a competitive borrowing cost.

Is it safe to do SBL transactions?

  • For each stock borrowing, a borrower must pledge cash or securities as collateral before the borrowing. At present, an initial margin of up to 50% of the borrowing value must be placed. When a borrower sells the borrowed stocks, the proceeds will be held with DBS Vickers; therefore, making the total value of his margin placement and proceeds from the sales up to 150% of the borrowed stocks’ value.
  • To provide more confidence, DBS Vickers serves as the counter party to borrowers and lenders.
 

What stocks can you borrow in SBL?

    The securities available for borrowing and lending are usually stocks in the SET 50 or ETFs with ample trading liquidity. DBS Vickers will publish and update the list of available stocks for SBL.

The List of Securities Borrowing and Lending

Commission & Fee

For retail investors and non-institutional investors


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