SLB, the lending and borrowing mechanism
Shares you are holding anyway can be lent for a fee
Explore the Securities Lending and Borrowing Mechanism (SLBM), which enables eligible market participants to lend or borrow securities through an exchange-regulated framework.
- What it is
- A loan of sharesNot a sale, not a pledge, not margin funding.
- Who runs it
- The clearing corporationAs the approved intermediary, under the SEBI scheme.
- Your counterparty
- The clearing corporationIt stands between both sides. You never face the other investor.
- Maximum tenure
- Twelve monthsTraded in monthly series, with dates the exchange publishes.
- Eligible stocks
- A specified listBroadly those in the derivatives segment. Check it before you plan.
- The lending fee
- Quoted per shareDiscovered in an order book, not negotiated or guaranteed.
- Votes during the loan
- Not yoursThe shares are elsewhere. Dividends are compensated; votes are not.
The list of eligible securities, the market lot for each, the series calendar, the margin the borrower must fund, the windows for early recall and early repayment, and the treatment of each type of corporate action are set by SEBI and by the clearing corporation, and are amended by circular. This page describes how the mechanism is structured rather than the parameters in force on any given day. The scheme document and the current circulars are the authoritative sources. Nothing here is advice to lend, to borrow or to short any security.
Four things to be clear about before using this market.First, a lender cannot sell what has been lent: the shares are gone until the reverse leg settles, an early recall only works if somebody takes the other side of it, and a price you would have liked to sell at can pass you by while you wait. Second, the fee is not a yield you can rely on: it is discovered in an order book that is thin or empty for most stocks on most days, and a stock that paid well last month may attract no bid at all this month. Third, borrowing shares to sell them short exposes you to a loss that is not limited to the amount you committed, because there is no ceiling on how far a price can rise. Fourth, the settlement guarantee covers settlement and nothing else: it does not protect either side from the price moving against them. Take advice from a qualified professional on anything specific to your own position.
Four ideas that explain the whole mechanism
None of these change when a circular is amended, and all four are more useful than knowing today's fee on any particular stock.
It is a loan of shares, not a sale of them
The lender delivers shares and gets the same number back at the end of the agreed period. In between, the lender has no shares and the borrower does. The economic exposure never leaves the lender: if the price doubles or halves while the shares are on loan, that gain or loss is still the lender's, because the same quantity comes back whatever the price has done.
Consequence: lending does not reduce your market risk by a rupee. It adds a fee on top of a position you were keeping anyway.
The clearing corporation sits between the two sides
The scheme runs through an approved intermediary, which is the clearing corporation, and it becomes the counterparty to the lender and to the borrower separately. Neither side knows or depends on the other. If a borrower fails to return the shares, the obligation to the lender is the clearing corporation's, and it has the borrower's margin to work with.
Consequence: you are not assessing a borrower's creditworthiness. That is the point of routing it through an exchange rather than arranging it privately.
The fee is discovered on screen, like a price
Lenders enter the fee they want, borrowers enter the fee they will pay, and the orders match in a book of their own. The fee is quoted in rupees per share for the period of the contract, which is why two stocks with the same price can cost completely different amounts to borrow, and why the same stock can be expensive one month and unborrowable the next.
Consequence: there is no standard rate to look up. What a stock earns or costs is whatever the book says at the moment you look.
The borrower funds margin; the lender funds shares
Once the first leg settles, the lender has delivered and has nothing further to fund. The borrower holds the shares and must keep margin with the clearing corporation covering their full value, marked to market as the price moves, until they are returned. That asymmetry is what makes the guarantee work, and it is also what makes borrowing expensive to carry.
Consequence: a borrower who cannot meet a mark-to-market call can be closed out. Budget for the margin, not just for the fee.
Six people in this market, and what each of them wants
Every fee you see quoted is somebody's answer to a problem. Knowing which problem explains why a stock is expensive to borrow this month, why the book is empty on most names, and whether the fee on offer is worth the shares you would have to give up.
The long-term holder
Lends shares that were being kept anywaySomebody with a position they intend to hold for years, who notices that the shares do nothing at all while they sit in the account. Lending adds a fee to a holding that was not going to be sold, in exchange for not being able to sell it until the contract ends.
- The economic exposure never moves: the same number of shares comes back whatever the price has done in between.
- The holding period is not interrupted, because neither leg is treated as a transfer.
- The cost is optionality. For the length of the contract, selling is simply not available.
What decides whether it works
- Whether the stock is on the eligible list, and in what market lot
- Whether anybody is quoting a borrowing fee for it at all
- Any record date falling inside the period, especially a meeting
- How certain you are that you would not sell during the contract
Lending a position you might actually want to exit. The fee looks like free money until the stock runs up to a level you would have sold at, the early recall finds no counterparty, and you watch the price come back down with the shares still out.
These are descriptions of why participants use the mechanism, not recommendations to adopt any of these approaches. Short selling, arbitrage and leveraged positions carry risks that are not described in full here, including losses that can exceed the amount committed. Who may lend or borrow, in what quantities and subject to what conditions is governed by the SEBI scheme and by the clearing corporation's circulars.
Every contract has two legs, and both go through the middle
One order creates two obligations: shares out now, the same number of shares back on a date fixed at the outset. Everything else, the fee, the margin, the dividend compensation, hangs off that one idea.
Scroll the diagram sideways to follow the flow across to the borrower.
First legReverse legThe lender and the borrower never face each other. Both face the clearing corporation.
What happens between the two legs
Lending and borrowing orders meet in a separate segment with its own session, in market lots fixed per stock. What is quoted is the fee per share for the whole period, not a price. Until an order matches there is no contract, and on a thinly traded name an order can sit unmatched all day.
The lender's shares are debited and delivered through the clearing corporation to the borrower. The borrower pays the fee, which reaches the lender, and funds margin covering the full value of what has been borrowed. From here the lender has no shares and no further obligation.
The margin is adjusted as the price moves, so a borrower who is short and watching the stock rise is funding an increasing amount as well as sitting on a loss. Failing to meet a call can have the position closed out by the clearing corporation at whatever the market offers.
The shares are in somebody else's account on the record date, so the dividend is paid to them and an equivalent amount is passed back to the lender through the mechanism. Bonus issues and splits adjust the quantity owed. Some actions cause the contract to be closed out early instead.
A lender can ask for an early recall and a borrower can offer an early repayment, each through its own window. Both are requests, not rights: they work only when the clearing corporation can find a counterparty. If nothing matches, the contract simply runs to its original date.
On the date fixed at the outset the borrower delivers the same number of shares, they reach the lender, and the margin is released. If the borrower cannot deliver, the clearing corporation handles the shortfall under its own procedure and the lender is made whole on the basis the scheme prescribes.
The date is fixed when you trade, not when you want out
A contract is entered for a defined period in a monthly series, up to a maximum tenure, with the reverse leg date known from the start. That date is the commitment. The early recall and early repayment windows exist, and they are genuinely useful, but neither one is something you can count on in advance.
Consequence: lend for a period you are comfortable being without the shares for, and assume the recall will not work.
Only certain stocks, and only in lots
The mechanism works on a specified list of securities rather than on anything that trades, and each one has a market lot, so quantities are not arbitrary. A holding of a few hundred shares in a name that is not on the list, or that trades in large lots, simply cannot be lent however much you would like to.
Consequence: check the eligible list and the lot size before building a plan around the fee you hope to earn.
The guarantee covers settlement, not the price
If a borrower disappears, the clearing corporation ensures the lender gets shares or their value on the basis the scheme prescribes. What no guarantee does is protect the lender from the stock falling while it is on loan, or the borrower from it rising. Those remain entirely with whoever has the exposure.
Consequence: the counterparty risk is handled. The market risk is exactly where it always was.
What happens when the company does something
Your shares are registered in somebody else's name on the record date, so you are not the one the company pays or writes to. The mechanism puts you back where you would have been, but it does so by rule rather than automatically, and the rule is different for each type of action.
A dividend is compensated, not received
The company pays whoever holds the shares on the record date, which is the borrower. The mechanism then collects an equivalent amount from the borrower and passes it to the lender, so the lender is not out of pocket. It arrives as compensation through the clearing corporation rather than as a dividend from the company.
Consequence: the amount reaches you, but it is not a dividend in your hands. That matters for how it is treated, so ask a professional.
A bonus or a split adjusts what is owed
When the share count changes mechanically, the contract changes with it: the borrower owes the adjusted number of shares rather than the original one, and the fee is adjusted on the same basis. Nobody gains or loses from the action itself, which is the whole intent of the adjustment.
Consequence: expect the quantity in your contract to change. That is the adjustment working, not an error.
The vote goes with the shares, and does not come back
Voting is a right attached to holding the security on the record date, and there is no mechanism to compensate for it. If a resolution matters to you, or you are the kind of holder who votes at every meeting, lending across the record date means giving that up for the fee.
Consequence: this is the one thing the mechanism does not restore. Check the meeting calendar before lending.
Some actions close the contract early
Where an adjustment cannot sensibly be made, a merger, a demerger, a scheme of arrangement or certain rights issues, the usual answer is to foreclose the contract before the action takes effect rather than to carry it through. Positions are closed on the basis the clearing corporation specifies and the shares come back early.
Consequence: a borrower relying on the full tenure can find the position closed at a time not of their choosing.
The calendar is the thing to check, not the stock
Nearly every complication in this market is timing. A record date falling inside the contract period is what turns a simple fee into dividend compensation, a quantity adjustment or an early foreclosure. The action is usually announced well before the contract would be affected by it.
Consequence: look at what the company has announced for the period you are lending into before you place the order.
The rule is in the circular, not in a general principle
How each category of action is handled, on which date, and at what value, is set out by the clearing corporation and amended from time to time. The principle is always the same, that neither side should gain or lose from the action, but the mechanics differ enough between action types to be worth reading rather than assumed.
Check first: the current corporate action circular for the segment, before lending into anything unusual.
This describes how corporate actions are structured in the scheme and is not a complete statement of the rules. The categories of action, the dates on which each is applied, the basis of compensation and the circumstances in which a contract is foreclosed are set by the clearing corporation and amended by circular. Confirm the position for the specific action and the specific contract before acting on it.
Borrowing shares, selling a future, or shorting intraday
Most people arrive at SLB because they want to be short a stock and cannot hold the position overnight any other way. These are the three routes, and they differ in tenure, in quantity, in what they cost to carry and in what can go wrong.
Which route fits the position you have in mind
Two questions about this particular trade. The matching column below is highlighted. This describes how the three routes work; it is not advice to take a short position, which carries losses that are not limited to the amount you commit.
You want the position overnight or for longer, and the quantity matters to you, which rules out the futures route where you can only deal in the lot size. Borrowing gets you the shares themselves, sold at the cash price exactly, for a fee fixed when you trade rather than a roll cost you cannot know in advance. The two things to settle before anything else are whether the stock can be borrowed at all, which on most names it cannot, and whether you can fund margin covering the full value of what you borrow for the whole period while the price does whatever it does.
This matches a stated requirement to the characteristics of three mechanisms. It is not investment advice and takes no view on any security. Short positions carry a loss that is not limited to the amount committed, because there is no ceiling on how far a price can rise. Availability, eligibility, lot sizes and margins are set by the exchange and the clearing corporation.
Attribute Borrow through SLB Sell a stock future Short intraday in cash
| What you are actually short | The shares themselves, borrowed and sold | A contract on the stock, not the stock | The shares themselves, for a few hours |
| How long you can hold it | The tenure agreed, up to the maximum | Until expiry, then you must roll | Until the session closes |
| Carried overnight | Yes, for the whole contract period | Yes, until the contract expires | No. It must be squared off the same day |
| Quantity you can take | In the market lots set for the segment | In the derivatives lot size, nothing smaller | Any number of shares you like |
| Which stocks | The eligible list, and only when lenders appear | Those with listed derivatives | Broadly anything you can trade intraday |
| The price you are short at | The cash price, exactly | The futures price, which is not the cash price | The cash price, exactly |
| What the carry costs | A fee fixed when you trade, known in advance | Whatever the roll costs at expiry, unknown now | Nothing. There is nothing to carry |
| What you must fund | The fee, plus margin on the short sale | Futures margin, marked to market | Margin for the session only |
| Dividends in the period | You compensate the lender for them | Already reflected in the futures price | Does not arise within a day |
| If you cannot close out | The shortfall procedure, with your margin at stake | Settlement at expiry on the prescribed basis | Squared off automatically at whatever is bid |
| The honest drawback | Availability. The book is empty on most names | Lot sizes, listed names only, and a moving basis | You cannot be wrong for more than a few hours |
What lending earns, and what borrowing costs
Both calculators work entirely on figures you type in. Neither knows today's fee on any stock, because there is no such thing as a standard fee: it is discovered in an order book and changes by the day and by the name.
An annualised fee is a comparison, not an income.A contract that earns a respectable annualised figure over one month earns it over one month and then stops, because the stock has to be borrowable again, at a similar fee, eleven more times for the annual figure to mean anything. On most names it will not be. Treat what the lending book offers as an occasional addition to a holding you were keeping anyway, and never as a yield you can plan around or quote to somebody as a return on your portfolio.
Six steps, whichever side you are on
The order itself takes a minute. Everything that makes it go well or badly happens before you place it and on the dates you agreed to.
The mechanism works on a specified list of securities, each with a market lot. If the name is not on the list, or your holding is smaller than one lot, there is no order to place however attractive the idea looks. Confirm both before planning anything around the fee.
The lending and borrowing book for most names is thin and for many it is empty. Check whether anybody is quoting in the series you want, and at what fee, rather than deciding to lend and then discovering there is no demand. This is the step most people skip.
Look for a record date falling inside the period you are committing to: a dividend, a bonus, a split, a meeting with a resolution you care about, or anything that would cause the contract to be foreclosed. Each of those changes what the contract does, and the announcement nearly always comes first.
Lend for a period you are content to be without the shares for, and borrow for a period you are content to fund the margin on. Assume no early exit: the recall and repayment windows work only when a counterparty appears, and on an illiquid name none may.
It is an order book, so you set your own fee and wait, exactly as you would with a limit order on a share price. Taking whatever is quoted is quick and frequently expensive. A lender in no hurry is in a considerably better position than a borrower who needs shares by a particular date.
Put the date in your calendar the day the contract is struck. A lender needs to know when the shares are coming back before planning anything that depends on selling them. A borrower needs to have the shares, or the funds to buy them, well before the obligation falls due.
Six ways this market disappoints people
The stock moving against you is not on this list; that is the ordinary risk of holding or shorting it. These are the ones the mechanism itself creates.
You cannot sell what you have lent
The shares are out of your account until the reverse leg settles. If the stock runs up to a level you would have taken, or news arrives that changes your view, you watch it. An early recall is a request that needs somebody on the other side, and on the names where you would most want it, nobody is there.
Guard: only lend a holding you are certain you would not sell during the period, and treat the recall as a bonus rather than an exit.
Treating the fee as a yield
A good fee this month is not an annual income. It exists because somebody had a specific reason to borrow that stock for that period, and when the reason passes the demand does with it. Annualising a one-month contract produces an impressive number that describes a month, not a year.
Guard: plan on earning nothing. Anything the book offers is an addition to a holding you were keeping regardless.
Building a trade around shares you cannot get
Borrowers find out the hard way that the book is empty on the name they need, or that the only quote is at a fee which destroys the trade. A strategy that depends on borrowing a particular stock at a particular time is a strategy with a single point of failure outside your control.
Guard: confirm the borrow is available, and at what fee, before committing to anything that depends on it.
Underestimating what a short position can cost
A borrowed-and-sold position loses when the price rises, and a price has no ceiling. The margin is marked to market, so a rising stock demands more funding from you at exactly the moment the position is going against you, and failing to meet the call has you closed out at whatever the market offers.
Guard: size the position against the margin you can fund through a bad run, not against the fee you are paying.
Lending straight into a corporate action
A record date inside the contract period turns a simple fee into dividend compensation, a quantity adjustment, a lost vote or an early foreclosure, depending on what the company has done. None of it is unfair, and all of it is avoidable by looking at the announcements before placing the order.
Guard: check the company's calendar for the period you are lending into. The vote in particular does not come back.
Confusing it with a pledge or with margin funding
Pledging keeps the shares yours and raises collateral against them. Margin funding borrows money. Lending gives the shares away for a period in exchange for a fee, with no money raised and no collateral created. Three different arrangements that get discussed as though they were one.
Guard: be clear which one you actually want. If the answer is cash against your holding, this is not the mechanism.
Every line, what it is charged on, and who charges it
Rates move with circulars and with the Finance Act, so the table gives you the structure and tells you where the current figure is published. The thing to notice is that a lending leg is not a sale, which is why several of the usual lines are absent from it.
| Line item | Calculated on | Levied by | Where the current rate is published |
|---|---|---|---|
| The lending fee | Each share, for the period of the contract. Income to the lender, cost to the borrower. The largest number in this table by a distance. | The other side | The order book, at the moment you trade |
| Brokerage | Each executed order in the segment, at our flat rate. | Yukti | Flat ₹20 per executed order |
| Securities transaction tax | Nothing on the lending or borrowing legs, because neither is a sale of securities. It applies in the ordinary way to a sale in the cash market, including a short sale of borrowed shares. | Government | Notified rate, in the Finance Act |
| Stamp duty | Generally nothing on the two legs, for the same reason: no beneficial ownership is transferred. It applies to an actual purchase in the cash market. | Government | Notified rate, under the Stamp Act |
| Exchange and clearing charges | The value of the lending transaction, on the basis the exchange and the clearing corporation prescribe for this segment. | Exchange | The current circular for the segment |
| SEBI turnover fee | Turnover in the segment, at the notified rate. | Regulator | The SEBI notification in force |
| Goods and services tax | Brokerage and the exchange and clearing charges, not on the value of the securities. | Government | Notified rate |
| Depository charges | The debit of shares from your demat account when you deliver them on a leg. | Depository | The published tariff sheet |
| Funding the margin | Not a charge anybody bills you. It is the cost of having capital locked with the clearing corporation for the whole contract, which falls on the borrower alone. | Nobody | Your own cost of capital |
For a lender the arithmetic is simple, because there is a fee coming in and a short list of charges going out. For a borrower it is not: the fee is only the visible part, and the margin funded for the full value of the borrowed securities, for the whole period, is usually the larger cost. Whether a particular levy applies to a particular leg is determined by the statute and the circulars in force, which are amended from time to time.
Work out what a contract is worth before you place it
Put the fee from the order book into the calculators with the price, the quantity and the days, and you get the figure that actually matters: what it is as a percentage of the value you are committing, and what that looks like annualised against anything else you could do with the position.
How the two legs are treated for tax
The whole treatment rests on one point: a transaction under an approved lending scheme is not regarded as a transfer. Everything else follows from that, and the rates and conditions are set in the Income-tax Act and amended by each Finance Act, so they are not quoted here.
Lending is not a transfer, so there is no capital gain on it
The Act excludes transactions in securities under a lending scheme framed by the regulator from the definition of transfer. Delivering shares on the first leg therefore does not trigger a capital gain, and getting them back on the reverse leg does not trigger an acquisition. This is the provision the entire mechanism depends on.
Condition: it applies to a scheme framed by the regulator. A private arrangement outside it is a different question entirely.
The fee is income, not a capital gain
What the lender receives is a fee for lending, which is not the proceeds of selling anything. It is taxed as income, under the head appropriate to how you hold the securities and how you are assessed, which differs between somebody holding investments and somebody trading as a business.
Consequence: it is taxed differently from a gain on the same shares, and usually less favourably. Ask which head applies to you.
Your holding period is not interrupted
Because neither leg is a transfer, the shares that come back are the same holding for the purpose of counting how long you have held them. A long-term position does not become short-term because it spent a month on loan, which is what would otherwise make the whole exercise pointless for a long-term holder.
Practical effect: this is the reason lending is workable for exactly the holders most likely to be asked for shares.
Dividend compensation is not a dividend
The amount that reaches the lender across a record date comes from the borrower through the clearing corporation, not from the company. It is compensation for a dividend rather than the dividend itself, and it is not obvious that it carries the same treatment, which is precisely why it is worth asking about rather than assuming.
Ask a professional: how the compensation is to be shown, before it appears in a statement and surprises you.
The borrower's sale and buy-back are ordinary transactions
Borrowing itself is not a transfer, but selling the borrowed shares in the market is a sale and buying them back is a purchase, both taxed in the ordinary way for whoever did them. The fee paid to borrow is a cost of that activity. How the whole is characterised depends on whether you are assessed as an investor or as a trader.
Consequence: the legs are outside the capital gains net. What you do with the shares in between is not.
What we give you, and what we do not
You will get contract notes, a ledger showing the fee and the charges, and statements for the year showing the movements on both legs. The depository shows the shares leaving and returning. None of that is a tax opinion, and the characterisation of lending income in particular turns on facts about you rather than about the trade.
We are not tax advisers.: For anything beyond the structure described here, ask a chartered accountant.
This is a description of how the tax treatment is structured and is not tax advice. Which provision applies, under which head the fee is assessed, how dividend compensation is characterised, and the position of a person assessed as a trader rather than as an investor all depend on the law in force for the relevant year and on your own circumstances. Please consult a qualified tax professional.
The lending and borrowing glossary
Every term you will meet in a contract note, an order book or a circular on this segment, defined in one or two sentences. Type to search, or jump by letter.
All 37 terms.
The lending fee restated as a yearly rate, so that contracts of different lengths and stocks of different prices can be compared. It describes the contract you have, not an income you can expect to repeat.
The entity permitted to run the lending scheme, which in practice is the clearing corporation. It is the party both the lender and the borrower actually contract with.
The exchange process for sourcing shares when somebody fails to deliver on a sale. Avoiding it is one of the common reasons to borrow for a very short period.
The side that receives shares, pays the fee and funds margin covering their full value until the same number is returned on the reverse leg.
The institution that clears and settles exchange trades and, in this segment, becomes the counterparty to both the lender and the borrower separately.
Anything the company does that affects the shares: a dividend, a bonus, a split, a rights issue, a merger. Each is handled by its own rule in the contract.
The account at the depository where shares are held. Lending debits yours on the first leg and credits it again on the reverse leg.
An amount equal to a dividend, collected from the borrower and passed to the lender through the mechanism because the company paid whoever held the shares on the record date.
A lender's request to have the shares back before the agreed date. It is a request rather than a right, and it succeeds only if a counterparty can be found.
A borrower's offer to return the shares before the agreed date, through its own window, and subject to the same requirement that somebody takes the other side.
The list of stocks on which lending and borrowing is permitted, broadly those with listed derivatives. A stock not on the list cannot be lent at any price.
The opening settlement, on which the lender delivers the shares and the borrower pays the fee and funds margin.
Closing a contract before its agreed date, used where a corporate action cannot sensibly be adjusted for, such as a merger or a demerger.
The discount applied to the value of collateral when working out how much it covers, so that a fall in its price does not leave the position under-covered.
The amount a borrower must place with the clearing corporation when the position is taken, before any mark to market adjustment.
The side that delivers shares, receives the fee, keeps the economic exposure and gets the same number of shares back at the end.
The amount the borrower pays the lender for the period of the contract, quoted in rupees per share and discovered in an order book rather than fixed anywhere.
The quantity in which a stock trades in this segment. Orders are in whole lots, so a holding smaller than one lot cannot be lent.
Adjusting the margin as the price moves, so that a borrower whose stock is rising must fund more while the position goes against them.
Selling shares that have been neither bought nor borrowed. It is not permitted, and arranging the borrow first is precisely what this mechanism is for.
The step by which the clearing corporation becomes counterparty to each side, replacing the original contract between them. It is what makes the guarantee work.
The screen where lending and borrowing orders meet. On most stocks on most days there is nothing in it, which is the single biggest practical limitation.
A different arrangement entirely: shares stay yours and are offered as collateral. Lending hands them over for a period and raises no money at all.
The change in the number of shares owed when a bonus or a split alters the share count, so that neither side gains or loses from the action.
The date on which the company decides who is entitled to a dividend, a bonus or a vote. One falling inside the contract is what creates every complication here.
Selling the shares and buying the future when the future is cheaper than the cash by more than the carry. Borrowing the shares is how somebody without them does it.
The closing settlement, on which the borrower returns the same number of shares, they reach the lender, and the margin is released.
A levy on sales of securities. It does not apply to the lending and borrowing legs, which are not sales, but it does apply to a sale of borrowed shares in the cash market.
The monthly cycle a contract belongs to, which fixes the reverse leg date. Tenure is chosen by picking a series rather than by naming a date.
The clearing corporation's undertaking that each leg will settle. It covers the counterparty failing. It does not cover the price moving against you.
Selling shares you do not own, having borrowed them, in the expectation of buying them back lower. The loss is not limited, because a price has no ceiling.
A rising price forcing short sellers to buy back, which pushes the price higher still. Borrowing costs and margin calls both climb at the same time.
A failure to deliver on a leg. The clearing corporation has a defined procedure for it, under which the other side is made whole on the prescribed basis.
The separate market in which lending and borrowing orders are entered and matched, with its own session, its own book and its own settlement calendar.
How long the shares are lent for, fixed when the contract is struck and running up to the maximum the scheme permits.
The concept the whole treatment turns on. A transaction under an approved lending scheme is not regarded as a transfer, so no capital gain arises on either leg.
The right to vote the shares, which belongs to whoever holds them on the record date. It is the one thing the mechanism does not compensate a lender for.
Commonly asked about lending and borrowing
If I lend my shares, do I still own them?
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What happens if the borrower simply does not return them?
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Can I get my shares back before the agreed date?
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Why is this stock so expensive to borrow when that one is free?
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Is lending my shares a safe way to earn extra return?
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Can I short a stock for a month using this?
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What is the difference between this and pledging my shares?
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Do I lose my dividend if the record date falls in the contract?
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Can I lend any share I hold?
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Does lending break my long-term holding period?
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