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India lowers SBL fees in bid to boost activity

15 February 2017

Securities lending fee structure changed as part of incentive scheme

India’s clearing and settlement house will lower charges levied on securities borrowing and lending (SBL) transactions.

NSCCL, part of the National Stock Exchange (NSE), published details of a new 'incentive structure’ on Wednesday.

From the start of March, the current monthly charge of 2.5% on fees earned via SBL will be replaced by a tiered pricing system.

Charges will be cut to 2% if the total monthly value of lending fees for each market participant is below 1m rupees ($15,0000).

A 1.25% charge will apply to any fees between $75,000-$150,000 earned in a month.

The most active participants, with monthly fees over the $150,000 threshold, will pay the least - 0.5%.

NSCCL’s fees apply to both lending and borrowing participants.

"The incentive will be applicable on all fresh lend and borrow transactions," said Nisha Pillai, manager at NSCLL. "The incentive shall not be applicable for rollover transactions."

The new system will be in place for an entire year from March 1.

Despite years of work, India’s securities lending has never developed like the rest of its international peers.

Offshore securities lending activity remains limited and the Securities and Exchange Board of India (SEBI) is keen for this to change.

An senior figure at a global lending agent told Global Investor/ISF that  he doubts  the new pricing structure will make a major difference. 

"It might give the current lenders an incentive to remain active," he added.

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