To facilitate physical settlement in equity derivatives, the Securities and Exchange Board of India (SEBI) has allowed stock exchanges to extend the timing of the stock lending and borrowing (SLB) segment.
Stock exchanges can set the trading hours in the SLB segment between 9am and 5pm, stated a circular issued by SEBI on Friday.
SLB segment is typically used by institutional investors to lend or borrow the shares depending on the positions taken in the derivatives segment. Globally, insurance companies and mutual funds that are typically long-term investors use the SLB segment to earn interest on their idle holding.
While the exchanges currently offer SLB segment, there is hardly any traction as the equity derivatives contracts were settled in cash.
Early this year in March, SEBI announced the introduction of physical settlement in the derivatives segment. Physical settlement refers to a mechanism wherein contracts are settled by giving or taking shares instead of cash.
Early this year in March, SEBI announced the introduction of physical settlement in the derivatives segment. Physical settlement refers to a mechanism wherein contracts are settled by giving or taking shares instead of cash.
