Products & Services
Stock Borrowing and Lending (SBL)
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:
- 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.
- 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.
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.