Welcome to the exciting world of securities lending and borrowing at Jhaveri Securities! We understand that managing your investments and maximising returns is of the utmost importance, which is why we offer a powerful mechanism to help you achieve your investment goals.
Securities lending and borrowing is the process of temporarily lending or borrowing securities in exchange for cash or other securities. This powerful tool allows investors to access additional liquidity, earn additional income, and make trades that would not have been possible without the ability to borrow securities.
With SLBM, you can enjoy a range of benefits, such as:
Additional liquidity
You can access additional liquidity to make trades that would not have been possible without the ability to borrow securities.
Income generation
You can earn additional income by lending your securities to other parties if you have a good number of stocks in your portfolio.
Short selling
You can short sell securities, which can be a powerful tool for managing risk.
Hedging
You can use securities lending and borrowing as a hedging tool to manage risk in your portfolio.
Diversification
You can access additional diversification opportunities through lending and borrowing securities
Cost-effective
Securities lending and borrowing can be a cost-effective way to access securities, as they eliminate the need to buy or sell them outright.
Lets also understand how SLBM transactions takes place.
Order Placing and Matching
The order placement and matching system is similar to screen-based trading. Online matching of orders ensures price transparency and the safety of trades. You can call Jhaveri Securities customer service desk to execute transactions.
Risk
All trades on the exchange platform are automatically covered under the settlement guarantee fund, ensuring complete peace of mind to both borrowers and lenders. All transactions are covered with appropriate margins and daily mark to market under the exchange clearing and settlement processes.
Tenure of Lending
Contracts are available for a period ranging from 1 month up to 12 months.
Lenders may recall the stock at an earlier date. Also, the borrower may return or repay the stock at an earlier date. The early recall and early repayment are also handled through the exchange platform, along with the adjustment of borrowing and lending costs.
Can I Make Losses
The shares are “lent” at a particular price and “returned” at a predetermined price and date. The difference between the lending price and the return price is the income of the stock lender. The potential profit is known at the time of lending since the return price is pre-determined at the time of trade. Thus, a SLBM transaction can never result in a loss. The amount of gain may vary depending on market conditions, but the lender can never make a loss.
Corporate Actions
The lender is entitled for all corporate actions of the securities such as dividend, bonus, stock split etc.
Stocks Available
Almost all top 500 stocks defined as large cap and mid cap by SEBI are available in SLBM.
Taxation
Since the shares have not been sold but only lent, the income is not treated as capital gains, but as business income. A lender can off set routine office expenses against such business income.
The research team at Jhaveri Securities carries out a continuous research on opportunities in SLBM segment. To open an account with Jhaveri Securities Ltd please give a missed call to 9555066040