Under the SBLNT Model, SBL participants are given an option to agree to their own SBL terms and conditions (OTC transaction) and input the transaction into Bursa Clearing (S)'s SBLNT system through their respective Lending / Borrowing Representative. This serves 2-folds:
The key changes introduced under the SBLNT Model are as follows:
Introduction of Lending / Borrowing Representative:
Therefore, prospective SBLNT Participants must ensure that their local intermediaries are approved as Lending / Borrowing Representative before the application to become SBLNT Participants are submitted;
Foreign securities dealers or foreign fund managers are now eligible to apply to become Approved SBLNT Borrower and application can be submitted to Bursa Clearing (S) through their Borrowing Representative;
Approved SBLNT Lenders need not be a principal party to the SBLNT transaction. Therefore an Agent Lender can register as an Approved SBLNT Lender and participate in SBL NT unlike under the SBL CLA Model whereby Lender has to be a principal party;
The format of agreement between the Approved SBLNT Lenders and Approve SBLNT Borrowers will not be prescribed by Bursa Clearing (S) - both parties merely have to report the SBL transaction at the point when both parties want to move the loaned securities. However, for a SBL agreement to be considered as approved by Securities Commission (SC) under the SBL guidelines issued by SC in order to enjoy tax exemption under the Income Tax (Exemption) (No.30) Order 1995 , the said SBL agreement must include the matters set out in rules of Bursa Clearing (S);
Approved SBLNT Borrower need to inform Bursa Clearing (S) on the purpose of the Securities borrowing and the purposes of borrowing permitted are
Approved SBLNT Borrower has to open a Designated SBL CDS account to hold the loaned securities and outward transfers of the loaned securities from this account is restricted to only specific conditions;
The movement of loaned securities will be on a real-time on-line basis once the SBL transaction is initiated by Borrowing Representative and accepted by Lending Representative;
Bursa will charge an Intermediary Fee for the service provided. It will be 0.04% (4 basis point) per annum of the outstanding loan (based on the daily closing price of the securities transacted) with a minimum of RM200. This fee shall be borne entirely by the Approved Borrower or shared equally between the Approved SBLNT Borrower and Approved SBLNT Lender i.e. 2 basis point per side;
Corporate Actions adjustments are dealt outside the SBLNT system. Bursa will not perform any adjustment to the loan quantity. However, request for Loan Quantity adjustment is provided in the SBLNT system. Approved SBLNT Lender and Approved SBLNT Borrower will have to instruct their respective Representatives for Loan Quantity adjustment;
There is no collateral lodgement with Bursa and this is left entirely between the Approved SBNT Lender and Approved SBLNT Borrower and handled outside the SBLNT system.
The introduction of this new model along with the existing Bursa SBL model aims to make the Malaysian SBL market more attractive for participants.