Bursa Malaysia

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Securities Borrowing & Lending (SBL)

Securities Borrowing and Lending (SBL) is a facility offered by Bursa Malaysia to enable the borrowing and lending of securities. The two models of SBL currently offered are Central Lending Agency and Negotiated Transaction.

Overview

Negotiated Transaction

Overview

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:

  • A means of effecting finality to the SBLNT transaction whereby the movement of the loaned securities between the Approved SBLNT Lender's CDS(i.e. depository) account to the Approved SBLNT Borrowers Designed SBL CDS account; and
  • Monitoring and statistical purposes.

The key changes introduced under the SBLNT Model are as follows:

  1. Introduction of Lending / Borrowing Representative:

    1. The Lending / Borrowing Representative will be the local intermediaries for both Approved SBLNT Lender / Approved SBLNT Borrower to put in SBLNT transactions;
    2. Lending Representative can either be local brokers or local custodian banks whereas Borrowing Representative will only be limited to local brokers;
    3. Both representatives must be approved by Bursa Clearing (S).

    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;

  2. 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;

  3. 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;

  4. 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);

  5. Approved SBLNT Borrower need to inform Bursa Clearing (S) on the purpose of the Securities borrowing and the purposes of borrowing permitted are

    1. settlement of a regulated short sale,
    2. settlement of a sale of ETF Related securities by a Market Maker or Permitted Short Selling activities and
    3. to onward lend the loaned securities;
  6. 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;

  7. 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;

  8. 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 Borrowing Representative or shared equally between the Borrowing Representative and Lending Representative i.e. *2 basis point per side;

  9. 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;

  10. 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.

* Bursa has obtained an approval to display prices exclusive of the Goods and Services Tax (“GST”) under subsection 9(7) of the Goods and Services Tax Act 2014. Accordingly, each fee, charge or amount payable to Bursa Clearing (S) set out above does not include GST i.e. price payable is exclusive of GST.

* 6% GST is payable on all fees, charges or amounts payable (unless otherwise specified by Bursa in accordance with the Goods and Services Tax Act 2014), and will be billed in the tax invoices issued in relation to such fees, charges or amounts payable.