- The Securities and Exchange Board of India (Sebi) will soon come up with a consultation paper on securities lending and borrowing mechanism (SLBM), as stated by Sebi chairman Tuhin Kanta Pandey.
- Sebi is discussing a set of changes to the SLBM, including expanding the universe of eligible stocks, allowing net settlement within the SLB segment and with the cash market, and enabling interoperability between stock exchanges.
- One of the measures that may be implemented is net settlement within the SLBM.
- For net settlements, it is better to have interoperability, allowing trading at one exchange and settling at another.
- According to data from the exchanges, the lending fee on the exchange in the SLB segment surged to ₹697 crore in 2025-26, compared to ₹425 crore in the previous year.
Sebi chairman Tuhin Kanta Pandey announced plans for reforms to the securities lending and borrowing mechanism (SLBM) during a symposium on cyber security. The regulator aims to enhance market liquidity through a consultation paper that will address key changes.
Proposed reforms include expanding the universe of eligible stocks, allowing net settlement within the SLB segment and with the cash market, and enabling interoperability between stock exchanges. These measures are designed to improve the connections between cash and derivatives markets, according to sources familiar with the developments.
The introduction of net settlement is particularly significant, as it would allow traders to execute transactions at one exchange and settle at another, enhancing flexibility and efficiency in trading.
The urgency for these reforms is underscored by the substantial increase in lending fees within the SLB segment, which surged to ₹697 crore in 2025-26, compared to ₹425 crore the previous year. This dramatic rise indicates a growing demand for securities lending, highlighting the need for a more robust framework to support market activities.
As Sebi prepares to release its consultation paper, stakeholders in the financial markets are keenly awaiting the proposed changes, which could significantly impact trading dynamics and liquidity in the Indian stock market.
“Sebi chairman Tuhin Kanta Pandey announced that a consultation paper on SLBM will be released soon, aiming to stabilize the capital market. The lending fee in the SLB segment increased significantly, reaching ₹697 crore in 2025-26, up from ₹425 crore the previous year.”
