Securities Borrowing And Lending

Securities Borrowing and Lending (SBL) is a service enabled through Edaa's systems to allow temporary transfer of securities between a lender and a borrower. SBL is an essential tool to allow market participants to manage their market activities and mitigate settlement risk.


SBL Framework

The ownership of listed securities will be transferred temporarily from the lender to the borrower. Accordingly, ownership rights such as attending general assemblies, voting rights and economic benefits are transferred to the borrower. However, lenders can determine their rights in respect to the above through a tailored SBL agreement. 


Who can participate 

  • Local custodians and brokers can act as lending agents for an SBL transaction. 
  • Non-qualified Investors can borrow and lend securities by approaching their local custodians or brokers.  
  • Qualified investors can borrow and lend directly to other qualified investors. 
  • Brokers, custodians and qualified foreign investors (QFIs) can borrow securities and re-lend to their clients. 

All listed securities are eligible for SBL activities except for tradable rights. 


Benefits Of SBL

SBL offers lenders an additional investment channel in which they can lend long-term positions to maximize potential return. In addition, it allows borrowers to short securities and hedge their positions.


SBL Forms

SBL Regulations and Related Procedures

Last Updated: May 23, 2022



Services Fees (SAR) Frequency
SBL Initiation 500 Per Transaction
SBL Termination 250 Per Transaction

Frequently Asked Questions

Borrowing securities is the temporary transfer of securities from its owner (lender) to an investor (borrower) with an obligation to return them back to their owner at a future agreed upon date. A borrower shall provide and maintain financial collateral as agreed with the lender that shall always be not less than 100% of the current market value of the borrowed securities. The value of the collateral provided may be amended at the discretion of the Capital Market Authority.

All listed securities are eligible for SBL except for tradeable rights.

The tasks that can be assigned to a third party include, but are not limited to, providing indemnity to lenders against borrower default, facilitating lending transactions with borrowers, collateral management, transaction management, and reporting.

After launching the Post Trade Technology Program, The Depository and Settlement system generates required reports for SBL transactions. Members must input all relevant details into the system, ensuring compliance with reporting obligations as per Article 12 of the Securities Borrowing and Lending Regulations. This automated process provides a real-time visibility of SBL transactions, and eliminates the need for separate reporting to Edaa.

After launching the Post Trade Technology Program, members can independently terminate the SBL transactions in case of events mentioned in paragraph (b) of Article (8) of Securities Borrowing and Lending Regulations through the Depository and Settlement system. However, members must notify Edaa in such events of the abovementioned article, noting that Edaa still has the authority to terminate the transaction.

The Securities Depository Center (Edaa) does not review the bilateral agreement between the lender and the borrower and their agents. It will be the responsibility of the Lenders & Borrowers and their agents to ensure their adherence with the Center's rules, procedures and market regulations.

The collateral agreed upon between the two parties to the process are acceptable, provided:
•    It must be evaluable and enforceable
•    Domiciled in a country that applies regulatory and supervisory standards similar to those applied by the Capital Market Authority or acceptable to it.
•    That the collateral covers at least 100% of the transaction value during the borrowing period.

There is no duration limit for a lending deal, but the period of validity of the agreement must be determined.

It is not mandatory to safekeep the collateral in Edaa, and the parties to the process can determine these details through the securities lending agreement.

Yes, an initiation and a termination fee will be levied on the custodian member executing the deal, as according to Edaa’s published fee schedule ( here ).

There is no additional requirement for executing a securities lending & borrowing transaction through Edaa.

An agent who has been authorized by their clients can enter into securities lending agreement in their behalf of them.

Yes, one of the purposes determined by Edaa is enabling Market Makers to enter into SBL transactions as borrowers to facilitate market making activities in accordance with the relevant exchange rules and procedures.

Yes, the ownership of the borrowed securities is transferred temporarily to the borrower, and all corporate action proceeds such as voting rights and dividends distributions will be with the borrower.

It is required that the lending agent must be a Center Member of Edaa or an Exchange Member of Saudi Exchange.

Unqualified investors can lend and borrow securities through a local broker or custodian.

• Unqualified investors can borrow through a local broker or custodian. 
• Foreign qualified investors can borrow from their foreign brokers provided said brokers are qualified foreign investors.

Yes, provided that the securities lending agreement contains the lender's right to terminate or recall securities during the lending period.

To give the flexibility to the lending agents to change the names of the parties as needed without changing the entire agreement.

A process through which the transfer of securities borrowed or owned by the broker or custodian member is made available to their clients, and the transfer process takes place in order to fulfill a lending or re-lending transaction between the broker and the custodian as a "lender" and his client as a "borrower", and the following transfer process is required:
• That it takes place between the broker or the custodian and their client (whether they are qualified or unqualified investors).
• There are no requirement for the type of agreement to be the used, provided the agreement meets the minimum requirements mentioned in the Securities Borrowing & Lending Regulations.
• That the purpose of the transfer is for one of the permitted purposes for securities borrowing & lending deals.

Since re-lending of securities is no longer one of the permitted purposes for securities lending transactions due to the risks that may accompany it. Also, there may be a need for some borrowers who borrowed to meet the needs of their clients to conclude a re-lending deal, this will be permitted in a standardized manner through the “re-lending process”.




If “A” is an unqualified investor and wants to borrow 100 shares of “C” to fulfill an obligation, make a short sale, or for any other permitted purposes. Then Investor A must deal with a local Exchange or Custody member.


If the local Exchange or custody members agrees to lend 100 shares of Company C either from their own shares or by entering into a securities lending deal, then a brokerage agreement or any other type of agreement will be signed with Investor A.


In the event that 100 shares of Company "C" are available, a transfer of borrowed securities will be executed, and the shares will be transferred from the local Exchange or Custody member to Investor A's account.*


In the event that 100 shares of Company "C" are not available, the local Exchange or Custody member will enter into a securities lending deal with another party to fulfill the request of Investor "A". The lending process with the other party has no direct relationship with Investor A.


After executing a securities lending transaction, and transferring the borrowed shares to the local Exchange or Custody member’s account. The 100 shares of Company “C” will be transferred to Investor A’s account through executing the transfer process.

* This applies to a foreign broker that is qualified as a foreign investor for their qualified foreign clients.

No specific agreement is required, provided this agreement meet the minimum requirements set out in the Securities Borrowing & Lending Regulations.

There is no requirement for any type of agreement, provided the agreement meets the minimum requirements of a securities lending agreement.

Transfer of borrowed securities is made available to meet re-lending requirements, so that unqualified investors can borrow through a local broker or custody member, and qualified foreign investors can borrow from their foreign brokers, provided the brokers are themselves qualified foreign investors.

Settlement period for securities lending transactions is defined by participants as intendend settlement date, can beT+0 to T+5.


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