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.

 

Under the 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 the SBL agreement.
  • Lenders can recall securities at any time subject to the Lending Agreement.
  • 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 QFI (who are "International Brokers") can borrow securities and re-lend to their clients.
  • Type of collateral can be agreed bilaterally by transacting parties, while maintaining a minimum of 100% coverage at any time during the transaction lifecycle.
  • All listed securities are eligible for SBL activities except for Tradable Rights.

 

Benefits of SBL
  • Enables 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.
  • An essential tool to allow market participants such as Brokers and Market makers to manage their market activities and mitigate settlement risk.

 

 

To view the Securities Borrowing and Lending Regulations and related procedures (click here)

For more information, please contact our Customer Service team on email: cc@edaa.sa