1. Securities Lending and Borrowing (SLB) Introduction  SLB is defined as the temporary exchange of securities with an obligation to redeliver the same.

Slides:

Advertisements

Similar presentations

Copyright© 2003 John Wiley and Sons, Inc. Power Point Slides for: Financial Institutions, Markets, and Money, 8 th Edition Authors: Kidwell, Blackwell,

Advertisements

1 Financing Techniques for Short Sellers Stuart McCrary.

Meezan Tijarah (Finished Goods).

Copyright© 2006 John Wiley & Sons, Inc.1 Power Point Slides for: Financial Institutions, Markets, and Money, 9 th Edition Authors: Kidwell, Blackwell,

Mechanics of Futures and Forward Markets

Part 6 Financing the Enterprise © 2015 McGraw-Hill Education.

 Derivatives are products whose values are derived from one or more, basic underlying variables.  Types of derivatives are many- 1. Forwards 2. Futures.

Chapter 10 Derivatives Introduction In this chapter on derivatives we cover: –Forward and futures contracts –Swaps –Options.

1. Margin Trading System- MTS Legal Frame Work The operations of MTS are governed under the following:  Securities (Leveraged Market and Pledging) Rules,

Collateral Management 11th ACG Cross Training Seminar, Dhaka (New Business Initiative TF) July 4, 2009 Korea Securities Depository.

 Presently, for the purposes of NCSS Money Settlement, Clearing Members (CMs) are required to designate Only One Bank Account in the Designated Branch.

Partner KPEI Securities Borrowing & Lending 8 th Asia-Pacific Central Securities Depository Group Cross Training Seminar June 27 th – 28 th, 2006, Bangkok.

5/25/ Introduction  SLB is defined as the temporary exchange of securities with an obligation to redeliver the same securities in the same number.

Chapter 20 Futures.  Describe the structure of futures markets.  Outline how futures work and what types of investors participate in futures markets.

Current Topics. Trends in Banking G & K Chps. 16, 17 & 18 G & K Chps. 16, 17 & 18 Financial Services Financial Services Electronic Banking Electronic.

Chapter 15. International Business Finance n Exchange Rate: the price of one currency in terms of another.

Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill /Irwin Chapter Ten Derivative Securities Markets.

Overview, Functionalities and Products NCCPL. NCCPL’s Overview.

Global Financial Services Outline –Why and how U.S. banks engage in international banking –Foreign banks in the U.S. –International lending –Foreign exchange.

National Clearing Company of Pakistan Limited 1. Back Ground The Securities and Exchange Commission of Pakistan (“SECP”) formed Consultative Group on.

Lecture Presentation Software to accompany Investment Analysis and Portfolio Management Eighth Edition by Frank K. Reilly & Keith C. Brown Chapter 20.

The International Financial System

Sources of finance Long term finance Short term finance.

1. Margin Trading System- MTS Background The Securities and Exchange Commission of Pakistan (“SECP”) constituted a Committee of professionals on June.

Collateral Management Indonesian Clearing and Guarantee Corporation (KPEI) Indonesia Stock Exchange Building, Tower th Fl Jl. Jend. Sudirman Kav.

Ch. 22 International Business Finance  2002, Prentice Hall, Inc.

Copyright© 2006 John Wiley & Sons, Inc.1 Power Point Slides for: Financial Institutions, Markets, and Money, 9 th Edition Authors: Kidwell, Blackwell,

I Investment Analysis and Portfolio Management First Canadian Edition By Reilly, Brown, Hedges, Chang 13.

Chapter Eight Risk Management: Financial Futures, Options, and Other Hedging Tools Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

Understand financial markets to recognize their importance in business. Types of financial markets Money market, Capital market, Insurance market,

Derivatives. What is Derivatives? Derivatives are financial instruments that derive their value from the underlying assets(assets it represents) Assets.

National Clearing Company of Pakistan Limited 1. Back Ground The Securities and Exchange Commission of Pakistan (“SECP”) formed Consultative Group on.

Financial Markets & Interest Rates. Financial System Surplus Economic Units Surplus Economic Units Deficit Economic Units Deficit Economic Units.

Introduction to Futures & Options As Derivative Instruments Derivative instruments are financial instruments whose value is derived from the value of an.

1 Futures Chapter 18 Jones, Investments: Analysis and Management.

Currency Futures Introduction and Example. 2 Financial instruments Future contracts: –Contract agreement providing for the future exchange of a particular.

SECTION IV DERIVATIVES. FUTURES AND OPTIONS CONTRACTS RISK MANAGEMENT TOOLS THEY ARE THE AGREEMENTS ON BUYING AND SELLING OF THESE INSTRUMENTS AT THE.

McGraw-Hill/Irwin Corporate Finance, 7/e Eighth Edition.

MEMBER REPORT BYNCCPL NATIONAL CLEARING COMPANY OF PAKISTAN LIMITED BYNCCPL.

Dated November 29, Automation of Securities Transfer.

CHAPTER 11 FUTURES, FORWARDS, SWAPS, AND OPTIONS MARKETS.

An Overview of the Financial System chapter 2 1. Function of Financial Markets Lenders-Savers (+) Households Firms Government Foreigners Financial Markets.

Derivative Markets: Overview Finance (Derivative Securities) 312 Tuesday, 1 August 2006 Readings: Chapters 1, 2 & 8.

SLB Service in Taiwan Securities Market Taiwan Depository & Clearing Co. ACG New Service Initiative Task Force.

1/5/ Introduction to CFS-MK II  Facilitate transparent and efficient financing for the market.  CFS-MK II will create an institutional bulk.

National Clearing Company of Pakistan Limited

Capital Gain Tax-CGT System Presentation NCCPL 1.

Money Markets Introduction to Money Markets. Agenda In this session, you will learn about: Features of the Money Market Functions of the Money Market.

Currency Futures Introduction and Example. 2 Financial instruments Future contracts: –Contract agreement providing for the future exchange of a particular.

Chapter 22 International Business Finance International Business Finance  2005, Pearson Prentice Hall.

Un-Listed TFCs Reporting Through NCSS 1. Introduction Un-Listed Term Finance Certificates (TFCs) are constituted major portion of Corporate Debt in Pakistan.

© 2013 Pearson Education, Inc., publishing as Prentice Hall. All rights reserved.2-1 The Uses of Derivatives Uses –Risk management. Derivatives are a tool.

P4 Advanced Investment Appraisal. 2 Section F: Treasury and Advanced Risk Management Techniques F2. The use of financial derivatives to hedge against.

MANAGING COMMODITY RISK. FACTORS THAT AFFECT COMMODITY PRICES Expected levels of inflation, particularly for precious metal Interest rates Exchange rates,

Chapter 20 Charles P. Jones, Investments: Analysis and Management, Twelfth Edition, John Wiley & Sons

Transfer of Risk Management Function from PSX to NCCPL Brief Overview Presented to BCMs April 15, 2016.

Forward contract: FORWARD COMTRACT IS A CONTRACT BETWEEN TWO PARTIES TO BUY OR SELL AN UNDERLYING ASSET AT TODAY’S PRE-AGREED PRICE ON A SPECIFIED DATE.

082SIS52 Ryu Soo-hyun. Money Market  Money Market - Subsection of fixed income market - financial market for short-term borrowing & lending - provides.

Un-listed TFCs Reporting through NCSS. Introduction Un-Listed Term Finance Certificates (TFCs) are constituted major portion of Corporate Debt in Pakistan.

Margin Trading System Based on Securities (Leveraged Markets and Pledging) Rules, 2011 and Concept Paper.

National Clearing Company of Pakistan Limited

National Clearing Company of Pakistan Limited

Margin Financing Recording System Through

Investment Management

Revised Features Securities Lending & Borrowing (“SLB”)

Margin Financing System (MFS)

Margin Financing System (MFS)

FINANCIAL DERIVATIVES/SNSCT/MBA

Well – Come to Treasury Management

Introduction to Futures & Options As Derivative Instruments

Presentation transcript:

1

Securities Lending and Borrowing (SLB) Introduction  SLB is defined as the temporary exchange of securities with an obligation to redeliver the same securities in the same number and at an agreed premium on a future date.  The potential lenders and borrowers can be the brokers, banking companies, financial institutions, investment finance companies and other person approved by NCCPL and SECP.  All potential lenders/borrowers have to be the Clearing Members of NCCPL. 2

Securities Lending and Borrowing (SLB) Why SLB?  The motivation for lenders is:  To earn income/return on their idle Securities.  To utilize 100% amount of lent Securities.  The motivation for borrowers is:  To avoid delivery failure in ready/future market ; and  To borrow SLB Eligible Security before affecting the short sale 3

Revised Features (SLB)  Revision in Cash Retention Methodology: 100% amount of SLB Transaction shall be paid to the lenders on Settlement Date  Additional Mode of Collateral: Margin Eligible Securities, Bank Guarantee, T-Bill, IUT can be deposited for the purpose of Exposure Margin  Risk Management from Lenders: 4

5

Brief Overview- SLB To Manage Delivery Failure of Ready/Future Market  SLB facility provides effective solution for managing delivery failures as per the following process:  Clearing Member (“CM”) may borrow securities on Trade Day from SLB market;  NCCPL may also borrow securities upon receiving written request from CM on the settlement date from SLB Spot Market. 6

Brief Overview- SLB To Facilitate the Market Participants Affecting Short Sales  In case of short sale, CMs shall be required to borrow securities from SLB Market before affecting short sale.  Short sale and corresponding borrowing transactions shall be settled on net basis on T+2, through NCSS whereby delivery obligation becomes zero on settlement date. 7

SLB-Modus Operandi  SLB market is available in parallel to the Regular Market.  SLB is operating through an automated platform provided by NCCPL as an Authorised Intermediary, to SLB Participants (lenders and borrowers) for placing offers and bids for SLB Eligible Securities to be lent and/or borrowed.  The Premium of lending and borrowing is determined by the market forces on demand & supply basis. However, such Premium is capped to KIBOR+8%.  The SLB transactions are carried out on an undisclosed basis in the SLB Market. 8

SLB-Modus Operandi  The valuation of SLB transactions are done at the immediate preceding price of the SLB Eligible Securities exist in Ready market at the time of execution.  SLB Contract period is 22 working days. On 23rd day SLB Contract shall be forced released.  Only borrower may release SLB contract at any given point of time during 22 working days.  SLB Contracts shall be force released on a day before the start of Spot Period of a particular SLB Eligible Security  The settlement of the SLB transactions shall be on T+2. Conti… 9

SLB-Modus Operandi  On Settlement Day of SLB Transaction, the lender is required to deliver lended securities and borrower is required to pay the total amount of borrowed securities. However, in case of corresponding sale, the money obligation of such borrower will be netted-off in NCSS;  Accordingly, 100% value of the lent securities paid to the lender;  At the time of release of SLB Transaction (SLB-R), the lender is required to pay 100% amount of the lent securities (after adjustment of Premium, if any) and receive the lent securities. 10

SLB-Modus Operandi  At the time of release of SLB-R Transaction the borrower is required to deliver the borrowed securities.  Accordingly, NCCPL will pay 100% amount to the borrower, after the adjustment of premium. 11

SLB-Risk Management  The borrower and lender shall pay VaR based exposure margins in the form of Margin Eligible Securities, Cash, Bank Guarantee, IUT and T-Bills to NCCPL against SLB Transactions on pre-trade basis.  The marked-to-market losses shall be collected from the borrower and lender on daily basis in the form of Cash only.  Special Margins shall be collected from borrowers in the form of Cash, Bank Guarantee, IUT and T- Bills only. 12

Thank you Thank you ! NATIONAL CLEARING COMPANY OF PAKISTAN LIMITED 8 th Floor, Pakistan Stock Exchange Building, Stock Exchange Road, Karachi – Pakistan TEL : (92-21) FAX: (92-21) Website : Website :