India’s pension system to enter securities lending
11 November 2016 New Delhi
Image: Shutterstock
India’s Pension Fund Regulatory and Development Authority (PFRDA) is seeking feedback on a proposal to allow the country’s National Pension System to begin participating in securities lending.
Under the proposal, which was circulated on 9 November, the National Pension System, with $22 billion in assets under management, would be able to begin lending securities through India’s central counterparty system for the purposes of short selling.
PFRDA has proposed allowing the National Pension System to use the clearing corporation of the National Stock Exchange of India, known as NSCCL, as it oversees the bulk of India’s borrowing and lending business. BOISL, a part of the BSE (previously the Bombay Stock Exchange), would also be utilised.
NSCCL has a centralised anonymous order book and clears, settles and guarantees all borrowing and lending for tenures up to 12 months, according to PFRDA.
The author of the proposal wrote of the benefits: “[Borrowing and lending] provides an incremental return on an idle portfolio. So if an investor intends to hold it for the long term, in the shorter term I could lend this whenever there is a demand and get additional return in terms of lending fees/additional return knowing that NSCCL/BOISL are the guarantors."
Under the proposal, which was circulated on 9 November, the National Pension System, with $22 billion in assets under management, would be able to begin lending securities through India’s central counterparty system for the purposes of short selling.
PFRDA has proposed allowing the National Pension System to use the clearing corporation of the National Stock Exchange of India, known as NSCCL, as it oversees the bulk of India’s borrowing and lending business. BOISL, a part of the BSE (previously the Bombay Stock Exchange), would also be utilised.
NSCCL has a centralised anonymous order book and clears, settles and guarantees all borrowing and lending for tenures up to 12 months, according to PFRDA.
The author of the proposal wrote of the benefits: “[Borrowing and lending] provides an incremental return on an idle portfolio. So if an investor intends to hold it for the long term, in the shorter term I could lend this whenever there is a demand and get additional return in terms of lending fees/additional return knowing that NSCCL/BOISL are the guarantors."
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