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The Bombay Stock Exchange has disallowed two securities, Dena Bank and Vijaya Bank, from being lent or borrowed in its securities lending and borrowing segment.
The exchange sent out a circular informing members that two securities have ceased to fulfill eligibility criteria in accordance with SEBI guidelines, and will not be available for trading in the SLB segment with effect from 2 December 2013.
In May of this year, the Indian regulator announced that it would increase the number of stocks allowed to be borrowed and lent, in efforts to ramp up the securities lending market in the country.
Stocks that fulfill certain criteria, such as an average monthly trading turnover of at least Rs.100 crores ($17.8 million), were allowed to be borrowed and lent out.
It is not the first time that the regulator has attempted to relax what some as seen as particularly severe rules. In November 2012, the board stated in a circular that lenders and borrowers of shares could carry forward their positions up to three months, instead of one month as is the current norm.
The “roll-over facility” states that any lender or borrower who wishes to extend an existing lent or borrow position shall be permitted to roll-over such positions for three months, although rollover shall not permit netting of counter positions.
SEBI also indicated the introduction of liquid Index Exchange Traded Funds as eligible for trading, with the ETF deemed liquid provided it has traded on at least 80 percent of the days over the past 6 months and its impact cost over the past 6 months is less than or equal to 1 percent.
