The Securities and Exchange Board of India (SEBI) has extended the trading hours of its securities lending and borrowing (SLB) segment by over two hours.
The SLB segment will now run from 9.00-17.00. This is two hours and 25 minutes longer than the previous session.
The regulator said it made the move with a “view to facilitate physical settlement of equity derivatives contracts.”
During a Global Custodian roundtable in India earlier this year, participants said that while the securities lending mechanism was in place, it had a lot of room for growth.
“The size of the securities lending business is not what it can potentially be,” said Viraj Kulkarni CEO, Pivot Management Consulting. “Korea has close to $800 billion of securities lending activity. Technically, India could have a larger market. It all boils down to how the regulator wanted the market to develop; when securities lending started, there was a lot of paperwork, which discouraged potential participants.
“Another inhibiting factor was the roll over of settlements, which limits the demand for borrowing. There is scope to grow the segment.”
SEBI has been active in trying to implement reforms in the securities lending market, including moves last year to include more securities, allow mutual funds to sell short and depositories to lend.