epicresearchindore
Epic Research
The latest relaxation in the Securities Lending and Borrowing (SLB) guidelines by Sebi is unlikely to excite short sellers, feel market participants.
Ever since its introduction in April 2008, SLB never took off the way it was intended to. SLB was set up so that investors with a bearish view on stocks could borrow the shares for a charge, sell them in the market, and later on buy them back at a lower rate.
But the mechanism has been a flop, and market watchers blame it largely on faulty design and partly on cultural factors/policy uncertainty.
The single biggest reason has been the stringent margins which made it near unprofitable for a bear trader to borrow shares and sell them in the market. Over the years, Sebi has relaxed some of the rules hoping to boost volumes, but the segment has remained comatose.
On Friday, the regulator said that lenders and borrowers of shares could carry forward their positions up to three months, instead of one month as is the current norm. But that will not be of much help, say market participants.
Ever since its introduction in April 2008, SLB never took off the way it was intended to. SLB was set up so that investors with a bearish view on stocks could borrow the shares for a charge, sell them in the market, and later on buy them back at a lower rate.
But the mechanism has been a flop, and market watchers blame it largely on faulty design and partly on cultural factors/policy uncertainty.
The single biggest reason has been the stringent margins which made it near unprofitable for a bear trader to borrow shares and sell them in the market. Over the years, Sebi has relaxed some of the rules hoping to boost volumes, but the segment has remained comatose.
On Friday, the regulator said that lenders and borrowers of shares could carry forward their positions up to three months, instead of one month as is the current norm. But that will not be of much help, say market participants.