Securities Borrowing And Lending

Securities Borrowing and Lending (SBL) is a service enabled through Edaa's systems to allow temporary transfer of securities between a lender and a borrower. SBL is an essential tool to allow market participants to manage their market activities and mitigate settlement risk.

 

SBL Framework

The ownership of listed securities will be transferred temporarily from the lender to the borrower. Accordingly, ownership rights such as attending general assemblies, voting rights and economic benefits are transferred to the borrower. However, lenders can determine their rights in respect to the above through a tailored SBL agreement. 

 

Who can participate 

  • Local custodians and brokers can act as lending agents for an SBL transaction. 
  • Non-qualified Investors can borrow and lend securities by approaching their local custodians or brokers.  
  • Qualified investors can borrow and lend directly to other qualified investors. 
  • Brokers, custodians and qualified foreign investors (QFIs) can borrow securities and re-lend to their clients. 

All listed securities are eligible for SBL activities except for tradable rights. 

 

Benefits Of SBL

SBL offers lenders an additional investment channel in which they can lend long-term positions to maximize potential return. In addition, it allows borrowers to short securities and hedge their positions.

 

SBL Forms

SBL Regulations and Related Procedures

Last Updated: May 23, 2022

 

Fees

Services Fees (SAR) Frequency
SBL Initiation 250 Per Transaction
SBL Termination 250 Per Transaction

Frequently Asked Questions

Edaa does not review the agreement; it is the responsibility of the lenders and borrowers and their agents to ensure adherence with Edaa’s rules, procedures and market regulations.

There is no requirement for any type of agreement, provided the agreement meets the minimum requirements of a securities lending agreement.

The settlement period for securities lending transactions is always T+0.

There is no duration limit for a lending deal, but the period of validity of the agreement must be determined.

It is not mandatory to safekeep the collateral in Edaa, and the parties to the process can determine these details through the securities lending agreement.

Any collateral agreed upon between the two parties to the process are acceptable, provided it is a) evaluable and enforceable, b) domiciled in a country that applies regulatory and supervisory standards on par with Saudi Capital Markets Authority, and c) covers at least 100% of the transaction value during the borrowing period.

 

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