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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Other Services Provided by Brokers

A broker's client wishes to borrow shares for delivering against a short sale and later return equivalent securities. Which mechanism in the Indian market formally enables this through the exchange clearing corporation?

The Securities Lending and Borrowing Scheme enables this. Through exchange-recognised intermediaries and the clearing corporation, a borrower obtains securities for a fixed tenure against collateral, delivers them, and later returns equivalent securities while the lender earns a lending fee.

  1. ASecurities Lending and Borrowing SchemeCorrect
  2. BRolling settlement auction
  3. CCall auction session
  4. DBuyback tender route

Explanation

The SLB scheme allows participants to borrow securities for a fixed tenure against collateral and return them later, via approved intermediaries and the clearing corporation. Auction handles failed deliveries in settlement, call auction is a price discovery session, and buyback is a corporate action.

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