SGX adds variable rates to securities borrowing and lending program

SGX building on Shenton Way in SingaporeSGX building on Shenton Way in Singapore

Singapore Exchange said Wednesday it would replace the fixed rates for the securities borrowing and lending (SBL) program with variable and more competitive rates, starting from 2 December.

Currently, the lending fee rate is fixed at 4 percent a year, while the borrowing fee rate is set at 6 percent a year, SGX said in a statement.

Under the new rate regime, the borrowing rates for index stocks, REITs and business trusts will be at 0.5 percent and the rest of securities will be at 4 percent, SGX said, adding lenders’ fees would be calculated based on 70 percent of the borrowing fee.

SGX said the new rates would make it more attractive for institutional investors to borrow, which may result in a higher frequency of loans and increase the chances of securities being lent out.

Currently, more than 450 securities valued at S$2.5 billion are available for loan, the statement said.

“Our enhanced SBL program will give borrowers access to a wider range of securities, including small to mid-cap stocks, with real-time lending pool availability. We also provide instant delivery of loaned securities, with no minimum borrowing value and a low minimum borrowing period of two days,” Michael Syn, head of equities at SGX, said in the statement.

“By improving the rates, range and accessibility of our SBL program, we are improving the mobility of loan collateral, better serving our clients as owners of this collateral, and promoting liquidity in the stock market,” Syn added.

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