Are you looking for ways to earn from your idle portfolio? You may be thinking of dividends, but
there's another option: securities lending and borrowing. This mechanism allows you to lend your
shares to those who need them.
But who needs shares? There are several situations where people may need to borrow shares.
For example,
- To avoid Auction : investors can borrow shares through SLBM to avoid hefty auction penalties.
- Short Selling : Short sellers can borrow shares to engage in short selling, a strategy to profit in
bearish markets.
- Reverse Arbitrage : Reverse arbitrage traders can borrow shares to execute a strategy where
they buy futures and sell stocks to earn a risk-free profit from the difference in spot and
futures prices. Later on they can buy back stocks from the market and deliver to SLBM for
final settlement.