SINGAPORE (Nov 27): Singapore Exchange (SGX) is set to replace the fixed rates for its Securities Borrowing and Lending (SBL) programme with variable and more competitive rates with effect from Dec 2. 

Under the current SBL programme, the lending fee rate and borrowing fee rate are fixed at 4% and 6% per annum respectively. Come Dec 2, the borrowing rates for index stocks, REITs and business trusts will be at 0.5% and the rest of securities at 4%. Lenders’ fees will be calculated based on 70% of the borrowing fee. 

The market regulator says that these rates will be reviewed periodically, taking into account factors such as market rates and the demand and supply of eligible securities. There are currently over 450 securities worth some $2.5 billion available for loan.

According to the market regulator, this will benefit both borrowers and lenders as the revised rates make borrowing more attractive for institutional investors, which could potentially result in higher frequency of loans, subsequently increasing lenders’ chances of securities being lent out. 

This closely follows SGX’s prior enhancements to the programme, including real-time processing of borrowing requests, as well as an expansion of borrowers’ eligibility criteria beyond Central Depository Account (CDP) members and depository agents, which allows entities to deal in securities in selected foreign jurisdictions to participate in the programme. 

From Dec 2 onwards, CDP account holders can also register for the programme for free and gain the opportunity to earn additional income from their securities holdings. 

Head of Equities at SGX Michael Syn says, “Our enhanced SBL programme 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.”

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