The SLBs avenue

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MFs investor base grow faster than AUM

considering expectations and apprehensions. On a daily basis only few shares with one or two trades are executed may be on an experimental basis. Also, SLBS is not yet officially launched as a product by any brokerage for their clients. The good news is that around 70 players have registered themselves for SLBS. As it is a new market every one is resistant to trade in SLBS due to certain limitations.

We have addressed some limitations, which hover around SLBS's current guidelines. The carry forward of positions is for a limited period and this is the most important concern. As compared to SLBS where you get a tenure of only T+8, F&O gives you one, two, and three months rolling settlement period. Other than settlement period, if one buys options no need to pay any margins.

Promoter holding doesn't come under the purview of SLBS. Ideally, a majority of the promoters don't sell their holdings often and it is kept in both physical or dematerialisation form. Permission to lend the securities of the promoter's stake could have resulted in a huge jump in the liquidity and another source of income for the promoters.

How best you can use it?

* Bearish phase

Ideally it is difficult for any normal investor to take a call for one day about the market trend. And many times they lose a lot of money on a daily basis by going short. On the other hand if the investor took a long-position, at least he can take delivery and sell afterwards if the price goes up.

Post the January crash a lot of opportunity has been given to exploit the advantage of short-selling but investors have to square off their position at the end of the day. Now as the markets are slowly drifting down, investors can take the opportunity of this bear phase by borrowing securities through SLBS. An investor can hold on to its short-position for additional five working days excluding the transaction day. Due to the carry forward facility, the probability of losing money in short-selling becomes relatively less. Further, short-selling would lead to better price discovery for the scrip in the cash market.

* Advantage as a lender