The National Stock Exchange (NSE) and BSE Clearing have launched shorter-tenure securities lending and borrowing (SLB) contracts under their respective SLB schemes, allowing traders to settle transactions within 3 days starting August 17, 2026. According to The Hindu BusinessLine and CNBC TV18, these contracts are specifically designed to improve short-term liquidity and boost participation in the new closing auction session (CAS). The three-working-day contracts, launched by NSE Clearing and BSE Clearing from Monday, will allow market participants to borrow securities for a much shorter period, addressing concerns over low participation and price spikes since CAS launch earlier this month. As per The Business Standard, these contracts enable traders to settle the reverse leg of a transaction within 3 days, with trades executed on the transaction day settled on T+1, and the reverse leg settled on T+3, excluding settlement holidays.
The shorter-tenor product is designed to help participants meet short-term securities borrowing and delivery needs while supporting a deeper and more efficient SLB ecosystem. As reported by The Hindu BusinessLine and CNBC TV18, an exchange source explained that "If participants are able to borrow securities through SLB for three days, it could make short-term trades in the closing auction more viable." These contracts will initially be available only for stocks eligible for trading in the equity derivatives segment, with the facility supporting inter-exchange arbitrage and better price alignment across trading venues. The SLB platform will continue to operate through an automated, screen-based order matching system based on price-time priority, providing participants with an additional avenue for short-term securities borrowing and lending. A shorter contract can help traders and institutions manage temporary borrowing needs without locking into longer-tenor contracts.
According to The Hindu BusinessLine and CNBC TV18, the contracts will not have a facility for repayment, recall or rollover, and unlike existing SLB contracts, these shorter-tenure contracts do not allow foreclosure for AGMs or EGMs. The operational structure ensures the contracts remain flexible for near-term requirements while maintaining the core SLB framework. Minimum eligibility criteria include a minimum order value of ₹1 lakh per security for lending and an order of at least 500 shares for borrowing. The new contracts will be generated daily and will be initially available only for stocks eligible in the Futures and Options (F&O) segment under the "D" series prefix. This enhanced framework aims to make the securities lending market more responsive to changing participant needs while supporting short-term securities requirements and helping price alignment across trading venues.
SEBI Chairman Tuhin Kanta Pandey addressed the CAS rollout challenges at a cyber-defence event at NISM on Monday, stating that "CAS is here to stay for sure" and emphasizing that "greater participation is critical for the mechanism." As reported by The Hindu BusinessLine, Pandey confirmed that SEBI will come out with a draft paper on a reformed SLB mechanism soon, noting that "SLBM improves CAS participation and that has been our goal." He acknowledged the urgency of the situation while emphasizing that "different participants need to be heard." The earlier system of determining closing prices using the volume-weighted average price of trades during the final 30 minutes was replaced by CAS, which determines a single equilibrium closing price by matching buy and sell orders. The rollout has triggered concerns over sharp price spikes amid low participation and liquidity, with SEBI maintaining that the mechanism needs time to settle while it continues to monitor data and industry feedback.
Dhiraj Relli, MD and CEO of HDFC Securities, stated that the T+3 contracts should be helpful for the closing auction and increase overall market depth, though he noted that "we will have to wait and see how volumes pick up." As reported by The Hindu BusinessLine, the move follows recent discussions between SEBI, brokers and market infrastructure institutions on improving participation in CAS. Vaisshali Babu, MD and CEO of BSE Clearing, emphasized that the introduction of shorter-tenor SLB contracts is an "important step towards making the securities lending ecosystem more responsive to the evolving needs of market participants." She added that the facility will support short-term securities requirements, facilitate greater price alignment and further deepen participation in the SLB market. The combination of NSE's shorter SLB contracts and BSE's similar launch represents a coordinated market response to participant requirements for greater flexibility in securities lending and borrowing operations.
