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BSE to introduce new lending scheme

Our Bureau

MUMBAI, Jan. 4

THE Bombay Stock Exchange (BSE) has decided to introduce a new borrowing and lending securities scheme, known as BLESS, to promote securities lending and ``provide a commercially competitive product.''

BLESS, an alternative system offering carry forward facility, would be introduced effective January 22 and with that the existing carry forward (badla) system on the BSE would cease to exist.

BSE's BLESS has received the blessings from the Securities & Exchange Board of India (SEBI) to offer the carry forward facility for all 141 scrips in the `A' group.

The new scheme would enable borrower of securities to withdraw shares which are not available in the existing badla system at BSE.

BLESS is designed on the model of Automated Lending and Borrowing Mechanism (ALBM) of the NSE.

The existing system requires badla shares to be lodged with the exchange's clearing house in demat mode and neither the borrower of securities nor lender of funds has recourse to withdraw the shares.

With this, the BSE has come full circle to the pre-1992 days and BLESS provides all the features of then carry forward (badla) system which were selectively restricted by the market regulator in the modified carry forward system.

The BSE President, Mr Anand Rathi, said that BLESS would provide the facilities of lending and borrowing to BSE members as well as their constituents and was expected to encourage more investor participation.

``It will also serve the purpose of deferral of settlement obligations by netting off obligations in BLESS with those in the normal settlement,'' Mr Rathi said.