SIB named agent for new share borrowing and lending platform

Standard Investment Bank (SIB) has been appointed as an agent to facilitate lending and borrowing of shares under the new investment path aimed at boosting stock trading at the Nairobi bourse.

Central Depository and Settlement Corporation (CDSC) said SIB has met terms to be appointed an agent for Securities Lending and Borrowing (SLB).

Securities Lending and Borrowing (SLB) is the temporary transfer of shares from one party (the lender) to another (the borrower) at an agreed lending or borrowing fee, with a formal agreement to return the securities either on-demand or at a future pre-agreed date.

The market practice is used as a lubricant for the financial markets and is expected to increase trading.

“Further to your application for appointment as SLB agents, we confirm that SIB Limited has met all the requirements and is hereby appointed as an SLB agent,” CDSC chief executive Nkoregamba Mwebesa said.

The CDSC said it will implement SLB pilot phase transactions under a model where the lender and borrower do not know each other, with their activities captured on an automated platform by the agents like SIB.

The lending and borrowing market works for idle portfolio holders, who lend stocks at a fee while retaining ownership including voting rights on the equity.

Those who borrow the stock are active market players who can then short the market or trade on the shares and return the stocks after an agreed period. The gains are split.