Karu Ramesh KumarSBL Unit

SECURITIES BORROWING & LENDING

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SBL Transaction Flow [ 5 ]

SBL/RSS Model [ 6 ]

Lending Interest [ 9 ]

Borrowing Request [11]

SBL Loan Tenure & Termination [13]

Collateral / Margin [15]

Corporate Actions [17]

Bursa SBL Fees [19]

Schematic of RSS / SBL [22]

Comparison of RSS Features: Before & Proposed [24]

Important NoticeContact Information

Contents

SBL TRANSACTION FLOW

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SBL TRANSACTION FLOW

LENDERTCP / NTCP

Key-inrequest

LENDING POOL

CLA

BURSA CLEARING (S)

Check availability

Confirmation

AUTHORISEDBORROWER

TradingClearing

Participant

Request

Collateral

Confirmation Collateral ULTIMATEBORROWER

Lender transfer securities to Bursa Clearing Bursa Clearing transfer securities to Authorised

Borrower

Authorised BorrowerTransfer securities to

Ultimate Borrower

Principal to Transaction Principal to Transaction

6

SBL TRANSACTION FLOW

SBL/RSS MODEL

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SBL/RSS MODEL

LENDING INTEREST

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LENDING INTEREST

• Minimum number of securities per counter to be lent is 50,000 units.

• Lenders to sign SBL Agreement with Bursa Clearing(S).

• Lenders to submit copy of SBL agreement and initiate their lending interest through Trading Clearing Participant(TCP)/Non Trading Clearing Participant(NTCP).

• Securities to be lent will be placed in the lending pool of the SBL system. If lending pool reserve drops below a certain percentage Bursa Clearing (S) may institute a recall exercise.

• Upon completion of matching, securities will be transferred from lender’s CDS account to borrower’s designated CDS account during batch processing on the effective date.

• Lenders must ensure securities are in his/her CDS accounts on the effective date.

• Lenders will receive confirmation from Bursa Clearing (S) on successful matching.

• At any given time, a certain percentage of securities from the lending pool will be set aside as reserve.

BORROWING REQUEST

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BORROWING REQUEST

• Authorised borrower (TCP) to sign SBL Agreement with Bursa Clearing (S).

• Ultimate borrowers who wish to participate in SBL scheme to sign agreement with Authorized Borrower (TCP) and initiate borrowing request through TCP.

• TCP is to open SBL account for each ultimate borrower and key-in borrowing request i.e. securities, quantity, effective date and borrower’s designated SBL CDS account particulars.

• Permitted minimum number of securities to be borrowed is 100 units per securities counter.

• Authorized borrower must ensure that sufficient collateral has been deposited with Bursa Clearing (S) prior to submitting the borrowing request.

• Upon completion of matching, securities shall be transferred from lender’s CDS account to borrower’s designated CDS account during batch processing on the effective date.

• Borrowers will receive confirmation from Bursa Clearing (S) on successful matching.

SBL LOAN TENURE & TERMINATION

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SBL LOAN TENURE & TERMINATION

• Based on open tenure (i.e.no expiration or maturity date)

• SBL loan can be terminated at any time by Lenders,Borrowers and Bursa Clearing (S).

• SBL Loan can be recalled in full or partial by lenders or returned in full or partial by borrowers.

• Termination of SBL by Lenders – Lender will receive the securities in their CDS account by Recall + 3 days.

COLLATERAL / MARGIN

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COLLATERAL / MARGIN

Borrowers are required to lodge sufficient collateral as margin with Bursa Clearing (S).

Acceptable collateral include cash, approved securities, prescribed bank guarantee and foreign currencies

Each collateral will be subjected to haircut on its value and

Will be mark-to-market (MTM) daily.

Margin is proposed to be maintained at 110% against value of stocks borrowed. If at any time after MTM valuation, the margin falls below the maintenance level of 105% of value of stocks borrowed, the borrower must top-up the margin cover, one business day after being informed by Bursa Clearing (S).

Interest on collateral - Interest will be paid on cash deposited (RM and foreign currencies) as collateral.

CORPORATE ACTIONS

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CORPORATE ACTIONSDividend Entitlements

Bursa Clearing (S) will provide the lending agent with a “manufactured payment” for securities on loan accompanied with a subsidiary tax voucher.

However, if the Borrower does not owns the borrowed shares Bursa Clearing will pay a gross amount.

All mandatory corporate actions which involve mandatory change to quantity of stocks such as Bonus Issues, Splits and Consolidation will be adjusted accordingly by Bursa Clearing.

For other corporate actions, Lenders will have to recall the loans and borrower will have to return the securities.

BURSA SBL FEES

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Type of Fee BursaProposed Rate(% or Amount)

Administrative fee Nil RM30.00

Processing fee per matched trade Nil RM20.00

Lending fee 2% 2%

Lending handling charges Nil 0 – 0.30% of MTM

Penalty fee 1% 1%

BURSA SBL FEES

Lending Fees

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Type of Fee BursaProposed Rate(% or Amount)

CDS A/C opening fee RM10.00 RM20.00

Administrative fee Nil RM30.00

Processing fee per matched RM100.00 Bursa + RM20.00

Borrowing fee 2.2% Bursa + (0.50% - 1.50%)

Penalty fee 1% 1%

BURSA SBL FEES (cont’d)

Borrowing Fees

SCHEMATIC OF RSS / SBL

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SCHEMATIC OF RSS / SBL

COMPARISON OF RSS FEATURES: BEFORE & NOW

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Before Now Remarks

Designated RSS screens for RSS order entry

Designated RSS screens for order entry to list out RSS/SBL designated CDS A/C

CDS A/C used for RSS activities can be listed

No differentiation of trading accounts

Designated RSS trading accounts to facilitate monitoring tagged to designated RSS/SBL CDS A/C

RSS activities can only occur through specific trading accounts for easy monitoring by POs. Client code for RSS to be marked “RSS”  

NonePOs must sight and obtain copy of SBL agreement before opening RSS trading account.

 

COMPARISON OF RSS FEATURES: BEFORE & NOW

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Before Now Remarks

No transfer restriction to settle RSS

Transfer restriction - to maintain the current transfer restriction with some flexibility for SBL to settle RSS trades

To facilitate lending arrangements

Identification of beneficial owner – not possible

Identification only up to first level i.e. instructing client of PO executing the RSS trade as per existing disclosure requirements for EANs

For investigative purposes, intermediary will be required to identify the end-client

Transacted price – zero tick rulePOs must sight and obtain copy of SBL agreement before opening RSS trading account.

Prevent spiraling down of prices in a downturn

 

COMPARISON OF RSS FEATURES: BEFORE & NOW (con’t)

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Before Now Remarks

Stock limit – no rulesRSS trades limited to 10% of issued cap of security per trading day

System monitored. RSS suspended for 1 settlement cycle if 10% breached

Reporting – monthly reporting on lending transaction.

Daily reporting will be produced by the Exchange

System monitored. Gross short trades will be disclosed real-time

None.

POs must obtain written confirmation from instructing client that client has securities to borrow before executing RSS trades

CDS A/C used for RSS activities can be listed

COMPARISON OF RSS FEATURES: BEFORE & Now (con’t)

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Before Now Remarks

Criteria for approved securities:1. Ave. daily mkt. cap. of more

than RM2.0 billion for the past 3 months.

2. At least 100 million shares in public float.

3. Ave. monthly volume traded of more than 2 million units for the past 12 calendar months.

4. At least 2,000 registered shareholders.

5. 5 years uninterrupted after-tax profits track record

6. Stock limit – no rules.

1. Ave. daily mkt. cap. of more than RM500 million for the past 3 months

2. At least 50 million shares in public float

3. Ave. monthly volume traded of more than 1 million units for the past 12 calendar months

4. Deleted

5. Deleted

6. No limit

COMPARISON OF RSS FEATURES: BEFORE & Now (con’t)

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Important NoticeThis presentation has been prepared by CIMB Investment Bank Berhad (“CIMB”) exclusively for the benefit and internal use of investor in order to indicate, on a preliminary basis, the feasibility of possible transactions. Terms contained in this presentation are intended for discussion purposes only and are subject to a definitive agreement. All information contained in this presentation belongs to CIMB and may not be copied, distributed or otherwise disseminated in whole or in part without the written consent of CIMB.

This presentation has been prepared on the basis of information that is believed to be correct at the time the presentation was prepared, but that may not have been independently verified. CIMB makes no express or implied warranty as to the accuracy or completeness of any such information.

CIMB is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessment of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers.

CIMB or its affiliates may act as a principal or agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities.

Neither CIMB nor any of its their directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (express or implied) arising out of, contained in or derived from or any omission from the presentation, except liability under statute that cannot be excluded.

Click to edit Master title styleClick to edit Master subtitle styleCONTACT INFORMATION

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Contact InformationFor enquiries on SBL, please contact:

Karu Ramesh Kumar Khairul Azhar IsaSBL Unit SBL UnitT: 03-2084 9887 T: 03-2084 9602E: karu.karuppiah@cimb.com E: khairulazhar.isa@cimb.com

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