Thew new variable rates will be more competitive, which will benefit both borrowers and lenders, SGX said.
Singapore Exchange (SGX) will scrap its fixed lending rate of 4 percent per annum and the borrowing fee rate of 6 percent per annum, currently set for its Securities Borrowing and Lending (SBL) program, from December 2, it announced in a press release on Wednesday.
Instead, it will implement a fixed 0.5 percent borrowing rate for index stocks, REITs and business trusts, and 4 percent for the rest of securities, the statement said. The rates will be periodically reviewed based on market rates and demand and supply of the eligible securities. Lender's fees will be set at 70 percent of the borrower's fee.
Promoting Liquidity
With the move, SGX hopes to increase the frequency of loans and increase lenders’ chances of securities being lent out. According to SGX, there are currently over 450 securities worth S$2.5 billion ($1.83 billion) available for loan.
«By improving the rates, range and accessibility of our SBL programme, we are improving the mobility of loan collateral, better serving our clients as owners of this collateral, and promoting liquidity in the stock market,» said Michael Syn, head of equities, about the changes.
