AUTOMATED LENDING AND BORROWING MECHANISM (ALBM)

Position limits and margining in automated lending and borrowing mechanism define risk controls and collateral requirements.

The circular permits an Automated Lending and Borrowing Mechanism (ALBM) to facilitate securities lending, borrowing and settlement netting. Exchanges may implement ALBM only after SEBI approval of scrip eligibility, selection processes and disclosure rules, and only if they demonstrate adequate margin-computation software, governance and clearing intermediation. Risk controls include aggregate and per-scrip position limits for netted trade positions, special rules for pure securities borrowers, rules on short-sale charge release, gross-basis margining with minimum margin floors and tiered incremental margins, and specified collateral forms for margin collection.