Securities Lending and Borrowing

Securities Lending and Borrowing

The Securities Lending and Borrowing system facilitates the bridging of any lack of securities coverage arising during settlement of securities transactions. The bilateral (pool) and three-way (triparty) securities lending mechanisms handled by the system contribute to the efficient operation of securities trading.

The system’s key functions and benefits are as follows:

• Management and recording of pool and triparty securities lending transactions
• Transaction-based straight through processing (STP)
• RTGS operation
• Real-time client connection
• Flexible and configurable modules to meet a wide range of user requirements
• System modules are suitable for integration with other internal and external applications

Modules

• Pool Securities Lending and Borrowing
• Triparty Securities Lending and Borrowing

The Securities Lending and Borrowing system assists users in performing securities lending and borrowing transactions.

The system’s pool and triparty lending mechanisms offer a means of bridging any lack of securities coverage that arises during the settlement of securities transactions.

Modules and business functions

The Securities Lending and Borrowing system consists of the following modules:

• Pool Securities Lending and Borrowing
• Triparty Securities Lending and Borrowing

In securities lending and borrowing transactions performed under the pool mechanism, the securities offered for pool lending prior to the transaction change hands anonymously. The system assists in providing coverage for the securities-side performance of multilateral net settlement transactions.

Services of the Pool Securities Lending module

• Handling of anonymous securities transactions
• Automatic allocation of lenders
• Recording of loan transactions
• Daily evaluation of loaned securities
• Collateral management
• Limit monitoring
• Individual and group-based loan settlement
• Reporting, statistics

The Triparty Securities Lending module enables the parties to propose lending terms, based on which they can then conclude securities lending/borrowing transactions.

The securities lending takes place in real time, under the DVD (Delivery Versus Delivery) principle. In the securities lending transactions, the borrowers are obliged to provide collateral, in exchange for which the lender provides them with the relevant securities. Clients receive reports, in real time, on both the terms and the status of the loan transactions.

Services of the Triparty Securities Lending and Borrowing system

• Management of triparty loan transactions between named parties
• Handling of closed and open-ended loan transactions
• OFFER of loan terms
• Real-time settlement of loan transactions
• Collateral management
• DVD-based settlement (simultaneous handling of loan and collateral)
• Loan return, recall and extension options
• Expiry monitoring
• Reporting, statistics

The Securities Lending and Borrowing system connects to other internal and external systems via a standardised interface.

The Triparty Module of the Securities Lending and Borrowing system connects in real time to the OPEN-RTGS system, which performs the processing of transactions in real time, using the queue-management system that forms the basis for the RTGS model.

The pool securities lending system is suitable for integration with the Securities Account Management system.

Securities Lending and Borrowing is a modular system with a client-server architecture and a user-friendly graphical interface, and can be flexibly developed to suit a wide range of user requirements.

The protection of the systems in terms of access and authorisation is ensured on multiple levels, partly by leveraging the opportunities offered by the applied technologies and partly by utilising the supplied application-level protection devices.

KELER (Central Clearing House and Depository Budapest) Ltd.