Automatic securities lending programme
The automatic borrowing and lending programme is a multilateral facility where borrowers and lenders are anonymous. For every share included in the programme, VPS will generate a unique loan ISIN. VPS acts as a securities registry offering legal protection also for these ISINs.
Who are the lenders?
In principle, any investor with securities registered on a VPS account can be a lender, provided that the investor’s account operator has a clearing representative agreement with SIX x-clear AG.
Who are the borrowers?
All broker dealers that participate in the settlement system can be members of the securities borrowing and lending programme. Broker dealers that use a settlement agent can also participate. The arrangement is voluntary, and is subject to entering into a clearing representative agreement with SIX x-clear AG. Settlement agents can only participate in the securities borrowing and lending programme in their role as a settlement agent, and are not permitted participate in the programme on their own account.
SIX x-clear AG decides which listed securities will be made available for borrowing through the securities borrowing and lending programme. Loans are made on an open-end basis, meaning they do not have a fixed maturity date. A loan is repaid when the lender recalls the loan, the borrower decides to repay the loan or when SIX x-clear AG recalls the loan.
Recalling of lent securities
Lenders can demand the return of all or part of the securities they have lent. If there are sufficient securities in the pool to replace the loan, a new lender will be selected at random. If there is a lack of securities in the pool, one or numerous borrowers, selected at random, will be called on to return the securities they have borrowed.
Automatic return of borrowed securities
Loans are automatically returned if there is sufficient cover in the broker dealer’s VPS account (domestic account).
The pool based borrowing and lending scheme does not include provisions for handling dividend payments and corporate actions in securities that are borrowed. Existing loans will be recalled and no new loans are available in a 14-days-period prior to the corporate action taking place.
SIX x-clear AG handles functions relating to contract administration, clearing, collateral , margins, interest and other charges.