NSE Clearing Introduces Shorter-Tenure SLB Contracts From August 17
NSE Clearing Introduces Shorter-Tenure SLB Contracts From August 17
NSE Clearing Limited will introduce a new shorter-tenure contract under India’s Securities Lending and Borrowing Scheme (SLBS) from August 17, 2026.
The new R3 series is designed for a shorter holding period than the existing SLB contracts. It will be available for transactions every trading day and will use a T+1 settlement for the first leg and T+3 settlement for the reverse leg, excluding settlement holidays. NSE Clearing announced the change in a circular dated August 14, 2026.
How the new R3 SLB contract works
Under the R3 series, the transaction begins on T Day, the day the SLB trade is executed.
The first leg, under which the securities are delivered to the borrower, will settle on T+1.
The borrowed securities will then be returned through the reverse leg on T+3, excluding applicable settlement holidays.
That makes the R3 structure different from the existing SLB contracts, where lending and borrowing normally run for much longer periods. NSE’s existing SLBS framework provides tenures ranging from one month to a maximum of 12 months.
The R3 series does not replace those contracts. It adds a shorter-tenure option to the existing securities lending and borrowing market.
Which stocks qualify for the R3 series?
The new shorter-tenure SLB contracts will not cover every stock listed on the NSE.
They will be available for securities that are eligible for trading in the equity derivatives, or F&O, segment of the National Stock Exchange.
NSE’s SLBS framework also specifies that securities lending and borrowing is conducted in dematerialised form.
This means market participants will need to check the eligible-security list rather than assume that any NSE-listed stock can be used under the R3 series.
What is securities lending and borrowing?
Securities Lending and Borrowing allows one market participant to lend securities to another for an agreed period in return for a lending fee.
A lender can make securities available through the SLB mechanism and receive a fee for the lending period. A borrower obtains the securities and is required to return them on the applicable reverse-leg settlement date.
The system is also used by market participants who need to borrow shares for permitted trading strategies, including short-selling. NSE Clearing provides the clearing and settlement infrastructure for these transactions.
R3 contracts will not have recall, repay or rollover facilities
One of the biggest differences between the new R3 series and the existing SLB structure is the absence of certain early-exit facilities.
For R3 contracts, repay, recall and rollover facilities will not be available.
Under the existing SLB framework, lenders can request an early recall of securities, while borrowers can use an early repayment facility subject to the applicable rules. Those facilities are not available under the R3 series.
Participants entering an R3 transaction therefore need to account for the fixed structure of the contract before committing to it.
Different treatment for AGM and EGM events
NSE Clearing has also specified a different treatment for Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) under the R3 series.
The new R3 contracts will not be foreclosed solely because of an AGM or EGM.
This is a specific provision for the new shorter-tenure series. Other corporate-action rules applicable to SLB transactions continue to operate under the existing framework, subject to the provisions specifically stated for R3.
Other SLB rules remain in place
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NSE Clearing is not replacing the existing SLB infrastructure.
The clearing corporation said the provisions covering market timings, clearing and settlement, risk management and corporate-action treatment will continue to apply to R3 contracts, except where the new series has specific rules.
That means the main change is the introduction of the shorter R3 contract and its specific conditions, rather than a complete overhaul of India’s securities lending and borrowing system.
Why the R3 series matters to market participants
The main attraction of the new contract is its shorter duration.
Existing SLB contracts can tie up borrowed or lent securities for periods ranging from one month to 12 months. The R3 series gives participants an alternative when the requirement is much shorter.
For a borrower, the structure can be used where securities are needed for a short-term position rather than an arrangement lasting several months.
For a lender, it creates another way to make eligible securities available for lending without committing them to a conventional longer-tenure SLB contract.
However, the shorter structure comes with fewer exit options. Since recall, repay and rollover are unavailable, participants cannot use those facilities to alter or extend an R3 position.
What changes from August 17, 2026?
The important details of the NSE Clearing R3 SLB contracts are:
Launch date: August 17, 2026.
Series: R3.
Availability: Daily.
First-leg settlement: T+1.
Reverse-leg settlement: T+3, excluding settlement holidays.
Eligible securities: Securities eligible for trading in the NSE equity derivatives/F&O segment.
AGM/EGM: R3 contracts will not be foreclosed because of an AGM or EGM.
Recall: Not available.
Repay: Not available.
Rollover: Not available.
Other provisions: Existing rules covering market timings, clearing and settlement, risk management and corporate actions continue to apply unless specifically modified for the R3 series.
What NSE Clearing is changing
The R3 series gives India’s securities lending and borrowing market a new short-tenure option without removing the longer contracts already available.
The key feature is the settlement structure: securities are delivered through the first leg on T+1, while the borrowed securities are scheduled to return through the reverse leg on T+3, subject to settlement holidays.
That distinction is important. The R3 series is not simply a general change to India’s settlement cycle. It is a specific shorter-tenure SLB contract with its own settlement and operating conditions.
For market participants, the new arrangement offers another way to structure short-term securities lending and borrowing, while the restrictions on recall, repay and rollover mean the terms need to be understood before entering the transaction.
The new NSE Clearing R3 SLB contracts will become available from August 17, 2026, marking a targeted expansion of the securities lending and borrowing framework rather than a replacement of the existing SLB system.
Makon Financials: The significance of the R3 series is its shorter structure. NSE Clearing is adding a contract where the first leg settles on T+1 and the reverse leg on T+3, giving eligible market participants another option for short-term securities lending and borrowing while keeping the existing longer-tenure SLB contracts in place.
