What happens if the borrower fails to deliver the securities at the time of reverse leg settlement under SLBS?
If the borrower fails to deliver (return) the securities, NSE Clearing Ltd conducts a buy-in auction on the reverse leg settlement date.
If the securities cannot be obtained during the auction, the transaction is closed-out through a financial settlement. The close-out price is taken as the higher of:
- The highest traded price of the security in the capital segment of NSE from the day before the reverse leg settlement day to the reverse leg settlement day, OR
- 25% above the closing price of the security in the capital market segment of NSE on the reverse leg settlement day.