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Overview of SBL Business

The KSFC effectively promotes the SBL market with market confidence earned as an intermediary.

The KSFC ensures the efficiency and safety of securities borrowing & lending (SBL) by guaranteeing the fairness of the transactions and executing on behalf of the defaulting party in case the borrowed securities are not returned, etc.

Concept and Types of
SBL Transactions

  • An SBL transaction is the lending of securities held by an institution (lender) to another institution (borrower) that needs the securities for investment strategies, settlement purposes, etc.
  • The lender can enjoy stable borrowing fees while the borrower is able to generate new streams of profit through various investment strategies.
  • Bid-offer transactions : SBL conducted via competitive bidding of the SBL fee rate between the lender and the borrower
  • Arranged transactions : SBL conducted with a specified counterparty, upon agreement between the lender and the borrower on conditions to the transaction such as the SBL fee rate
  • Customized transactions : SBL where the counterparty is specified and overall conditions such as the SBL fee rate, etc. are agreed between the lender and the borrower, and where the KSFC is not held accountable for execution on behalf
  • Cash-backed transactions : SBL collateralized by cash and conducted via competitive bidding on the fee rate for the cash collateral between the borrower and the lender, under a fixed SBL fee rate
Overview of SBL
  Bid-Offer Transactions Arranged Transactions Customized Transactions Cash-Backed Transactions
Loan Period Mutual agreement
SBL Fees Bid-offer quotes Mutual agreement Fixed rate (0%)
Intermediary Fees Bond : 1.5% of the borrowing fee (lender), 1% of the borrowing fee (borrower) *
Stock : 2% of the borrowing fee
Collateral Ratio 105% or more
(102% or more for bonds)		 Mutual agreement 100% or more
Collateral Acquisition & Management KSFC Lender
Obligation Performance KSFC Borrower KSFC
Early Return Borrower : Possible
Lender : The securities shall be returned within two business days (T+2) if the lender makes the request before 12pm, and within three business days (T+3) for the request made after 12pm.
Payment in Installments Possible
Purpose of Transaction Securities-backed transactions, settlements, arbitrage, hedging, etc.

* In the case the borrowing fee is less than 1%, the intermediary fee shall be calculated setting the borrowing fee at 1%.
For customized transactions, the lender is exempt from intermediary fees. However, upon the request of the lender, the lender may bear half or all of the borrower's intermediary fee.