Comment on Reverse Arbitrage? SLB?
commented on
20 May 2013, 12:38 PM
Basu,
You have to first borrow the stock and then sell in delivery.
So for example if SBI is trading at 2300, instead of going to the futures market, you can go to the SLB mechanism, borrow SBI stock and sell it in the market.
Once the stock price goes down, you can buy back the stock and give it back to your lender.
SLB is really popular in countries like Brazil and Korea. Unlike in India SLB is more popular than futures. SLB improves the market depth considerably and measures taken by Indian exchanges should help in the same.