All NSCC settling members can participate in the Stock Borrow Program. Stocks and fixed income securities are eligible for the program.

The Stock Borrow Program enables participants to earn interest on the full current market value of their excess DTC positions borrowed by NSCC, while lending securities in the safety of a controlled environment.

• In the Stock Borrow Program, participants' NSCC money settlement accounts are credited on the day of the loan with the full market value of any securities borrowed by NSCC. This allows members to invest the funds to earn interest overnight on the value received from the loans
• Securities on loan to NSCC are recorded as long positions in a special CNS account set up specifically for the participant's Stock Borrow activity. This enables the member to benefit from lending securities within the safe, controlled CNS processing environment

By early evening on each business day, participants forward to NSCC a list of securities that are available for borrowing. The list can be transmitted via CPU-to-CPU link or PCWeb Direct. Early in the morning on the following business day, NSCC determines the securities obligations that remain open after CNS clearance processing. NSCC then attempts to satisfy these obligations by borrowing from participants in the Stock Borrow Program.

Selecting Lenders
If two or more participants are willing to lend the same security, NSCC selects the order of borrowing based on an algorithm that takes into account a random number and the participant's average loans and clearing fees. This procedure permits borrowing to be spread among many potential lenders of a security. NSCC uses the full quantity that the participant makes available in each issue before proceeding to the next participant in the sequence.

Crediting Participants' Accounts
After NSCC borrows securities in the early morning, the transactions are recorded as long positions in the participant's Stock Borrow (C) sub-account, a special account in the CNS System. The total current market value of the borrowed securities is credited in the participant's CNS account. These funds are available to the participant overnight. This process is reversed when NSCC returns the borrowed securities. No rebates are charged and the entire transaction occurs in the controlled CNS processing environment.

Reporting On Stock Borrow Activity
NSCC distributes reports to participants each morning, reflecting Stock Borrow activity. In reviewing the report, participants sometimes discover that the securities lent to NSCC are needed for customer securities segregation requirements.

In such cases, at the request of the participant, the long position in the Stock Borrow account is moved into a long position in the Fully-Paid-For (E) account. This results in the member not being credited the current market value of the securities position. The Securities & Exchange Commission treats this "E" position as a good control location for customer securities under Commission rule 15c3-3.

Please call Relationship Management at 1 888.382.2721.