ASE's executive director, Rajiv Desai told The Financial Express that ASE received permission last week and the exchange will implement ALBM within four weeks. After the National Stock Exchange (NSE), ASE is the second exchange to have this facility and it has already placed orders with Applied Softwear Limited for developing software for ALBM's settlement system.

The National Securities Clearing Corporation (NSCCL), a wholly-owned subsidiary of NSE and an approved intermediary registered with SEBI will provide training to the managers and brokers of the exchange for ALBM system. As specified by Sebi, all securities lending and borrowing transactions under ALBM have to be routed through an approved intermediary.

Meanwhile, to impart training to the managers and brokers, an expert faculty committe is coming to Ahmedabad next week. The ALBM programme will also be completed by this time. The primary objective of ALBM is to provide a window for trading members of the ASE for lending and borrowing securities. They are required to sign the Securities Lending Agreement with NSCCL and complete other essential documentation to become a participant to ALBM.

All eligible participants are allowed to borrow/lend securities for their own and on behalf of their clients, which is one of the major benefits of ALBM. Currently, ALBM is restricted to only index securities that have to be settled compulsorily in electronic form. This covers the most actively traded and liquid securities.

In the ALBM session, all the lending and borrowing transcations are executed with reference to a price called securities lending price (SLP). SLP is the closing price of the date prior to the ALBM session. The difference between the SLP and the rate at which transactions are executed in the ALBM session is the returns from borrowing/lending. A schedule is announced for each ALBM session. Participants will have to adhere to the schedule for pay in of securities/funds. The pay-in and pay-out is done on the same day. NSCCL imposes strict penalties for failure to honour ALBM obligations.

Meanwhile, the ASE has also entered into a memorandum of understanding (MoU) with the Calcutta Stock Exchange (CSE).

This will facilitate live-trading of CSE on the ASE. NSE has also accepted the proposal of ASE for availing live-trading of share prices.

Earlier, ASE had entered into a similar kind of agreement with the country's premier exchange, the Bombay Stock Exchange. As a part of this agreement the BOLT terminals will start functioning within a month.