The Singapore Exchange (SGX) will replace the fixed rates for its securities borrowing and lending programme with variable and more competitive rates from Dec 2.

It said yesterday that the move will benefit both borrowers and lenders.

Securities lending is the temporary transfer of securities from a lender to a borrower for a fee.

Under the current programme, the fee paid to lenders is fixed at 4 per cent a year, while the fee paid by borrowers is 6 per cent.

From next Monday, the borrowing rate for index stocks, real estate investment trusts and business trusts will be lowered to 0.5 per cent, while the borrowing rate for the rest of the securities will be lowered to 4 per cent.

These rates will be reviewed periodically, taking into account factors such as market rates, and demand and supply of the eligible securities, the SGX said.

Lenders' rates will be calculated based on 70 per cent of the borrowing rate.

The new rates make it more attractive for institutional investors to borrow, which could result in a higher frequency of loans, and increase lenders' chances of securities being lent out, the SGX added.

Retail investors with Central Depository (CDP) accounts can become lenders by registering for the programme for free, and have the opportunity to earn additional income from their securities holdings, the SGX noted.

They will receive a lending fee from the CDP if they have eligible securities to be borrowed.

The SGX noted that an investor can register as a lender now even if he does not own any eligible securities or does not have the requisite quantity of securities.

"Once your securities holdings meet the eligibility criteria, CDP may borrow your securities when there is demand," it added.

The full list of eligible securities, along with the indicative rates, is available at https://www1.cdp.sgx.com/sgx-cdp-web/lendingpool/show

There are more than 450 securities worth $2.5 billion available for loan.