Manufactured dividend: Difference between revisions
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imported>Doug Williamson (Create page. Source: UK Money Markets Code April 2017: http://www.bankofengland.co.uk/markets/Documents/money/code/ukmoneymarketscode.pdf) |
imported>Doug Williamson (Classify page.) |
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Latest revision as of 07:18, 29 June 2022
Securities lending and Repurchase agreements
A manufactured payment of dividends normally arises when a securities lending or repurchase agreement (repo) crosses a dividend date.
As a consequence, the stock lender will not receive the (real) dividend to which it would have been entitled, had it not lent the securities.
In this situation, the stock borrower or repo counterparty may be required to pay a 'manufactured' dividend amount to the lender, as compensation for not receiving the real dividend.
