Manufactured dividend
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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.
