Manufacture
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In the world of securities financing and title transfer collateral arrangements, to “manufacture” income received on a security you have borrowed, purchased, or been delivered as collateral, is to pay an equal amount of cash to your counterparty representing that interest.
Because of the title transfer nature of these arrangements, this payment is your own debt obligation to your counterparty, not the underlying issuer’s, and should you go tetas arriba in that brief period between receiving the income and paying it away, that is your counterparty’s problem.
But, that aside, this is all really rather finnicky stuff. You just pay over any interest as and when you receive it. Compare, by way of alternative, interest accrual — where you don’t manufacture income but instead accrue nominal interest every day and pay it at the end of the arrangement.
In the various agreements:
- Global Master Repurchase Agreement: This is the main difference between, for example, a Repurchase Transaction and a Buy/Sell Back Transaction. See Income Payments - GMRA Provision
- 2010 GMSLA: Typically ticks over on manufactured income, not interest accrual. See Income - GMSLA Provision