Loaned Securities - 2000 GMSLA Provision: Difference between revisions

:''Where {{gmsla2000prov|Income}} is paid ''in relation to any {{gmsla2000prov|Loaned Securities}}''  [...] on or by reference to an {{gmsla2000prov|Income Payment Date}} ...''

Say I hold {{gmsla2000prov|Securities}} on their {{gmsla2000prov|Income Payment Date}} (NB: this is {{2000gmsla}} speak for the {{gmslaprov|Income Record Date}}<ref>That this is sloppily expressed is another whole conversation — in any case it was (partially) fixed in the 2010 {{gmsla}}.</ref>), being the date by reference to which the Income was payable, but I redeliver them before the date on which relevant {{gmsla2000prov|Income}} is actually paid, then must I manufacture the dividend?

A common sense economic analysis would say yes: the {{gmsla2000prov|Lender}} was not the holder of record on the record date, by reason of the {{gmsla2000prov|Borrower}} having borrowed the shares. So the {{gmsla2000prov|Borrower}} should manufacture the payment. But when the {{gmsla2000prov|Income}} is paid, the {{gmsla2000prov|Securities}} are not  “{{gmsla2000prov|Securities}} which are” — present tense — “the subject of an outstanding {{gmsla2000prov|Loan}}.”

Also, this is an easy end-run for a nefarious Borrower: once an Income record date passes, as long as it can deliver the shares back to the Lender before the actual payment date, on a literal reading of this clause it can avoid ever having to manufacture a dividend.