Bombardier Inc. T.BBD.A

RE:RE:RE:Technicalities & markets realities........

[clubhouse19]

Acuras

From the IIROC ruling that I can see, the broker then needs to have a separate agreemnt with the client and that may very well be the case as it is likely hidden in some corner of the agreement.

1. https://www.iiroc.ca/news-and-publications/notices-and-guidance/fully-paid-securities-lending

1. Agreements

The Dealer must sign a securities loan agreement directly with the client. Clients of an Introducing Broker or Portfolio Manager must enter into a tri-party securities loan agreement with the Dealer where:

• the client is the lender,
• the Introducing Broker or Portfolio Manager is responsible for client eligibility, appropriateness and suitability, and
• the Dealer, in its capacity as Carrying Broker (for the Introducing Broker) or Custodian (for the Portfolio Manager), is the borrower.

The securities loan agreement must be in a form acceptable to IIROC and must clearly identify the:

• roles and responsibilities of each party,
• events of default,
• rights of the client to the collateral in the event of insolvency of the Dealer and if the Dealer is unable to recall lent securities within stipulated timeframes, and
• the fee schedule and the basis for the fee calculation.

1. Disclosure to clients

The Dealer must provide a clear description to clients of the FPL program including the type of accounts or sub-accounts to be opened and the purpose of borrowing the fully-paid securities.

The Dealer must also obtain signed risk disclosure acknowledgements from, and provide documentation in plain language21  to, the client that explains all applicable risks including:

• market risks that could result from the lent securities being used to facilitate short selling which could put downward pressure on the price of the lent securities,
• restrictions on access to lent securities on demand if the Dealer is unable to recall the securities within the timeframes stipulated by the Dealer,
• potential tax implications of receiving manufactured payments from the Dealer (in lieu of dividends and distributions directly from the issuer),
• potential tax implications if the client exercises their rights to the cash collateral,
• loss of voting rights on securities that are out on loan, including that the Dealer may not be able to recall the lent securities in time to vote (i.e. before the record date) and that the lent securities could be voted on contrary to how the client might have wanted to vote,
• lending out securities may trigger insider or early warning reporting requirements under applicable securities laws,
• restrictions on access to collateral, and
• in the event of insolvency of the Dealer, limitations on recourse to collateral with increased risk if all of a client’s fully-paid securities have been lent to the Dealer,  and lack of CIPF coverage for lent securities.

1. Confirmations

The Dealer must provide a confirmation to the client with all required details related to the securities loan transaction when the following has occurred:

• securities have been lent
• the loan is terminated
• there is a change in fees and/or rates

Acuras1 wrote:
Not just margined shares = 

I will add this with regard to shares held in trusts: the documentation gives the house the right / permission to borrow your shares in any cash and or margin account.

Here's how it works: should you not want to "lend" your shares, you have to specifically sign out of the pool of shares held in trust by the firm. 

GLTA