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18-01-2022, 07:44 PM
Hi dreamybear,
By right, if a share had been suspended, CDP should have initiated a loan request recall to the borrower. If the borrower is unable to return those shares, it will be cash settled at the latest closing price. Also, do take note that from the terms and conditions of the Share Lending Programme, with the exception of dividend payout, for any other corporate actions, CDP will recall those loaned shares back to the lender. This applies to stocks that are not suspended as well.
This EAO is a corporate action, and therefore CDP will initiate a loan request recall as stated in the terms and conditions.
As to why $1.36 is the cash settlement price, it is the last trading price of Best World before suspension. Therefore, it is used as the settlement price as per terms and conditions of the SGX Share Lending Programme. It had nothing to do with the EAO offer price. These are two different matters altogether.
Computer records of loaned shares? I think you have mistaken. Borrowers lend shares because they wanted to short sell. They would have already sold those shares that they have borrowed. So, they are not holding any shares in their hands. They could have sold their borrowed shares at various prices to various parties. And those parties might have also sold those shares again. How could CDP track back? Even if CDP could track back., how are they going to settle with those buyers of those borrowed shares at various prices?
If Best World shares are still listed, things would be much simpler. If the borrower could not return, CDP can attempt to buyback from the market and return those shares to the lenders. But now that Best World had been suspended, those borrowers and CDP will have a harder time to find shares to return to the lenders. It is really the function of the market and in this case, it is not working well because the shares had been suspended.
By right, if a share had been suspended, CDP should have initiated a loan request recall to the borrower. If the borrower is unable to return those shares, it will be cash settled at the latest closing price. Also, do take note that from the terms and conditions of the Share Lending Programme, with the exception of dividend payout, for any other corporate actions, CDP will recall those loaned shares back to the lender. This applies to stocks that are not suspended as well.
This EAO is a corporate action, and therefore CDP will initiate a loan request recall as stated in the terms and conditions.
As to why $1.36 is the cash settlement price, it is the last trading price of Best World before suspension. Therefore, it is used as the settlement price as per terms and conditions of the SGX Share Lending Programme. It had nothing to do with the EAO offer price. These are two different matters altogether.
Computer records of loaned shares? I think you have mistaken. Borrowers lend shares because they wanted to short sell. They would have already sold those shares that they have borrowed. So, they are not holding any shares in their hands. They could have sold their borrowed shares at various prices to various parties. And those parties might have also sold those shares again. How could CDP track back? Even if CDP could track back., how are they going to settle with those buyers of those borrowed shares at various prices?
If Best World shares are still listed, things would be much simpler. If the borrower could not return, CDP can attempt to buyback from the market and return those shares to the lenders. But now that Best World had been suspended, those borrowers and CDP will have a harder time to find shares to return to the lenders. It is really the function of the market and in this case, it is not working well because the shares had been suspended.