Funfun, a traditional managed fund, owns some Australian government bonds. Funfun accepts to lend its government bonds to BoboBank, an investment bank, for a 15 day loan. BoboBank puts a sale order for the government bonds the day after it found a lender. The buyer of the government bonds is Kiwi, a superannuation fund.15 days after the settlement of the lending agreement, the government bonds need to be returned to the original owner and BoboBank needs to put a buy order for these government bonds during the last day of the loan. The original owner puts a sale order for the government bonds the day after the borrower has put the order to return them.

a. Represent on a timeline the events described above. Include for each transaction the order and the delivery of the securities and clearly indicate which entities are involved in the transaction. Note that in order to not overcrowd the timeline we represent one entry for both the order and the match.

b. Consider each sale involved in the story and conclude if it constitutes an ordinary sale, a covered short sale or a naked short sale. Give a precise justification for your choice. Conclude whether these sales are allowed under the current Australian legislation/regulation.

C. Consider the reporting(s) required when BoboBank puts its sale order. Clearly indicate which information needs to be reported, which entity is in charge of reporting and to which entity the information is reported.

D. A week after the lending agreement was established, payment of coupons is due on the Australian government bonds as well as the payment of fees on the bond lending agreement. Describe all payments taking place on this occasion, clearly indicating which entities in our story pay and which entities in our story receive.

Answer rating: 100% (QA)

Answer a Timeline of Events Day 1 Funfun lends Australian government bonds to BoboBank Day 2 BoboBank puts a sale order for the government bonds Day 3 ... View the full answer