OSLA is short for Overseas Securities Lending Agreement.There is...

OSLA is short for Overseas Securities Lending Agreement.

There is a PDF brochure put out by ISLA - International Securities Lending Association:

On the ISLA website here.

The main reason for borrowing shares is for shorting - that is to borrow the shares and sell them immediately, hoping the SP will depreciate so they can be bought back at a cheaper price before repayment.

Another scenario is to cover a position during a CR in case the SP goes below the issue price.

I remember at the time of the CR just prior to the A#1 duster a poster called 'bentano' said he took part in the CR but immediately sold the shares to lock in the profit.

From the document posted by

TevezFC - Post: 5995637.

the terms were:

'Placement
Trading Halt Tuesday 23 November and Wednesday 24 November 2010.
Bids due: 4pm Wednesday 23 November 2010 (Baillieu reserves the right to close the offer early)
Acceptances / CARD Forms due: 9am Thursday 24 November 2010
Announce Placement and recommence trading: 10am Thursday 25 November 2010
DvP settlement (T+3): Tuesday 30 November 2010
Allotment and quotation on ASX: Wednesday 1 December 2010'


From the post dated 25 Nov 2011:

Bentano - 6005264.

Bentano must have had his issue of shares confirmed by the time MEO came out of TH 25 Nov and had already sold them (or their equivalent) by COB on the same day. I am not sure about the T+3 issue of a CR but if the shares were not allocated until 1 Dec he may have borrowed an equivalent amount of shares to those issued, so he could sell them and cover his position. After taking part in the CR @ 52c and selling the shares immediately at 55.5c he would have made a profit of 7% on the day. All he needed to do was return his allocation to the lender. Other institutions taking part in the CR may have done the same.

The reason I mention this is that the OSLA is a vehicle to allow for the borrowing of shares to cover positions taken by instos during CR, and other, exercises. It is well known that after a CR the SP often goes down to the CR issue price, in this case 52c, so it is usually a sure bet, if managed well. At the time the SP went down to 48.5c by COB 30 Dec. By 3 Dec it was down to 42c.

If we look at P3 of the:

CS - becoming a substantial holder release, 16/02/11.

there is a prime example of 500,000 shares being borrowed after the CR (26 Nov) and being returned 2 Dec which was probably an CR insto covering its position.

This has been happening since the A#1 exercise with SHs trying to recoup their losses and is still taking a while to settle down.

Of course we humble retail SHs do not have such facilities where we can short or have access to algorithms but the elite rely on us to keep feeding them through our relatively meagre trades.

As ANZ posted recently the short trading is still going on. Whilst CS has a number of clients I believe the balance is returning to the accumulators, rather than the shorters ATM. I hope so.

The recent 'Ceasing to be a substantial holder' (below 5%) release shows a reduction from 27,663,769 shares (5.12%) to 25,733,101 shares (4.77%) which has been brought about by 4.4m OSLA stock returns but offset somewhat by 2.5m on-market purchases.

BTW bentano said:

'I wouldnt be too worried long term holders .... It'll bounce back to normal over the next week or 2- it always does...'

But this did not account for the duster. As a LT holder I am still not worried. The CR exercise lessened the risk for MEOmites and there is still plenty of upside IMHO. It will just take time.

The ST traders were annoyed about the timing of the CR as it was totally unexpected. We all must be aware that the unexpected, both good and bad (depending on the SHs strategy) can happen. Instos with their 'smart money' usually cover themselves and it is usually the retail traders/investors that hold up the company through difficult times.

And MEO has needed plenty of support lately - let's hope we are rewarded.

#:>))