Section 632 | Payment on transfer with accrued interest

(1)In the case of a transfer of securities with accrued interest, for the purposes of this Chapter a payment is treated as made by the transferee to the transferor in the interest period in which the settlement day falls.

(2)The amount of that payment depends on whether the transfer is under an arrangement by which the transferee accounts to the transferor separately—

(a)for the consideration for the securities, and

(b)for gross interest accruing to the settlement day.

(3)If the transfer is under such an arrangement, the amount of the payment is the amount of gross interest which the transferee accounts for.

(4)If—

(a)the transfer is not under such an arrangement, and

(b)the settlement day is itself an interest payment day for the securities,

the amount of the payment is the amount of interest payable on the securities on that day.

(5)If—

(a)the transfer is not under such an arrangement, and

(b)the settlement day is not an interest payment day for the securities,

the amount of the payment is an amount equal to—

(6)For the purposes of subsection (5), the first day on which that interest accrues is taken to be—

(a)the day after the last interest payment day before the settlement day, or

(b)if there was no interest payment day before the settlement day, the first day of the first interest period of the securities.

(7)In a case where no one is treated as the transferor (see sections 648(4) and 649(5)), this section has effect as if—

(a)in subsection (1) the words “to the transferor” were omitted, and

(b)subsections (2), (3), (4)(a) and (5)(a) were omitted.

(8)In a case where no one is treated as the transferee (see sections 621(2) and (3) and 648(2)), this section has effect as if—

(a)in subsection (1) the words “by the transferee” were omitted, and

(b)subsections (2), (3), (4)(a) and (5)(a) were omitted.

(9)Subsections (2) to (5) are subject to section 662 (new securities issued with extra return: special rules about payments).

(10)Subsections (4) and (5) are subject to section 659 (transfers with or without accrued interest: interest in default).