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Stock Loan Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Stock Loan Agreement

"I need a Stock Loan Agreement for a Hong Kong-based hedge fund acting as borrower with multiple international bank lenders, including specific provisions for automated trading platforms and cross-border collateral arrangements."

Document background
The Stock Loan Agreement serves as the primary contractual framework for securities lending transactions in the Hong Kong market. It is typically used when financial institutions, investment firms, or other market participants need to facilitate temporary transfers of securities, whether for settlement purposes, short selling, or yield enhancement strategies. The agreement encompasses crucial elements such as loan initiation procedures, collateral management, corporate action handling, and default provisions, all tailored to comply with Hong Kong regulatory requirements, particularly the Securities and Futures Ordinance (Cap. 571) and related regulations. This document is essential for establishing clear rights, obligations, and operational procedures between lenders and borrowers in securities lending transactions.
Suggested Sections

1. Parties: Identification of the lender and borrower, including their legal status and registered addresses

2. Background: Context of the agreement and general purpose of the stock lending arrangement

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and interpretation rules

4. Loans of Securities: Core provisions governing the lending and borrowing of securities, including initiation process and confirmation requirements

5. Transfer of Securities: Mechanics and requirements for the transfer of securities between parties

6. Collateral Requirements: Provisions regarding posting, maintaining, and returning collateral, including margin requirements

7. Distributions and Corporate Actions: Treatment of dividends, rights issues, and other corporate actions affecting the loaned securities

8. Fees and Charges: Lending fees, rates, payment mechanics, and other charges

9. Tax Provisions: Treatment of taxes, including withholding tax and manufactured payments

10. Representations and Warranties: Standard and specific representations and warranties from both parties

11. Events of Default: Definition of events of default and their consequences

12. Termination: Provisions for termination of loans and the agreement, including close-out procedures

13. Set-off Rights: Rights of set-off and netting arrangements

14. Governing Law and Jurisdiction: Choice of law and jurisdiction provisions

Optional Sections

1. Agency Provisions: Required when either party acts as agent for underlying principals

2. Custody Arrangements: Needed when involving third-party custodians for securities or collateral

3. Electronic Trading Platform: Required when transactions will be executed through specific trading platforms

4. Market Disruption: Provisions dealing with market disruption events and their consequences

5. Force Majeure: Provisions for extraordinary events affecting performance

6. Central Counterparty Provisions: Required when transactions will be cleared through a CCP

7. Buy-in Procedures: Detailed procedures for buy-in rights if needed

8. Sanctions and Compliance: Additional compliance requirements for regulated entities or cross-border transactions

Suggested Schedules

1. Schedule 1 - Form of Loan Confirmation: Standard form for confirming individual loan transactions

2. Schedule 2 - Eligible Securities: List or criteria of securities eligible for lending under the agreement

3. Schedule 3 - Eligible Collateral: Acceptable forms of collateral and applicable haircuts

4. Schedule 4 - Agency Terms: Detailed terms applicable to agency transactions if relevant

5. Schedule 5 - Contact Details: Administrative and operational contact information for both parties

6. Schedule 6 - Fee Schedule: Detailed fee arrangements and calculations

7. Schedule 7 - Systems and Operations: Operational procedures and requirements for executing transactions

8. Appendix A - Standard Settlement Instructions: Settlement and payment instructions for both parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions


































































Clauses


































Relevant Industries

Banking

Financial Services

Investment Management

Securities Trading

Asset Management

Hedge Funds

Broker-Dealers

Investment Banking

Pension Funds

Insurance

Relevant Teams

Legal

Compliance

Trading

Operations

Risk Management

Collateral Management

Settlement

Middle Office

Product Development

Documentation

Regulatory Reporting

Client Services

Relevant Roles

Legal Counsel

Compliance Officer

Securities Trading Manager

Collateral Manager

Risk Manager

Operations Director

Securities Lending Trader

Portfolio Manager

Settlement Officer

Prime Brokerage Manager

Chief Operating Officer

Legal Director

Head of Trading

Regulatory Reporting Officer

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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