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Security Lending Agreement for United Arab Emirates

Security Lending Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that establishes the terms and conditions for the temporary transfer of securities from a lender to a borrower in exchange for collateral. The document incorporates UAE regulatory requirements, including Central Bank and Securities and Commodities Authority (SCA) regulations, while addressing key aspects such as delivery mechanisms, collateral management, corporate actions, and default procedures. It ensures compliance with UAE financial regulations while facilitating efficient securities lending transactions in the local market.

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Security Lending Agreement

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What is a Security Lending Agreement?

The Security Lending Agreement serves as the primary legal framework for securities lending transactions in the UAE market. This document is essential when financial institutions seek to generate additional revenue from their securities holdings or when market participants need to borrow securities for trading strategies, settlement coverage, or market-making activities. The agreement must comply with UAE Federal laws, Central Bank regulations, and SCA requirements while incorporating international best practices for securities lending. It covers crucial elements including loan initiation, collateral requirements, rights and obligations of parties, corporate actions, and default scenarios. The document is particularly important given the UAE's growing role as a regional financial hub and the increasing sophistication of its securities markets.

What sections should be included in a Security Lending Agreement?

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

2. Background: Context of the agreement and brief description of the parties' intentions

3. Definitions: Detailed definitions of terms used throughout the agreement

4. Loans of Securities: Core terms governing the lending of securities, including initiation process and conditions precedent

5. Delivery of Securities: Procedures and timeframes for delivering securities and returning them

6. Collateral Requirements: Details of required collateral, including type, value, and maintenance requirements

7. Mark to Market: Procedures for daily valuation and margin calls

8. Income and Corporate Actions: Treatment of dividends, interest, and other corporate actions during the loan period

9. Representations and Warranties: Standard representations and warranties from both parties

10. Events of Default: Definition of default events and consequences

11. Termination: Conditions and procedures for termination of loans and the agreement

12. Tax Provisions: Treatment of taxes and manufactured payments

13. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction details

What sections are optional to include in a Security Lending Agreement?

1. Agency Provisions: Required when either party is acting as an agent for multiple principals

2. Islamic Finance Compliance: Required for Sharia-compliant security lending transactions

3. Custody Arrangements: Required when involving third-party custodians

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

5. Tri-party Arrangements: Required when using tri-party collateral management services

6. Securities Lending Market Places: Required when transactions occur through specific market venues

7. Regulatory Reporting: Required for transactions subject to specific regulatory reporting requirements

What schedules should be included in a Security Lending Agreement?

1. Schedule A - Eligible Securities: List of securities eligible for lending under the agreement

2. Schedule B - Eligible Collateral: Approved forms of collateral and applicable haircuts

3. Schedule C - Fee Schedule: Lending fees, rebate rates, and other applicable charges

4. Schedule D - Operating Procedures: Detailed operational procedures including cut-off times and delivery instructions

5. Schedule E - Forms and Notices: Standard forms for borrowing requests, recalls, and other notices

6. Schedule F - Authorized Persons: List of authorized signatories and contact details

7. Schedule G - Jurisdictional Requirements: Specific requirements under UAE law and regulations

8. Appendix 1 - Tax Documentation: Required tax forms and documentation

9. Appendix 2 - AML Documentation: Required anti-money laundering documentation and procedures

Authors

Alex Denne

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

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions





































Clauses































Relevant Industries

Banking

Financial Services

Investment Management

Securities Trading

Asset Management

Brokerage Services

Investment Banking

Wealth Management

Islamic Finance

Relevant Teams

Legal

Compliance

Risk Management

Securities Operations

Trading

Settlement

Portfolio Management

Treasury

Documentation

Regulatory Reporting

Investment Operations

Middle Office

Collateral Management

Relevant Roles

Securities Lending Manager

Collateral Manager

Trading Desk Manager

Legal Counsel

Compliance Officer

Risk Manager

Operations Manager

Portfolio Manager

Treasury Manager

Settlement Officer

Investment Officer

Chief Investment Officer

Head of Securities Services

Documentation Specialist

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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