The Short Sale Agreement is essential for facilitating regulated short selling activities in the Saudi Arabian securities market. This document is used when an investor wishes to borrow securities for the purpose of short selling, typically in anticipation of a price decline. The agreement must comply with the Capital Market Authority's regulations and Shariah principles, making it unique to the Saudi Arabian context. It includes comprehensive details about the borrowed securities, margin requirements, fees, settlement procedures, and risk management protocols. The document is particularly important given the specialized nature of short selling in Islamic finance and the need to ensure all transactions conform to both regulatory requirements and religious principles. It's commonly used by financial institutions, investment firms, and market makers operating in the Saudi Arabian market.
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1. Parties: Identification of the lender (securities owner), borrower, and any intermediary brokers
2. Background: Context of the agreement and brief explanation of the short sale transaction
3. Definitions: Key terms used throughout the agreement, including technical trading terms and Shariah-compliant concepts
4. Securities Subject to Short Sale: Detailed description of the securities being borrowed and sold, including quantity and specifications
5. Terms and Conditions: Core transaction terms including loan period, fees, and collateral requirements
6. Margin Requirements: Specifications for initial and maintenance margin requirements as per CMA regulations
7. Settlement Procedures: Process and timeline for settling the short sale transaction
8. Representations and Warranties: Statements of fact and guarantees from both parties, including Shariah compliance declarations
9. Risk Disclosure: Mandatory risk warnings and acknowledgments
10. Default and Remedies: Events of default and corresponding remedial actions
11. Termination: Conditions and procedures for early termination
12. Governing Law and Jurisdiction: Specification of Saudi law and relevant jurisdiction
1. Broker Obligations: Include when a broker is involved as an intermediary in the transaction
2. Islamic Finance Compliance: Detailed section on Shariah compliance when required by institutional investors or regulatory requirements
3. Market Making Provisions: Include when the short sale is part of market making activities
4. Cross-Border Provisions: Include when either party is based outside Saudi Arabia
5. Price Determination: Include when specific pricing mechanisms need to be detailed
6. Reporting Requirements: Include when additional reporting to regulators or other parties is required
1. Schedule 1 - Securities Details: Detailed specifications of the securities including ISIN, ticker symbols, and quantity
2. Schedule 2 - Fee Schedule: Breakdown of all applicable fees, charges, and commission rates
3. Schedule 3 - Settlement Instructions: Detailed settlement and payment procedures
4. Schedule 4 - Required Disclosures: Standard risk disclosures and regulatory warnings as required by CMA
5. Schedule 5 - Margin Calculations: Detailed methodology for calculating and maintaining margin requirements
6. Appendix A - Shariah Compliance Certificate: Documentation of Shariah board approval and compliance declarations
7. Appendix B - Forms and Notices: Standard forms for margin calls, termination notices, and other communications
Relevant legal definitions
Clauses
Relevant Industries
Financial Services
Investment Banking
Securities Trading
Asset Management
Islamic Finance
Capital Markets
Wealth Management
Banking
Relevant Teams
Legal
Compliance
Trading
Risk Management
Operations
Settlement
Islamic Finance
Investment Management
Securities Lending
Middle Office
Relevant Roles
Trading Manager
Compliance Officer
Legal Counsel
Risk Manager
Investment Officer
Securities Lending Manager
Shariah Compliance Manager
Portfolio Manager
Operations Director
Chief Investment Officer
Broker-Dealer Representative
Settlement Officer
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