Margin Agreement Template for Australia

Margin Agreement Template for Australia

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Key Requirements PROMPT example:

Margin Agreement

"I need an Australian law Margin Agreement for use between our hedge fund and international trading partners, with specific provisions for cross-border collateral transfers and multiple currency support, to be implemented by March 2025."

What is a Margin Agreement?

The Margin Agreement is a critical document used in financial trading relationships to manage counterparty credit risk through collateral arrangements. It is particularly relevant in the Australian financial markets context, where it must comply with local regulatory requirements including ASIC regulations and the Corporations Act 2001. This agreement is typically used when parties engage in trading activities that require collateral posting, such as derivatives trading, securities lending, or prime brokerage relationships. The document details the operational aspects of margin transfers, eligible collateral, valuation methodologies, and default procedures, while ensuring compliance with Australian legal and regulatory frameworks. It is essential for financial institutions operating in Australian markets to have properly structured Margin Agreements that reflect both international best practices and local requirements.

What sections should be included in a Margin Agreement?

1. Parties: Identification of the contracting parties and their legal status

2. Background: Context of the agreement and relationship between the parties

3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpretation

4. Margin Requirements: Core obligations regarding posting and maintaining margin, including calculation methodologies

5. Margin Transfer and Settlement: Procedures and timing for transferring margin between parties

6. Eligible Collateral: Types of acceptable collateral and their valuation methods

7. Interest and Distributions: Treatment of interest, dividends, and other distributions on posted collateral

8. Events of Default: Circumstances constituting default and consequences

9. Close-out and Netting: Procedures for termination and calculation of final obligations

10. Representations and Warranties: Standard legal assurances from each party

11. Dispute Resolution: Procedures for resolving disagreements

12. Governing Law and Jurisdiction: Choice of law and jurisdiction for disputes

13. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment

What sections are optional to include in a Margin Agreement?

1. Regulatory Compliance: Specific provisions for regulated entities or activities, used when either party is subject to specific regulatory requirements

2. Cross-Border Provisions: Additional terms for international transactions, used when parties are in different jurisdictions

3. Initial Margin Requirements: Specific provisions for initial margin requirements, used when transactions are subject to mandatory initial margin rules

4. Segregation Requirements: Terms for segregation of collateral, used when required by regulation or agreed by parties

5. Third Party Custodian: Provisions for use of a custodian, used when parties agree to third-party holding of collateral

6. Special Conditions: Specific terms for unique circumstances or requirements, used when standard terms need modification

What schedules should be included in a Margin Agreement?

1. Schedule 1 - Margin Calculation: Detailed methodology for calculating margin requirements

2. Schedule 2 - Eligible Collateral and Haircuts: List of acceptable collateral types and applicable valuation haircuts

3. Schedule 3 - Contact Details: Administrative and operational contact information for both parties

4. Schedule 4 - Forms and Notices: Standard forms for margin calls, transfers, and other notices

5. Schedule 5 - Account Details: Banking and securities account information for transfers

6. Appendix A - Credit Support Document Forms: Standard documentation for third-party credit support if applicable

7. Appendix B - Jurisdictional Requirements: Specific requirements for relevant jurisdictions

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 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

Financial Services

Banking

Investment Management

Securities Trading

Derivatives Trading

Asset Management

Insurance

Pension Fund Management

Commodities Trading

Investment Banking

Relevant Teams

Legal

Compliance

Risk Management

Trading Operations

Collateral Management

Credit Risk

Treasury

Portfolio Management

Trading

Operations

Finance

Regulatory Affairs

Relevant Roles

Legal Counsel

Compliance Officer

Risk Manager

Trading Operations Manager

Collateral Manager

Credit Risk Officer

Treasury Manager

Portfolio Manager

Trading Desk Manager

Operations Director

Financial Controller

Chief Risk Officer

Chief Legal Officer

Chief Compliance Officer

Head of Trading

Head of Operations

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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