Security Loan Agreement for Canada

Security Loan Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that establishes the terms and conditions under which one party (the lender) temporarily transfers securities to another party (the borrower) in exchange for collateral. The agreement complies with Canadian federal and provincial securities regulations, including relevant Provincial Securities Acts and the Personal Property Security Act (PPSA). It covers crucial aspects such as collateral requirements, rights and obligations of parties, fee structures, default provisions, and regulatory compliance requirements specific to the Canadian securities lending market.

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What is a Security Loan Agreement?

The Security Loan Agreement is a fundamental document in Canadian securities markets that facilitates the temporary transfer of securities between parties while maintaining legal and regulatory compliance. It is typically used when institutional investors, banks, or broker-dealers need to borrow securities for various purposes, including short selling, covering settlement failures, or supporting trading strategies. The agreement must comply with Canadian federal and provincial regulations, including securities laws, financial institution regulations, and personal property security legislation. It contains detailed provisions for collateral management, marking to market, corporate actions, voting rights, and default scenarios. This document is essential for participants in the Canadian securities lending market and must reflect current regulatory requirements and market practices.

What sections should be included in a Security Loan Agreement?

1. Parties: Identification of the lender and borrower, including full legal names and addresses

2. Background: Context of the agreement and general purpose of the security loan arrangement

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

4. Loan of Securities: Core provisions regarding the lending of securities, including transfer mechanisms and conditions precedent

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

6. Loan Fee and Rebate: Terms of compensation for the loan, including fees, rebates, and payment mechanics

7. Rights and Obligations: Specific rights and obligations of each party during the loan period

8. Representations and Warranties: Standard and specific representations and warranties from each party

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

10. Termination: Provisions for termination of the agreement and individual loans

11. Settlement and Delivery: Procedures for settling transactions and delivering securities

12. Indemnification: Mutual indemnification provisions and limitation of liability

13. Notices: Communication requirements and contact details

14. Governing Law and Jurisdiction: Choice of law and jurisdiction for dispute resolution

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

1. Tax Provisions: Specific tax considerations and obligations - include when cross-border lending is involved

2. Foreign Securities Provisions: Additional provisions for dealing with foreign securities - include when non-Canadian securities are involved

3. Agency Provisions: Additional provisions when one or more parties are acting as agents - include for agency arrangements

4. Market Disruption: Provisions dealing with market disruption events - include for longer-term arrangements

5. Electronic Trading Platform: Provisions related to electronic trading platforms - include when using specific trading systems

6. Regulatory Compliance: Specific regulatory compliance requirements - include when dealing with regulated entities

7. Multiple Currency Provisions: Provisions for handling multiple currencies - include when different currencies are involved

What schedules should be included in a Security Loan Agreement?

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

2. Schedule B - Eligible Collateral: List of acceptable forms of collateral and their respective haircuts

3. Schedule C - Fee Schedule: Detailed breakdown of fees, rebates, and other charges

4. Schedule D - Operating Procedures: Detailed procedures for borrowing/lending, marking to market, and settlements

5. Schedule E - Form of Loan Confirmation: Standard form for confirming individual security loans

6. Schedule F - Notice Details: Detailed contact information for all types of notices

7. Schedule G - Tax Documentation: Required tax forms and documentation

8. Appendix 1 - Standard Settlement Instructions: Details of settlement procedures and account information

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

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Investment Management

Securities Trading

Asset Management

Financial Services

Wealth Management

Institutional Investment

Broker-Dealers

Investment Banking

Fund Management

Relevant Teams

Legal

Compliance

Risk Management

Trading Operations

Securities Operations

Collateral Management

Portfolio Management

Prime Brokerage

Trading Desk

Documentation

Regulatory Affairs

Securities Finance

Relevant Roles

Securities Lending Manager

Legal Counsel

Compliance Officer

Risk Manager

Trading Operations Manager

Collateral Manager

Securities Operations Officer

Portfolio Manager

Prime Brokerage Manager

Custodian Relationship Manager

Trading Desk Manager

Securities Finance Director

Legal Documentation Specialist

Regulatory Compliance Manager

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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