Share Lending Agreement for Switzerland

Share Lending Agreement Template for Switzerland

A comprehensive legal agreement governed by Swiss 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 is structured in accordance with Swiss financial regulations, particularly the Federal Act on Financial Market Infrastructures (FMIA) and Swiss Code of Obligations, and includes detailed provisions for the transfer, maintenance, and return of securities, collateral requirements, corporate actions, fees, and default scenarios. It incorporates specific Swiss market practices and regulatory requirements while addressing tax implications under Swiss law.

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What is a Share Lending Agreement?

The Share Lending Agreement is a crucial document used in Swiss financial markets to facilitate securities lending transactions between financial institutions. This agreement type is essential for market participants looking to generate additional revenue from their securities holdings or obtain specific securities for trading strategies. The document, governed by Swiss law, must comply with the Federal Act on Financial Market Infrastructures (FMIA), FINMA regulations, and the Swiss Code of Obligations. It contains detailed provisions covering loan initiation, collateral requirements, corporate actions, fee structures, and default scenarios. The Share Lending Agreement is particularly important in Switzerland's sophisticated financial markets, where securities lending plays a vital role in maintaining market liquidity and supporting various trading strategies.

What sections should be included in a Share 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 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 terms

5. Delivery and Return: Procedures and requirements for the delivery and return of borrowed securities

6. Collateral Requirements: Provisions regarding the posting, maintenance, and return of collateral

7. Rights and Obligations: Detailed rights and obligations of both parties during the lending period

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

9. Fees and Payments: Lending fees, payment procedures, and other financial considerations

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

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

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

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

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

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

1. Market Disruption: Provisions dealing with market disruption events - include if lending in volatile markets or emerging markets

2. Agency Provisions: Include when either party acts as agent for underlying principals

3. Set-off Rights: Detailed set-off provisions - include when parties have multiple trading relationships

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

5. Multiple Currencies: Include when loans and collateral may be in different currencies

6. Credit Support: Additional credit support provisions - include for parties with lower credit ratings

7. Regulatory Compliance: Specific regulatory compliance provisions - include when parties are subject to special regulatory regimes

What schedules should be included in a Share Lending Agreement?

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

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

3. Schedule C - Collateral Parameters: Detailed specifications for acceptable collateral and haircuts

4. Schedule D - Fee Schedule: Detailed breakdown of applicable fees and charges

5. Schedule E - Settlement Instructions: Standard settlement and account details for both parties

6. Schedule F - Contact Details: List of authorized personnel and contact information

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

8. Appendix 2 - Operating Procedures: Detailed operational procedures and requirements

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

Switzerland

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Investment Management

Securities Trading

Asset Management

Hedge Funds

Prime Brokerage

Pension Funds

Insurance

Financial Services

Capital Markets

Relevant Teams

Legal

Compliance

Risk Management

Securities Operations

Trading

Settlement

Product Control

Financial Control

Portfolio Management

Collateral Management

Relevant Roles

Legal Counsel

Securities Operations Manager

Compliance Officer

Risk Manager

Trading Manager

Portfolio Manager

Securities Lending Trader

Collateral Manager

Settlement Officer

Product Controller

Financial Controller

Operations Director

Chief Legal Officer

Head of Trading

Investment Manager

Industries
Swiss Code of Obligations (Obligationenrecht, OR): The fundamental law governing contracts in Switzerland, providing the basic framework for contractual relationships, including formation, performance, and termination of contracts
Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIA/FinfraG): Regulates securities lending activities, trading venues, and post-trading infrastructure in Switzerland
Swiss Financial Market Supervision Act (FINMASA): Establishes the regulatory framework for financial market supervision and the powers of FINMA (Swiss Financial Market Supervisory Authority)
Federal Act on Banks and Savings Banks (Banking Act): Provides regulations for banking institutions involved in securities lending, including requirements for risk management and capital adequacy
FINMA Circular 2010/2 on Repo/SLB: Specific regulations and guidelines from FINMA regarding securities lending and borrowing transactions
Swiss Federal Act on Intermediated Securities (FISA): Governs the custody and transfer of intermediated securities, which is crucial for share lending arrangements
Federal Act on Debt Enforcement and Bankruptcy (DEBA): Relevant for understanding the treatment of lent securities and collateral in case of bankruptcy of either party
Federal Act on Stock Exchanges and Securities Trading (SESTA): Contains provisions relevant to securities trading and market conduct rules
Swiss Federal Tax Law: Governs the tax implications of securities lending transactions, including stamp duty and income tax considerations
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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