Securities Account Control Agreement Template for England and Wales

A Securities Account Control Agreement is a specialised legal document that establishes control over securities accounts used as collateral in secured financing transactions. Under English and Welsh law, this agreement is essential for creating perfected security interests in financial assets, ensuring lenders have the necessary legal protections when securities serve as collateral for loans or other financial obligations.

When do you need this document?

You need a Securities Account Control Agreement whenever securities held in an account will serve as collateral for financing arrangements. This includes secured lending transactions where borrowers pledge investment portfolios, structured finance deals involving securities as underlying assets, and margin lending arrangements with investment brokers. The agreement is particularly crucial in repo transactions, securities lending arrangements, and when establishing security interests over managed investment accounts. Financial institutions, corporate borrowers, and investment managers regularly use this document to ensure proper legal control over collateral accounts.

Key legal considerations

The agreement must clearly define the control mechanism over the securities account, specifying which party has authority to direct account activities and under what circumstances. Critical provisions include the secured party's rights to receive account statements, direct dispositions of securities, and access funds or proceeds from the account. The document should address voting rights for securities held in the account, typically transferring these rights to the secured party upon default. Enforcement procedures must comply with the Financial Collateral Arrangements Regulations 2003, which provide streamlined enforcement mechanisms for financial collateral. The agreement should also specify notice requirements, default triggers, and the priority of the security interest relative to other potential claims on the account.

Legal requirements in England and Wales

Under English and Welsh law, Securities Account Control Agreements must comply with the Financial Services and Markets Act 2000, particularly regarding authorised persons and regulated activities. The Financial Collateral Arrangements (No.2) Regulations 2003 govern the creation and enforcement of security over financial instruments, providing specific requirements for perfection and enforcement. Securities intermediaries involved in the arrangement must comply with FCA Handbook CASS Rules regarding client asset protection and segregation requirements. The agreement must ensure compliance with UK EMIR requirements for relevant securities transactions and reporting obligations. Companies Act 2006 provisions may apply regarding corporate capacity and registration requirements for security interests created by company entities. Proper documentation and registration may be required depending on the nature of the underlying securities and the parties involved.