Stock Borrowing Agreement Template for Hong Kong

The Stock Borrowing Agreement is a fundamental document in Hong Kong's securities markets, typically used when parties need to establish an ongoing relationship for securities borrowing and lending transactions. It's particularly crucial for activities such as short selling, settlement coverage, and market making operations. The agreement must comply with Hong Kong's regulatory framework, particularly the Securities and Futures Ordinance and Hong Kong Exchange requirements. It includes detailed provisions for the transfer of securities, collateral management, corporate actions, and default scenarios. This document is essential for financial institutions operating in Hong Kong's markets and must incorporate specific local regulatory requirements, market practices, and stamp duty considerations. The agreement serves as a master document under which multiple individual borrowing transactions can be conducted.

1. Parties: Identification of the lender and borrower, including their regulatory status if applicable

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

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Loans of Securities: Core provisions governing the borrowing and lending of securities

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

6. Collateral Requirements: Provisions regarding posting and maintaining collateral

7. Margin Maintenance: Requirements for maintaining margin levels and mark-to-market procedures

8. Rights and Obligations: Specific rights and obligations of both parties during the loan period

9. Income and Corporate Actions: Treatment of dividends, rights issues, and other corporate actions

10. Tax and Stamp Duty: Provisions dealing with tax implications and stamp duty obligations

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

12. Termination: Circumstances and procedures for termination

13. Representations and Warranties: Standard and specific representations by both parties

14. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law