Stock Borrowing Agreement for Malta

Stock Borrowing Agreement Template for Malta

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Stock Borrowing Agreement

"I need a Stock Borrowing Agreement governed by Maltese law for a hedge fund borrowing equities listed on European exchanges from a prime broker, with specific provisions for automated trading platforms and cross-border collateral arrangements."

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What is a Stock Borrowing Agreement?

The Stock Borrowing Agreement serves as the primary contractual framework for securities lending transactions in Malta, enabling market participants to temporarily transfer securities while maintaining economic benefits and managing associated risks. This document is essential for financial institutions engaging in securities lending, short selling, or collateral management operations under Maltese jurisdiction. The agreement must comply with the Financial Markets Act (Chapter 345 of the Laws of Malta), relevant EU regulations, and international market standards. It details the rights and obligations of both parties, collateral requirements, corporate action procedures, and default mechanisms. The Stock Borrowing Agreement is particularly crucial for maintaining market liquidity, supporting trading strategies, and facilitating efficient settlement processes while ensuring regulatory compliance within Malta's financial services framework.

What sections should be included in a Stock Borrowing Agreement?

1. Parties: Identification of the lender and borrower, including registration details and addresses

2. Background: Context of the agreement and general purpose of the stock borrowing arrangement

3. Definitions and Interpretation: Detailed definitions of technical terms and interpretation rules

4. Loans of Securities: Core provisions governing the borrowing and lending process, including initiation and confirmation of loans

5. Transfer of Securities and Collateral: Procedures and requirements for transferring securities and posting collateral

6. Collateral Maintenance: Rules for maintaining, valuing, and adjusting collateral throughout the loan period

7. Fees and Charges: Borrowing fees, payment terms, and other applicable charges

8. Income and Corporate Actions: Treatment of dividends, rights issues, and other corporate actions affecting borrowed securities

9. Tax and Withholding: Tax obligations, manufactured payments, and withholding requirements

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

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

12. Close-out and Set-off: Procedures for terminating loans and settling obligations following default

13. Notices: Communication requirements and contact details

14. Governing Law and Jurisdiction: Maltese law as governing law and jurisdiction provisions

What sections are optional to include in a Stock Borrowing Agreement?

1. Agency Provisions: Required when either party acts as agent for underlying principals

2. Intermediary Provisions: Required when transactions involve custodians or other intermediaries

3. Margin Maintenance: Detailed margining provisions for complex collateral arrangements

4. Electronic Trading Platform: Required when loans are initiated through specific trading platforms

5. Market Disruption: Provisions dealing with market disruption events and force majeure

6. Additional Tax Provisions: Required for cross-border arrangements or specific tax structures

7. Central Counterparty Provisions: Required when trades are cleared through a CCP

8. Non-Standard Settlement: Required for securities with non-standard settlement arrangements

What schedules should be included in a Stock Borrowing Agreement?

1. Form of Loan Confirmation: Standard form for confirming individual loan transactions

2. Eligible Securities: List of securities eligible for borrowing under the agreement

3. Eligible Collateral: Types of acceptable collateral and applicable haircuts

4. Fee Schedule: Detailed fee structure and calculation methodologies

5. Contact Details: Operational and legal contacts for both parties

6. Agency Disclosure: Format for disclosure of underlying principals in agency transactions

7. Tax Documentation: Required tax forms and documentation

8. 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

alex.den.21@genieai.co

Relevant legal definitions

Account
Adequate Financial Resources
Agency Transaction
Agreed Rate
Appointee
Appropriate Market
Approved Intermediary
Available Securities
Base Currency
Business Day
Buy-in
Cash Collateral
Close of Business
Collateral
Collateral Value
Defaulting Party
Default Market Value
Default Notice
Delivery
Dividend
Economic Benefits
Equivalent Collateral
Equivalent Securities
Event of Default
Exercise Price
Financial Instruments
Income
Income Payment
Income Record Date
Letter of Credit
Loaned Securities
Margin
Margin Percentage
Margin Transfer
Market Value
Manufactured Dividend
Non-Cash Collateral
Non-Defaulting Party
Notice of Exclusive Control
Notification Time
On-Loan Securities
Performance
Posted Collateral
Potential Event of Default
Prescribed Security
Pricing Rate
Principal
Professional Client
Rate Card
Regulated Market
Relevant Payment Date
Required Collateral Value
Securities
Securities Financing Transaction
Settlement Date
Standard Settlement Time
Stock Exchange
System
Tax
Term
Transaction
Transfer
Transferable Securities
Valuation Date
Valuation Percentage
Valuation Time

Clauses

Relevant Industries

Banking

Investment Management

Securities Trading

Asset Management

Hedge Funds

Insurance

Pension Funds

Financial Services

Investment Banking

Wealth Management

Relevant Teams

Legal

Compliance

Trading

Operations

Risk Management

Settlement

Portfolio Management

Treasury

Documentation

Regulatory Reporting

Collateral Management

Financial Control

Relevant Roles

Securities Lending Trader

Risk Manager

Legal Counsel

Compliance Officer

Operations Manager

Settlement Officer

Portfolio Manager

Trading Director

Collateral Manager

Chief Investment Officer

Head of Securities Finance

Treasury Manager

Financial Controller

Documentation Specialist

Regulatory Reporting Officer

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