Margin Lending Agreement for New Zealand

Margin Lending Agreement Template for New Zealand

A comprehensive legal agreement governed by New Zealand law that establishes the terms and conditions under which a financial institution provides margin lending facilities to investors. The document outlines the lending parameters, security arrangements, margin requirements, rights and obligations of all parties, default provisions, and risk management procedures. It ensures compliance with New Zealand financial regulations, including the Financial Markets Conduct Act 2013 and Credit Contracts and Consumer Finance Act 2003, while providing a clear framework for the operation of the margin lending facility.

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What is a Margin Lending Agreement?

The Margin Lending Agreement serves as the primary contractual document between financial institutions and investors seeking to leverage their investment portfolio in New Zealand. It is used when investors wish to borrow funds against their existing securities portfolio or purchase additional securities using the lending facility. The agreement incorporates essential elements required by New Zealand financial regulations, including the Financial Markets Conduct Act 2013 and related legislation. It details the mechanics of margin lending, including loan-to-value ratios, margin calls, interest calculations, and security arrangements. This document is crucial for establishing clear rights, obligations, and risk management procedures for both lenders and borrowers in margin lending transactions.

What sections should be included in a Margin Lending 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 margin lending facility

3. Definitions: Detailed definitions of terms used throughout the agreement, including financial terms specific to margin lending

4. Facility Establishment: Terms and conditions for establishing the margin lending facility, including credit limits and account setup

5. Security Arrangements: Details of security requirements, including approved securities and maintenance of collateral

6. Margin Requirements: Specification of initial and ongoing margin requirements, calculation methods, and margin calls

7. Interest and Fees: Interest rates, calculation methods, fees, and charges applicable to the facility

8. Drawdown and Repayment: Procedures and conditions for drawing down the facility and making repayments

9. Events of Default: Circumstances constituting default and consequences thereof

10. Rights and Obligations: Key rights and obligations of both parties, including reporting requirements

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

12. Term and Termination: Duration of the agreement and circumstances for termination

13. General Provisions: Standard legal provisions including notices, amendments, and governing law

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

1. Guarantees: Required when a third-party guarantee is provided for the margin lending facility

2. Multiple Borrowers: Include when the facility is extended to joint borrowers or corporate entities with multiple stakeholders

3. Foreign Currency Provisions: Required when the facility allows for multiple currency denominations

4. Online Access and Trading: Include when electronic trading and account access facilities are provided

5. Nominee Arrangements: Required when securities are held by a nominee company

6. Broker Integration: Include when the facility is integrated with specific broker arrangements

7. Portfolio Management: Required when offering managed portfolio services alongside margin lending

What schedules should be included in a Margin Lending Agreement?

1. Schedule 1 - Approved Securities: List of securities acceptable as collateral and their respective margin ratios

2. Schedule 2 - Fee Schedule: Detailed breakdown of all fees, charges, and interest rates

3. Schedule 3 - Calculation Methods: Detailed methodology for calculating margin requirements, buffer, and loan-to-value ratios

4. Schedule 4 - Account Operating Instructions: Procedures for operating the margin lending account, including trading and settlement

5. Schedule 5 - Risk Disclosure: Detailed disclosure of risks associated with margin lending

6. Appendix A - Account Opening Forms: Required forms and documentation for account establishment

7. Appendix B - Direct Debit Authority: Authorization for direct debiting of linked accounts

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

New Zealand

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Financial Services

Investment Management

Wealth Management

Stockbroking

Private Banking

Securities Trading

Asset Management

Consumer Finance

Relevant Teams

Legal

Compliance

Risk Management

Credit

Wealth Management

Operations

Client Services

Product Development

Trading

Portfolio Management

Documentation

Financial Advisory

Relevant Roles

Credit Manager

Risk Officer

Compliance Officer

Legal Counsel

Relationship Manager

Investment Advisor

Financial Advisor

Portfolio Manager

Credit Analyst

Operations Manager

Product Manager

Wealth Manager

Trading Manager

Client Services Manager

Documentation Specialist

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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