Stock Borrowing Agreement Template for New Zealand

A comprehensive legal agreement governed by New Zealand law that establishes the terms and conditions under which one party (the lender) agrees to temporarily transfer securities to another party (the borrower) in exchange for collateral and fees. The agreement addresses key aspects including delivery mechanisms, collateral requirements, rights and obligations of both parties, fee structures, tax implications, and default procedures, while ensuring compliance with New Zealand's Financial Markets Conduct Act 2013 and related regulations. It includes provisions for corporate actions, dividend payments, and voting rights during the borrowing period.

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What is a Stock Borrowing Agreement?

This Stock Borrowing Agreement is designed for use in securities lending transactions within the New Zealand financial markets framework. It is particularly relevant when financial institutions need to establish formal arrangements for temporary transfers of securities, whether for market making, settlement coverage, or trading strategies. The agreement encompasses essential elements required under New Zealand law, including compliance with the Financial Markets Conduct Act 2013 and related regulations. It provides comprehensive coverage of operational procedures, risk management measures, and regulatory requirements specific to the New Zealand jurisdiction, while aligning with international securities lending practices. The document is structured to address both routine lending operations and exceptional circumstances, including default scenarios and market disruptions.

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 relationship between parties

3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpretation

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

5. Delivery of Securities: Procedures and timing for delivering borrowed securities

6. Collateral Requirements: Terms regarding posting and maintaining collateral

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

8. Fees and Charges: Borrowing fees, charges, and payment terms

9. Tax and Dividends: Treatment of dividends, corporate actions, and tax implications

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

11. Termination: Conditions and procedures for terminating the agreement

12. Representations and Warranties: Standard declarations by both parties

13. Indemnification: Indemnity provisions and allocation of risks

14. Notices: Communication procedures between parties

15. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, etc.

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

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

2. Regulatory Compliance: Specific section for enhanced regulatory requirements when dealing with regulated entities

3. Electronic Trading: Include when parties will use electronic platforms for lending transactions

4. Central Counterparty Provisions: Required when transactions will be cleared through a central counterparty

5. Margin Maintenance: Detailed margin requirements when parties agree to specific margin thresholds

6. Securities Rehypothecation: Include when borrower is permitted to re-use borrowed securities

7. Foreign Securities Provisions: Required when agreement covers international securities

What schedules should be included in a Stock Borrowing Agreement?

1. Schedule 1 - Eligible Securities: List of securities that may be borrowed under the agreement

2. Schedule 2 - Fee Schedule: Detailed breakdown of fees and charges

3. Schedule 3 - Collateral Requirements: Specific collateral criteria and haircuts

4. Schedule 4 - Operating Procedures: Detailed operational procedures for borrowing and returning securities

5. Schedule 5 - Form of Loan Confirmation: Standard form for confirming individual loan transactions

6. Schedule 6 - Authorized Persons: List of authorized signatories and traders

7. Appendix A - Standard Settlement Instructions: Settlement and payment instructions for both parties

8. Appendix B - Tax Documentation: Required tax forms and declarations

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

Stock Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Banking

Investment Management

Securities Trading

Asset Management

Insurance

Pension Fund Management

Prime Brokerage

Capital Markets

Financial Technology

Relevant Teams

Legal

Compliance

Risk Management

Trading Operations

Securities Operations

Portfolio Management

Collateral Management

Settlement

Credit Risk

Treasury

Financial Control

Investment Operations

Trading Desk

Client Relations

Relevant Roles

Securities Lending Manager

Trading Operations Manager

Legal Counsel

Compliance Officer

Risk Manager

Portfolio Manager

Securities Operations Specialist

Collateral Manager

Trading Desk Manager

Settlement Officer

Relationship Manager

Credit Risk Analyst

Financial Controller

Investment Operations Manager

Treasury Manager

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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