Reverse Repurchase Agreement Template for Saudi Arabia

The Reverse Repurchase Agreement is a critical financial instrument used in the Saudi Arabian market for liquidity management and short-term financing. This document is essential when parties wish to enter into a transaction where securities are purchased with an agreement to resell them at a future date, structured in compliance with Sharia principles. It is particularly relevant for financial institutions operating under Saudi Arabian jurisdiction, including banks, investment firms, and government entities. The agreement incorporates all necessary regulatory requirements from SAMA and the Capital Market Authority, while ensuring adherence to Islamic financial principles. It includes detailed provisions for pricing, margin maintenance, events of default, and risk management, making it suitable for both domestic and international financial institutions operating in Saudi Arabia. The document is designed to protect both parties' interests while providing clarity on transaction mechanics, regulatory compliance, and dispute resolution procedures.

1. Parties: Identification of the parties entering into the agreement, including their legal status and registration details

2. Background: Context of the agreement and brief description of the transaction structure

3. Definitions: Definitions of key terms used throughout the agreement, including financial and technical terms

4. Sale and Repurchase: Core transaction terms including initial sale and agreement to repurchase

5. Purchase Price and Pricing: Specification of initial purchase price, repurchase price, and profit rate calculation

6. Transfer of Title and Risk: Provisions regarding ownership transfer and risk allocation

7. Margin Maintenance: Requirements for maintaining collateral value and margin calls

8. Income Payments: Treatment of income on purchased securities during the transaction period

9. Payment and Transfer: Mechanics of payment and securities transfer

10. Conditions Precedent: Prerequisites before the agreement becomes effective

11. Representations and Warranties: Standard and transaction-specific representations by both parties

12. Events of Default: Circumstances constituting default and consequences

13. Termination: Provisions for early termination and close-out

14. Sharia Compliance: Provisions ensuring compliance with Islamic financial principles

15. Governing Law and Jurisdiction: Saudi law as governing law and jurisdiction provisions