Securities Lending Agreement Template for Saudi Arabia

The Securities Lending Agreement serves as the primary contractual framework for financial institutions engaging in securities lending transactions within Saudi Arabia. This document is essential when parties wish to establish a recurring lending relationship for securities, whether for market making, short selling, or collateral purposes. The agreement must comply with the Capital Market Authority's Securities Lending and Covered Short Selling Regulations, as well as Islamic finance principles mandated by Saudi law. It includes comprehensive provisions for loan initiation, collateral management, corporate actions, and default scenarios, while incorporating specific requirements for Shariah compliance, regulatory reporting, and local market practices. The document is typically used by banks, investment firms, and other financial institutions operating in the Saudi market who need a robust legal framework for their securities lending activities.

1. Parties: Identification of the lender and borrower, including their legal status and regulatory authorizations

2. Background: Context of the agreement and confirmation of parties' authority to enter into securities lending transactions

3. Definitions: Comprehensive definitions of terms used throughout the agreement, including specific Saudi regulatory terms

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

5. Delivery of Securities: Procedures and timing for the delivery of loaned securities

6. Collateral Requirements: Details of required collateral, including types, maintenance, and margin requirements

7. Income Payments and Corporate Actions: Handling of dividends, rights issues, and other corporate actions affecting loaned securities

8. Shariah Compliance: Specific provisions ensuring the agreement complies with Islamic finance principles

9. Fees and Charges: Lending fees, payment terms, and other applicable charges

10. Tax Provisions: Treatment of taxes and withholding requirements under Saudi law

11. Representations and Warranties: Standard and Saudi-specific representations regarding authority, capacity, and compliance

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

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

14. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction