Short Sale Contract Template for Saudi Arabia

This Short Sale Contract is designed for use in securities trading operations within Saudi Arabia's regulated financial markets. It is specifically structured to comply with the Capital Market Authority's regulations and Islamic finance principles, making it suitable for both conventional and Shariah-compliant short selling transactions. The document is typically used when an investor or institution wishes to sell borrowed securities with the intention of buying them back at a lower price, while ensuring compliance with Saudi Arabia's strict regulatory framework. The contract includes comprehensive provisions for securities borrowing, risk management, margin requirements, and settlement procedures, along with necessary declarations and warranties required under Saudi law. It is particularly relevant for transactions executed through the Saudi Stock Exchange (Tadawul) and must align with the Securities Clearing Center Rules (Muqassa).

1. Parties: Identification of the seller, borrower, broker, and any other relevant parties to the short sale contract

2. Background: Context of the agreement and statement of the parties' intention to enter into a short sale transaction

3. Definitions: Key terms used throughout the agreement, including technical and regulatory terminology

4. Securities Subject to Short Sale: Detailed description of the securities to be sold short, including quantity, type, and identification numbers

5. Borrowing Arrangements: Terms and conditions for borrowing the securities, including lending fees and duration

6. Short Sale Execution: Procedures and requirements for executing the short sale transaction

7. Margin Requirements: Details of initial and maintenance margin requirements as per CMA regulations

8. Settlement Procedures: Process and timeline for settling the short sale transaction

9. Fees and Commissions: Breakdown of all applicable fees, commissions, and charges

10. Risk Disclosure: Mandatory risk warnings and acknowledgments

11. Representations and Warranties: Declarations by all parties regarding their capacity, authority, and compliance with regulations

12. Default and Remedies: Consequences and procedures in case of default by any party

13. Governing Law and Jurisdiction: Confirmation of Saudi law application and dispute resolution procedures