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Securities Lending Agreement for the United Kingdom

Securities Lending Agreement Template for England and Wales

A Securities Lending Agreement is a legally binding contract governed by the laws of England and Wales that establishes the terms and conditions under which one party (the lender) temporarily transfers securities to another party (the borrower) in exchange for collateral. The agreement covers crucial aspects including delivery mechanisms, collateral requirements, rights to distributions, voting rights, events of default, and termination provisions. It incorporates regulatory requirements under UK financial services legislation and typically follows market standard documentation such as the GMSLA.

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Securities Lending Agreement

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What is a Securities Lending Agreement?

Securities Lending Agreements are essential documents in financial markets, facilitating the temporary transfer of securities while maintaining legal ownership with the original holder. Under English and Welsh law, these agreements are particularly important for managing counterparty risk, ensuring regulatory compliance, and establishing clear operational procedures. A Securities Lending Agreement typically includes detailed provisions for collateral management, corporate actions, income payments, and default scenarios. It's commonly used by financial institutions to generate additional revenue from their securities holdings or to cover short positions, while incorporating safeguards to protect both parties' interests.

What sections should be included in a Securities Lending Agreement?

1. Parties: Identification of the lender and borrower, including registration details and addresses

2. Background: Context of the agreement and basic premises of the lending arrangement

3. Definitions: Key terms used throughout the agreement

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

5. Delivery of Securities: Mechanics and timing of securities transfers

6. Collateral: Requirements for posting and maintaining collateral

7. Payments and Transfers: Process for handling payments and transfers between parties

8. Events of Default: Circumstances constituting default and consequences

9. Termination: Provisions for ending the agreement and closing out positions

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

1. Agency Provisions: Required when one party acts as agent for multiple principals

2. Custody Arrangements: Details of third-party custodian arrangements

3. Tri-party Arrangements: Provisions for tri-party collateral management

What schedules should be included in a Securities Lending Agreement?

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

2. Schedule of Eligible Collateral: Acceptable forms of collateral and associated haircuts

3. Agency Lending Disclosure Annex: Required disclosures for agency lending arrangements

4. Tax Schedules: Provisions relating to tax treatment and withholding requirements

5. Form of Loan Confirmation: Template for confirming individual lending transactions

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions







































Clauses


































Industries

Financial Services and Markets Act 2000: Primary UK legislation that regulates financial services and markets, establishing the regulatory framework for securities lending activities

Companies Act 2006: Core legislation governing company law in the UK, relevant for corporate authority and execution matters in securities lending agreements

Financial Collateral Arrangements (No.2) Regulations 2003: UK regulations implementing EU Directive on financial collateral arrangements, covering treatment of collateral in securities lending transactions

FCA Handbook: Regulatory sourcebook including COBS (Conduct of Business) and SYSC (Senior Management Arrangements), providing detailed regulatory requirements for securities lending

PRA Requirements: Prudential Regulation Authority requirements covering capital adequacy and risk management standards for securities lending operations

Global Master Securities Lending Agreement: Industry standard agreement published by ISLA, serving as the key reference point for market practice in securities lending

Income Tax Act 2007: Tax legislation relevant for securities lending, particularly regarding manufactured payments and withholding tax considerations

Corporation Tax Act 2010: Corporate tax legislation applicable to securities lending transactions and related tax treatments

UK EMIR: Post-Brexit version of European Market Infrastructure Regulation, covering reporting requirements for securities lending transactions

UK Market Abuse Regulation: Post-Brexit market abuse regulations aimed at preventing market manipulation in securities lending activities

Anti-Money Laundering Regulations 2017: Regulations setting out client due diligence requirements and reporting obligations for securities lending transactions

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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