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Margin Agreement

Margin Agreement Template for Canada

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Key Requirements PROMPT example:

Margin Agreement

"I need a Margin Agreement for an investment dealer registered with IIROC, to be used with institutional clients in Canada, incorporating standard IIROC margin requirements and including rehypothecation rights for securities with a value over $1 million."

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Document background
The Margin Agreement serves as the foundational document for establishing credit arrangements in securities trading relationships under Canadian law. This document is essential when a broker-dealer or financial institution extends credit to clients for trading securities, whether they are retail or institutional investors. The agreement details crucial aspects such as margin requirements, maintenance levels, collateral arrangements, and default procedures, all while ensuring compliance with Canadian federal and provincial securities regulations, IIROC rules, and applicable banking laws. The Margin Agreement becomes particularly important in volatile market conditions, providing clear procedures for margin calls and enforcement rights, while also addressing risk management requirements for both the lender and borrower.
Suggested Sections

1. Parties: Identification of the broker-dealer/lender and the customer/borrower

2. Background: Context of the agreement and relationship between the parties

3. Definitions: Key terms used throughout the agreement including Margin, Collateral, Margin Call, Events of Default

4. Margin Facility: Terms of the margin lending facility, including credit limits and purpose

5. Collateral Requirements: Initial margin requirements, eligible collateral types, and valuation methods

6. Margin Maintenance: Ongoing margin requirements, margin calls, and timing for meeting margin calls

7. Interest and Fees: Interest calculation methodology, rates, and any additional fees

8. Representations and Warranties: Standard and specific representations by both parties

9. Events of Default: Circumstances constituting default and consequences

10. Remedies: Rights and remedies upon default, including liquidation rights

11. Term and Termination: Duration of agreement and termination provisions

12. General Provisions: Standard legal provisions including notices, amendments, governing law

Optional Sections

1. Cross-Default: Links defaults under other agreements between the parties - include for institutional clients with multiple agreements

2. Portfolio Margining: Allows for portfolio-based margin calculations - include for sophisticated investors with diverse portfolios

3. Rehypothecation Rights: Rights to reuse customer collateral - include for institutional arrangements where rehypothecation is permitted

4. Electronic Trading Provisions: Specific provisions for electronic trading platforms - include if electronic trading is offered

5. Foreign Currency Provisions: Handling of multiple currencies - include if multi-currency trading is permitted

6. Risk Disclosure Statement: Additional risk disclosures - include for retail clients or where required by regulations

Suggested Schedules

1. Schedule A - Margin Requirements: Detailed initial and maintenance margin requirements for different types of securities

2. Schedule B - Eligible Collateral: List of acceptable collateral types and their respective haircuts

3. Schedule C - Fee Schedule: Detailed breakdown of all applicable fees and charges

4. Schedule D - Authorized Persons: List of persons authorized to trade on behalf of the customer

5. Schedule E - Account Details: Details of trading accounts and settlement instructions

6. Appendix 1 - Risk Disclosure: Detailed risk disclosures required by regulatory authorities

7. Appendix 2 - Trading Procedures: Operational procedures for margin calls, trading, and settlements

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Account
Applicable Law
Authorized Person
Business Day
Collateral
Credit Limit
Customer Assets
Default Interest Rate
Eligible Margin Securities
Event of Default
Excess Margin
Financial Indebtedness
Haircut
Initial Margin
Interest Period
Long Position
Maintenance Margin
Margin
Margin Call
Margin Deficiency
Margin Excess
Margin Loan
Margin Percentage
Margin Requirement
Market Value
Maturity Date
Net Asset Value
Payment Date
Rehypothecation
Secured Obligations
Security Interest
Settlement Date
Short Position
Trading Day
Transaction
Valuation Date
Valuation Percentage
Valuation Time
Relevant Industries

Financial Services

Banking

Securities Trading

Investment Management

Wealth Management

Asset Management

Capital Markets

Professional Services

Financial Technology

Investment Banking

Relevant Teams

Legal

Compliance

Risk Management

Trading Operations

Credit Risk

Regulatory Affairs

Client Services

Investment Advisory

Operations

Documentation

Front Office

Middle Office

Back Office

Relevant Roles

Compliance Officer

Legal Counsel

Risk Manager

Trading Operations Manager

Credit Risk Analyst

Investment Advisor

Portfolio Manager

Securities Trader

Chief Risk Officer

Regulatory Affairs Director

Operations Director

Account Manager

Financial Advisor

Credit Manager

Legal Operations Manager

Industries
Securities Act (Provincial): Provincial legislation (such as Ontario Securities Act) governing securities trading, registration requirements, and investor protection measures
Bank Act: Federal legislation governing banking operations and requirements for financial institutions in Canada, including collateral and security arrangements
Personal Property Security Act (PPSA): Provincial legislation governing the creation and enforcement of security interests in personal property, including investment securities
Bankruptcy and Insolvency Act: Federal legislation governing bankruptcy and insolvency proceedings, including the treatment of margin accounts and collateral in bankruptcy
Investment Industry Regulatory Organization of Canada (IIROC) Rules: Self-regulatory organization rules governing margin requirements, account maintenance, and risk management for investment dealers
Derivatives Act (Provincial): Provincial legislation governing derivatives trading and related margin requirements (where applicable, such as in Quebec)
Securities Transfer Act: Provincial legislation governing the transfer and pledging of securities, including as collateral
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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