Credit Support Agreement Template for Hong Kong

The Credit Support Agreement is a critical document in financial transactions where one party seeks to mitigate credit risk by requiring collateral or other forms of credit support from its counterparty. Under Hong Kong law, this agreement type is commonly used in derivatives trading, securities lending, and other financial arrangements where credit exposure needs to be managed. The document details the operational aspects of credit support arrangements, including calculation methodologies, eligible collateral types, transfer timing, and enforcement mechanisms. It must comply with Hong Kong's sophisticated financial regulatory framework, particularly the Securities and Futures Ordinance and Banking Ordinance. The agreement is especially relevant in the context of Hong Kong's position as a major financial center, where it frequently governs both domestic and international financial relationships involving Hong Kong-based entities or those choosing Hong Kong law for its well-developed commercial legal system.

1. Parties: Identification of the credit support provider and credit support receiver, including full legal names and addresses

2. Background: Context of the agreement, reference to underlying obligations or master agreement, and purpose of the credit support arrangement

3. Definitions and Interpretation: Definitions of key terms, interpretation rules, and references to any external definitions (e.g., ISDA definitions if applicable)

4. Credit Support Obligations: Core obligations regarding posting of credit support, including timing, calculation of amounts, and delivery methods

5. Conditions Precedent: Conditions that must be satisfied before credit support obligations become effective

6. Representations and Warranties: Standard and specific representations regarding capacity, authority, and ownership of posted collateral

7. Transfer and Release of Credit Support: Procedures and timing for transferring and releasing credit support, including substitution rights

8. Valuation and Calculations: Methods for valuing posted credit support and calculating required amounts

9. Default and Enforcement: Events of default, consequences, and enforcement mechanisms

10. Interest and Distributions: Treatment of interest or distributions on posted collateral

11. Tax Provisions: Handling of tax implications related to credit support

12. Costs and Expenses: Allocation of costs related to posting, maintaining, and enforcing credit support

13. Notices: Communication procedures and contact details

14. Governing Law and Jurisdiction: Specification of Hong Kong law as governing law and jurisdiction provisions