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The Stock Borrowing And Lending Agreement (SBLA) is a fundamental document used in Hong Kong's financial markets to facilitate securities lending transactions. It is essential for market participants engaging in short selling, market making, settlement coverage, and collateral management. The agreement is structured to comply with Hong Kong regulatory requirements, particularly the Securities and Futures Ordinance and related regulations. It details the mechanisms for transferring securities, managing collateral, handling corporate actions, and addressing default scenarios. This document is particularly important in Hong Kong's active securities market, where securities lending plays a crucial role in maintaining market liquidity and efficiency.

1. Parties: Identifies and defines the lender and borrower entering into the agreement

2. Background: Sets out the context and purpose of the agreement, including the parties' intentions to engage in securities lending transactions

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Loans of Securities: Core provisions governing the borrowing and lending of securities, including loan mechanics and procedures

5. Transfer of Securities: Provisions regarding the delivery and transfer of borrowed securities

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

7. Fees and Charges: Provisions regarding lending fees, charges, and other payments between parties

8. Income and Corporate Actions: Handling of dividends, rights issues, and other corporate actions affecting borrowed securities

9. Tax: Treatment of tax matters, including withholding tax and manufactured payments

10. Events of Default: Defines events constituting default and consequences

11. Close-out and Set-off: Procedures for terminating loans and settling obligations

12. Representations and Warranties: Standard representations and warranties from both parties

13. Indemnities: Indemnification obligations of the parties

14. General Provisions: Standard boilerplate provisions including notices, amendments, and governing law