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The Short Sale Agreement is a critical document used in Australian financial markets when an investor or trader intends to sell borrowed securities with the expectation of buying them back at a lower price. This agreement is essential for compliance with ASIC's regulatory framework and the Corporations Act 2001, establishing the legal relationship between the securities lender and borrower. It covers crucial aspects such as borrowing terms, margin requirements, fee structures, default provisions, and regulatory reporting obligations. The document is particularly important in institutional trading and investment management, where short selling is used for various strategies including hedging, arbitrage, and directional trading. The agreement must align with Australian securities regulations and market integrity rules, while also addressing risk management and operational requirements.

1. Parties: Identification of the parties entering into the agreement, including the lender (securities owner) and borrower (short seller)

2. Background: Context of the agreement, including the intention to conduct short selling activities and regulatory framework

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

4. Securities Lending Terms: Details of the securities to be borrowed, including quantity, type, and lending period

5. Short Sale Process: Procedures for executing the short sale, including borrowing, selling, and repurchasing securities

6. Fees and Charges: Borrowing fees, transaction costs, and other applicable charges

7. Margin Requirements: Collateral requirements, maintenance margin levels, and margin call procedures

8. Rights and Obligations: Detailed responsibilities of each party, including reporting requirements and regulatory compliance

9. Risk Allocation: Distribution of risks between parties, including market risk and counterparty risk

10. Default and Termination: Events of default, remedies, and procedures for early termination

11. Representations and Warranties: Standard declarations about capacity, authority, and compliance

12. Governing Law and Jurisdiction: Application of Australian law and jurisdiction for disputes