Securities Account Control Agreement

Summary

This Securities Account Control Agreement template is used to perfect a lender's security interest in a borrower's financial assets held in a securities account. The intermediary or bank that maintains the securities account agrees to comply with the secured lender's instructions regarding the account upon a default under the underlying credit facility. This template includes practical guidance and drafting notes. A securities account control agreement is entered into as part of a suite of loan documents to allow the secured party to take control of the account upon a default under the underlying credit facility, after which the intermediary will no longer follow instructions originating from the borrower, which is assumed to hold the account. Agreement terms should reflect the entity holding the account, if not the borrower. This template assumes application of the New York Uniform Commercial Code, which reflects the intermediary's jurisdictional location. This template should be used primarily for reference as each intermediary will have a preferred form of securities account control agreement. Read in conjunction with the practice notes Perfecting Security Interests by Possession, Filing, and Control and Collateral Perfection and Release in the Closing Process. For a full listing of key content that provides an overview of the creation, perfection, and priority of security interests under the Uniform Commercial Code (UCC), see Security Interests Resource Kit. For a full listing of key content covering asset-based lending, including agreements, security, guaranties, perfection, and priorities, see Asset-Based Lending Resource Kit.