The Customer is obliged, prior to entry into a Transaction, to ensure availability of Collateral acceptable to the Bank on the Account opened for the Customer with the Bank, at least in the amount which would ensure that the corresponding Transaction would not trigger a drop in the Customer's Proportion of Own Funds below the limit established in the Conditions.
The Bank shall have the right to unilaterally change the rate of collateral established on particular Securities, funds or other rights serving as Collateral, by publishing the corresponding information on the Website. In establishing and changing the rate of collateral for the Collateral, the Bank shall be governed by the relevant changes in the financial markets, including changes or expected changes in the market price and/or liquidity of the Collateral, the rate of inflation and the general outlook for economic growth. Considering the importance of the availability of sufficient Collateral, and given the volatility and efficiency of the financial markets and their quick response to any information and changes related to market conditions, financial instruments and/or issuers, the change of the rate of collateral for the Collateral is essentially associated with the ratio between the object and price of the contract, and the value delivered. The unilateral right to change the rate of collateral for the Collateral is the Bank’s precondition for entry into the Agreement.
In order to guarantee fulfilment of the obligations arising from the Agreement or Transactions conducted or to be conducted by the Customer under these Conditions, the Customer shall encumber, with the right of pledge, the Collateral which is available on or which is to be transferred to the Account, together with all of the related rights, for the benefit of the Bank.
Based on the Customer's authorisation, the Bank shall establish in the Estonian Central Register of Securities a pledge on the Securities covered by and to be purchased for the Collateral and kept via the Customer's account in the central register. The Bank shall have the right, at its own discretion, to determine the time and scope of the order of registration of the pledge in the Estonian Central Register of Securities.
The Customer hereby grants the Bank the irrevocable authorisation and rights to submit to the Estonian Central Register of Securities the orders for registration of a pledge with respect to the Securities specified in clause 7.4.
The Parties have agreed that the Bank may, at its own discretion, transfer the pledge to the Estonian Central Register of Securities on the following conditions:
- the Bank has an irrevocable right of disposal of the pledged Collateral;
- the Bank's written consent is required for transfer or disposal of the Securities;
- the pledge covers the shares to be issued with regard to the Securities covered by the Collateral.
The Pledge shall be considered as established upon entry of the corresponding notation in the Estonian Central Register of Securities. The service charges and expenses related to the registration and deletion of the pledge shall be borne by the Customer in accordance with the Price List.
The Securities covered by and to be purchased for the Collateral, which are kept on the Bank's Securities Account on behalf of the Customer, shall be considered as encumbered with a pledge as of the conclusion of the Agreement and each transfer of Securities to the Bank's Securities Account.
The funds on the Account, which are covered by the Collateral, shall be considered as encumbered with a pledge as of the conclusion of the Agreement and after each transfer of funds to the Account.
The Bank shall have the right, but not the obligation, to allow the Customer to exchange the Collateral or to partially release the Collateral from the Pledge, if the Proportion of Own Funds is sufficient.
Where the Customer has not appropriately fulfilled, in front of the Bank, the obligations arising from the Agreement or the Transaction, the Bank shall have the right, without the Customer's separate consent or order, to satisfy all claims (including the contractual penalty, fine for delay and interest receivables) at the expense of the Collateral (including to dispose the Securities set up as Collateral). The Bank shall have the right to choose, at its own discretion, the assets set up as Collateral which will be disposed by the Bank, as well as the volume and order of the disposal.
The Bank shall inter alia have the right to purchase Securities at the expense of the Collateral, so as to fulfil the Customer's contractual obligation to return Securities (closure of the short position) or to fulfil the obligations arising from and close the position in Derivative Instruments.
The encumbering pledge on the Collateral shall expire when the Customer has appropriately fulfilled all obligations arising from the Agreement and Transaction, and terminates the Agreement. The Bank shall issue the order for deletion of the pledge in the Estonian Central Register of Securities.
By signing the Agreement, the Pledgor shall grant the Bank the irrevocable right and authorisation to:
- use and dispose the funds on the Account for the purpose of fulfilling the obligations arising from the Agreement or Transactions.
- to submit, on behalf of, in the name of and on account of the Pledgor the order for disposal of the Security covered by the Collateral (including to give instructions and submit orders to the Estonian Central Register of Securities, including for transsfer of the Security to the account indicated by the Bank) and to perform other tasks related to the Collateral
The Pledgor’s obligation shall be considered as fulfilled in the amount of the proceeds from the sale/disposal of the Collateral, less any costs related to the safeguarding and/or disposal of the Collateral. The remaining funds shall be returned to the Pledgor upon compensation of the above costs and satisfaction of the claim arising from the Secured Agreement.
In order to satisfy its claims, the Bank shall have the right, without the Customer's separate order and consent, to debit the Customer's other accounts opened in the Bank within the extent of the claims.
In case of establishment of a moratorium with respect to the Bank, declaration of bankruptcy, approval of a reorganisation plan or initiation of other similar insolvency proceedings, the Agreement and any Transactions entered into on the basis of the Agreement shall be considered as prematurely terminated as at 11:59 p.m. on the Banking Day preceding the establishment of the moratorium, declaration of bankruptcy, approval of the reorganisation plan or initiation of other similar insolvency proceedings