UCC Filing Requirements for Security Lending Agreement - Need Help with Collateral Description
I'm working on UCC-1 filings for a security lending agreement my firm just established with a hedge fund client. The arrangement involves temporary transfers of securities as collateral for short positions, and I'm struggling with how to properly describe the collateral on the filing. The securities change daily based on trading activity - sometimes it's equities, sometimes bonds, sometimes derivatives. Our legal team says we need to perfect our security interest properly but the collateral description requirements seem tricky when the underlying assets are so fluid. Has anyone dealt with UCC filings for security lending agreements before? I'm particularly confused about whether we should file as a blanket lien on 'all securities' or try to be more specific. The loan amount varies between $2M-15M depending on market conditions. Any guidance on the proper approach would be really helpful.
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Fatima Al-Suwaidi
Security lending agreements definitely require careful UCC filing strategy. You're right that the collateral description is tricky with fluid assets. Generally you want to use broad language like 'all securities, investment property, and financial assets' rather than trying to list specific instruments. The key is making sure your description covers all possible collateral without being so vague it gets rejected.
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Dylan Mitchell
•This is exactly what I was worried about - being too broad vs too specific. Do you know if there are any standard templates for securities lending UCC descriptions?
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Fatima Al-Suwaidi
•Most firms use variations of standardized language. Check with your compliance team - they usually have approved templates for different collateral types.
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Sofia Morales
We do tons of these filings and you definitely want to go broad on the collateral description for security lending agreements. Something like 'all securities, instruments, financial assets, investment property, and proceeds thereof' typically works. The important thing is making sure your UCC-1 gets filed before the lending arrangement goes live.
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NebulaNinja
•That's helpful language, thanks. Should I be concerned about the debtor name matching exactly with how the hedge fund is registered? They have several entities and I want to make sure I file against the right one.
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Sofia Morales
•Absolutely critical - the debtor name has to match their charter documents exactly. Even small variations can cause perfection issues later.
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Dmitry Popov
•This is where I always get nervous about UCC filings. One wrong letter and your entire security interest could be worthless.
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Ava Garcia
Had a similar situation last year with a securities lending client. I was going back and forth trying to verify all the entity names and document consistency when someone suggested using Certana.ai's document checker. You basically upload your charter docs and proposed UCC-1 and it instantly flags any name mismatches or inconsistencies. Saved me hours of manual cross-checking and caught a middle initial discrepancy I would have missed.
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NebulaNinja
•That sounds really useful for catching those small details. Did it handle complex entity structures well?
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Ava Garcia
•Yeah, it picked up on subsidiary relationships and flagged when I was filing against the wrong entity in the corporate structure.
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StarSailor}
Security lending UCC filings can be a nightmare if you don't get the timing right. Make sure you coordinate with the trading desk so your filing is active before any securities change hands. I've seen deals get held up because the UCC wasn't properly perfected when the first transaction occurred.
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NebulaNinja
•Good point about timing. Our trading starts Monday so I need to get this filed by Friday at the latest.
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StarSailor}
•Definitely don't cut it close. Electronic filing usually processes same day but give yourself buffer time in case there are rejections.
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Miguel Silva
•I always file these at least 2 business days early. Murphy's law applies to UCC filings more than anything else.
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Zainab Ismail
Question about the dollar amounts - does the UCC filing need to specify the loan amount for security lending agreements? Ours fluctuate so much day to day I'm not sure what to put.
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Fatima Al-Suwaidi
•Most states don't require you to specify the secured amount on the UCC-1. You can leave it blank or put 'all obligations' to cover the full relationship.
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Zainab Ismail
•Thanks, that makes it much simpler. I was trying to figure out how to handle the variable amounts.
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Connor O'Neill
Are you filing this in Delaware? Their UCC system has been giving me grief lately with securities-related filings. Keeps rejecting for random formatting issues.
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NebulaNinja
•Actually filing in New York. Haven't had issues with their system recently but good to know Delaware is being difficult.
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Connor O'Neill
•NY is usually pretty reliable. Just make sure you're using their current forms - they updated the UCC-1 template a few months ago.
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Yara Nassar
Whatever you do, don't make the mistake I did and file a UCC-3 amendment instead of the initial UCC-1. Spent a whole day trying to figure out why the system kept rejecting it before realizing my error.
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Dmitry Popov
•Oh no, that's exactly the kind of thing I'm afraid of doing. The UCC forms all look so similar.
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Yara Nassar
•Yeah, now I always double-check the form type before submitting anything. Lesson learned the hard way.
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Keisha Robinson
•This is why I like using document verification tools - they catch these basic errors before you submit.
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GalaxyGuardian
For what it's worth, I've found that security lending UCC filings are pretty straightforward once you get the template right. The key is having good processes in place for monitoring when the agreements change or expire.
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NebulaNinja
•That's a good point about monitoring. Do you set calendar reminders for continuation filings?
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GalaxyGuardian
•Absolutely. UCC-1 filings lapse after 5 years so you need to file UCC-3 continuations before then. I put reminders at 4.5 years to be safe.
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Paolo Ricci
Just want to echo what others have said about getting the debtor name exactly right. We had a situation where a single-letter typo in the entity name caused perfection issues during a bankruptcy proceeding. Cost the client their security position on a $8M loan.
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NebulaNinja
•That's terrifying. I definitely want to avoid that kind of mistake.
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Paolo Ricci
•Yeah, it's one of those things that seems minor until it becomes a major problem. Triple-check everything.
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Ava Garcia
•This is exactly why automated document checking is so valuable. Catches those human errors that can be so costly.
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Amina Toure
One more thing to consider - make sure your security agreement language aligns with what you're putting in the UCC filing. I've seen situations where the collateral description in the UCC didn't match the underlying agreement, which created perfection gaps.
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NebulaNinja
•Good catch. I should probably have our legal team review both documents together to make sure they're consistent.
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Amina Toure
•Definitely worth the extra review. Consistency between all the documents is crucial for proper perfection.
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Sofia Morales
•I always run the security agreement and UCC-1 by legal before filing. Saves headaches later.
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