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Financial collateral arrangement
Practical Law UK Glossary 0-621-8031 (Approx. 3 pages)
Glossary
Financial collateral arrangement
An arrangement to which the Financial Collateral Arrangements (No 2) Regulations 2003 (SI 2003/3226), as amended (the FCA Regulations) apply. The arrangement must be one of the following:
- A security financial collateral arrangement, under which security over financial collateral is provided to a creditor. The holder of the security must have possession or control of the financial collateral in order for the FCA Regulations to apply to the arrangement.
- A title transfer financial collateral arrangement, under which legal and beneficial title to financial collateral is transferred on terms that title to equivalent financial collateral will be transferred back to the collateral-provider when it discharges its obligations to the collateral-taker.
Financial collateral is defined under the FCA Regulations as cash, financial instruments or monetary claims of certain types. The FCA Regulations do not apply if either party to the arrangement is an individual.
Typical arrangements falling within the ambit of the FCA Regulations are charges over shares, charges over deposits, and stock lending and repo arrangements.
For further information on financial collateral arrangements, see Practice note, Financial collateral arrangements.