Elgar Financial Law and Practice series
Chapter 6: TITLE TRANSFER FINANCIAL COLLATERAL ARRANGEMENTS
‘Financial collateral arrangements’ are either ‘title transfer financial collateral arrangements’ or ‘security financial collateral arrangements’. This chapter deals with the first of these types of arrangements. The expression ‘title transfer financial collateral arrangement’ is defined in the Financial Collateral Arrangements (No. 2) Regulations (‘FCARs’) as: an agreement or arrangement, including a repurchase agreement, evidenced in writing, where – (a) the purpose of the agreement or arrangement is to secure or otherwise cover the relevant financial obligations owed to the collateral-taker; (b) the collateral-provider transfers legal and beneficial ownership in financial collateral to a collateral-taker on terms that when the relevant financial obligations are discharged the collateral-taker must transfer legal and beneficial ownership of equivalent financial collateral to the collateral-provider; and (c) the collateral-provider and the collateral-taker are both non-natural persons. The definition in the FCARs expressly states that a repurchase agreement is included (as does the parallel definition in the FCD). There is no definition of ‘repurchase agreement’ in either the FCD or the FCARs, but Recital (3) to the FCD helpfully explains that what is meant is what is commonly referred to as a ‘repo’. In addition to repurchase agreements, title transfer arrangements would include securities lending agreements and credit support arrangements where the collateral is provided by way of title transfer. There are important differences between a title transfer arrangement and a security arrangement.
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