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Yeowart and Parsons on the Law of Financial Collateral

Yeowart and Parsons on the Law of Financial Collateral

Elgar Financial Law and Practice series

Geoffrey Yeowart, Robin Parsons, Edward Murray and Hamish Patrick

This book is the first of its kind to offer a systematic examination of the whole law relating to financial collateral. It does so in two parts. First, it explains the law created by the Financial Collateral Arrangements (No 2) Regulations 2003, the Directive it implemented and related legislation. Second, it examines how financial collateral is used in practice in a range of different markets. It will be an essential reference point for all legal practitioners operating in financial markets.


Geoffrey Yeowart, Robin Parsons, Edward Murray and Hamish Patrick

Subjects: law -professional, finance and banking law


‘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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