A financial collateral arrangement is an arrangement that involves the delivery of financial assets as security or “quasi-security” for financial obligations. When used in this way, such financial assets are referred to as “collateral”, “financial collateral” or “margin”. Financial collateral arrangements are used predominantly in the financial markets to secure or support financial obligations. As discussed in more detail towards the end of the chapter, a number of regulatory changes motivated by the recent financial crisis directly or indirectly require greater use of financial collateral by market participants. A proper understanding of the forms, uses and commercial and legal characteristics of financial collateral arrangements has never been more important. The distinctive economic characteristics of financial collateral arrangements and their use predominantly in the financial markets give rise to the question whether and, if so, to what extent those characteristics and/or the financial market context in which they are used justify a distinctive legal treatment of financial collateral arrangements relative to other forms of security or “quasi security” arrangement. The chapter considers how this question has been addressed in the European Union, but also attempts to draw more general conclusions regarding the implementation of a legal framework for financial collateral in the context of the development of a financial market.