- Elgar Financial Law and Practice series
Chapter 4: FORMAL REQUIREMENTS DISAPPLIED BY THE FCARs AND EXTENT OF EXEMPTION FROM THOSE REQUIREMENTS
The Financial Collateral Directive (‘FCD’) recites that, in order to limit the administrative burdens for parties using financial collateral under the scope of the FCD: … the only perfection requirement regarding parties which national law may impose in respect of financial collateral should be that the financial collateral is under the control of the collateral taker or of a person acting on the collateral taker’s behalf while not excluding collateral techniques where the collateral provider is allowed to substitute collateral or to withdraw excess collateral. It goes on to recite: … For the same reasons, the creation, validity, perfection, enforceability or admissibility in evidence of a financial collateral arrangement, or the provision of financial collateral under a financial collateral arrangement, should not be made dependent on the performance of any formal act such as the execution of any document in a specific form or in a particular manner, the making of any filing with an official or public body or registration in a public register, advertisement in a newspaper or journal, in an official register or publication or in any other manner, notification to a public officer or the provision of evidence in a particular form as to the date of execution of a document or instrument, the amount of the relevant financial obligations or any other matter. The FCD recognises the need for a balance between market efficiency and the safety of the parties to the arrangement and third parties, thereby avoiding inter alia the risk of fraud.
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