View source for Financial Collateral Directive

{{anat|security¬}}
The {{tag|Financial Collateral Directive}} ({{eudirective|2002|47|EC}}) is a well-intended piece of {{tag|EU Regulation}} that, by common consent, didn't quite achieve what it set out to, which was to introduce 
:“''a Community framework to reduce credit exposure in financial {{tag|collateral}} arrangements. These common rules contribute to the effectiveness and integration of European financial markets, reducing credit losses and thereby stimulating cross-border transactions and competitiveness.''”

===Overview===
The directive was designed to simplify and universalise the process of taking security in financial contracts across the EU – for one thing it would mean that any formal registration or perfection requirements which otherwise would be required (registering the security interest with the registrar of companies for example) do not apply.

'''Contractual Provisions''': The {{tag|Financial Collateral Directive}} is a little more vague about what counts as a {{tag|financial collateral arrangement}} than is ideal, so you may see contractual stipulations that both parties agree their arrangement is intended to be one. 

While this is no doubt intended to help, given that, in the final analysis, the person likely to challenge that analysis would be a competing creditor, and the person who would be arbitrating on it would be a liquidqator, if an arrangement were not formally within the definition, then the fact that the parties agreed it was intended to be probably wouldn’t.

===What it does===
The [[FCD]] divides [[financial collateral arrangement|financial collateral arrangements]] into two mutually exclusive categories:
*'''[[Title transfer financial collateral arrangement]]s''': Under a [[TTCA]] a [[collateral-provider]] transfers full ownership of the [[financial collateral]] to the [[collateral-taker]] on terms that It will transfer back [[equivalent]] assetswhen the obligations are discharged; and 
*'''[[Security financial collateral arrangement]]s''': Under an [[SFCA]] the collateral provider provides [[financial collateral]] by way of security but retains full ownership of the financial collateral remains with the collateral-provider.

===[[Appropriation]]===
As well as disapplying certain formalities to effective security interest, the [[FCD]] creates a remedy of “[[appropriation]]”, a novel remedy certainly as regards shares, Which was previously unknown to English law: 
:''Where a legal or equitable mortgage is the [[security interest]] created or arising under a [[security financial collateral arrangement]] on terms that include a power for the [[collateral-taker]] to appropriate the collateral, the [[collateral-taker]] may exercise that power in accordance with the terms of the [[security financial collateral arrangement]], without any order for foreclosure from the courts.''

===[[Title transfer collateral arrangement]]s===
'''{{tag|Title transfer collateral arrangement}}s''': [[TTCA]]s are not security arrangements of any kind, do not therefore require registration, and therefore the Financial Collateral Directive doesn't really apply to them. But contrast differing styles of agreement that cover the same product:
* a {{gmsla}} is a TTCA, so isn't in scope for the financial collateral regualtions;
* a {{msla}} is a security interest arrangement, and so is in scope.

===Interpretation===
Helpful Clifford Chance article [http://www.cliffordchance.com/briefings/2012/11/financial_collateralremainsagrayarea.html here]

===Adoption===
*'''Portugal''': It was adopted by {{tag|Portugal}} in July 2004 (see in depth article [http://www.internationallawoffice.com/newsletters/Detail.aspx?g=9e05b76f-2448-4878-8fff-a0bdd7464388 here])
*'''UK''': It was adopted by the UK under the [[Financial Collateral Arrangement (No.2) Regulations 2003]], fondly known to all as the [[Financial Collateral Regulations]].
{{sa}}
*[[Registration of charges]]
*{{casenote1|Re Lehman Brothers International}} - a long disquisition about the [[Financial Collateral Regulations]].