Title transfer collateral arrangement: Difference between revisions
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A {{tag|collateral}} arrangement whereby, instead of instigating a [[pledge]] or [[security interest]] of some kind, a debtor provides cash or [[financial collateral arrangement|financial collateral]] to its [[creditor]] by means of [[title transfer]] against a [[Contingencies|contingent obligation]] on the creditor to return an [[equivalent]] security should the [[exposure]] be resolved. | A {{tag|collateral}} arrangement whereby, instead of instigating a [[pledge]] or [[security interest]] of some kind, a debtor provides cash or [[financial collateral arrangement|financial collateral]] to its [[creditor]] by means of [[title transfer]] against a [[Contingencies|contingent obligation]] on the creditor to return an [[equivalent]] security should the [[exposure]] be resolved. | ||
Known, for the purposes of the [[Financial Collateral Directive]], as a [[title transfer financial collateral arrangement|''title transfer'' financial collateral arrangement]]. But | Known, for the purposes of the [[Financial Collateral Directive]], as a [[title transfer financial collateral arrangement|''title transfer'' financial collateral arrangement]]. But it’s the same thing among us finance lawyer freaks, and contrasted sharply with a [[security financial collateral arrangement|''security'' financial collateral arrangement]], which is a whole different thing. | ||
This has profound — some might say a bit barmy — consequences when one considers the {{eureg|2015|2365|EC}} (also known, stiffly, as [[The Regulation on Transparency of Securities Financing Transactions and of Reuse]], more casually, as the [[securities financing transaction regulations]] and fondly as {{tag|SFTR}}) which, at Article 15, have some things to say about {{tag|title transfer}} collateral arrangements and what you have to tell your counterparty about them. | This has profound — some might say a bit barmy — consequences when one considers the {{eureg|2015|2365|EC}} (also known, stiffly, as [[The Regulation on Transparency of Securities Financing Transactions and of Reuse]], more casually, as the [[securities financing transaction regulations]] and fondly as {{tag|SFTR}}) which, at Article 15, have some things to say about {{tag|title transfer}} collateral arrangements and what you have to tell your counterparty about them. | ||
Revision as of 19:21, 23 February 2020
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A word about credit risk mitigation
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A collateral arrangement whereby, instead of instigating a pledge or security interest of some kind, a debtor provides cash or financial collateral to its creditor by means of title transfer against a contingent obligation on the creditor to return an equivalent security should the exposure be resolved.
Known, for the purposes of the Financial Collateral Directive, as a title transfer financial collateral arrangement. But it’s the same thing among us finance lawyer freaks, and contrasted sharply with a security financial collateral arrangement, which is a whole different thing.
This has profound — some might say a bit barmy — consequences when one considers the 2015/2365/EC (EUR Lex) (also known, stiffly, as The Regulation on Transparency of Securities Financing Transactions and of Reuse, more casually, as the securities financing transaction regulations and fondly as SFTR) which, at Article 15, have some things to say about title transfer collateral arrangements and what you have to tell your counterparty about them.
As indeed do the CASS rules, especially if your counterparty should ask for you to change or terminate one.
Note also, there is a genus of lawyer (Causidicus mediocris) who frets that a TTCA might be recharacterised as a pledge, with apocalyptic consequences.