Security financial collateral arrangement

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A security financial collateral arrangement — to specialists, an “SFCA” — is a collateral arrangement which involves the pledge of or grant of security over collateral in favour of the creditor, as opposed to outright title transfer of collateral to the creditor.

It is, therefore, not a title transfer financial collateral arrangement (“TTCA”).

Collateral is transferred by way of possession only, where the receiver has a security interest and may even have legal title but down not have beneficial ownership of the asset in question ... buuuuuut if rehypothecation is allowed, may be able to sell it anyway.

English law collateral arrangements are title transfer, New York ones are pledged

Generally, New York law-governed financial collateral arrangements are styled as security interest arrangements, whereas English law ones are title transfer. Time for a table.

Collateral styles for common trading agreements

Format	Form	Governing law	Security arrangement	Reuse allowed?
ISDA	1994 NY CSA/2016 NY Law VM CSA	New York law	Security interest	Yes
	1995 CSA/2016 VM CSA	English law	Title transfer	N/A
	2018 English law IM CSD	English law	Security interest	No
Stock lending	2010 GMSLA	English law	Title transfer	N/A
	2017 MSLA	New York law	Security interest	Yes
	2018 Pledge GMSLA	English law	Security interest	No
Repo	2010 GMRA	English law	Title transfer	N/A
	1995 MRA	New York law	Security interest	Yes

Confused? Don’t be. Well, do be, but don’t feel ashamed about it. All is explained in our article on the Financial Collateral Directive. And, if not in that one, in our section on cognitive dissonance.

Fly, you fools!

Or, check out our NY law Variation Margin CSA Anatomy.

But, really, you should fly. Fools.

See also

• [[Security interest]]
• Collateral
• Rehypothecation
• [[Security interest GMSLA]]
• Credit risk mitigation techniques

• credit support annex