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Title transfer collateral arrangement: Difference between revisions
Title transfer collateral arrangement (view source)
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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. | ||
===CASS rules=== | |||
The CASS rules impact on title transfer collateral arrangements, albeit tangentially: strictly speaking, a title transfer collateral arrangement is not a client money arrangement. but it is ''like'' one: an “arrangement by which a client transfers full ownership of money to a firm for the purpose of securing or otherwise covering present or future, actual, contingent or prospective obligation”. This sounds a lot like receiving money from, or holding money for or on behalf of a client, in connection with (etc etc) its MiFID business — except that by cleverly constructing it as a title transfer collateral arrangement, you are subtly changing it into a [[contractual liability]] (not a regulated deposit taking activity), and not a kind of [[bailment]], which is what the client money rules bite on. Reluctantly, for [[professional clients]], the CASS 7 rules give brokers a pass, but they prohibit [[title transfer collateral arrangements]] with [[retail client]]s. | |||
As indeed do the {{tag|CASS}} rules, especially if your counterparty should ask for you to change or terminate one. | As indeed do the {{tag|CASS}} rules, especially if your counterparty should ask for you to change or terminate one. | ||