Title transfer collateral arrangement

A word about credit risk mitigation

Legal security: Mortgage • Pledge • Lien • Bailment Equitable security: Charge • fixed • floating \| ABWOS \| Equitable lien Credit risk mitigation: Title transfer \| Guarantee \| Letter of credit \| Netting Friends and relations: Rehypothecation \| Equivalent Documents: 1994 NY CSA \| 1995 CSA \| 1995 ISDA CSD (English law) Regulation: LPA 1925 \| Financial Collateral Regulations \| LPMPA 1994 Index: Click ᐅ to expand: Taking security Security Collateral

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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 counterpart 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.

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