The Financial Collateral Directive’s Practice in England

Abstract

This article assesses the operation of the Financial Collateral Arrangements (No.2) Regulations 2003 (FCAR), as amended by the Financial Markets and Insolvency (Settlement Finality and Financial Collateral Arrangements) (Amendment) Regulations 2010. It will be seen that the FCAR has achieved only limited success in England, thanks in part to the poor drafting of the FCAR, though some defects have been remedied by the 2010 Regulations which ironically have created some new problems. Some practical solutions to common practical problems will also be considered.

Keywords: Financial Collateral Directive 2002/47/EC, retroactivity, fixed and floating charges, possession and control, security interest, title transfer, enforcement of security, appropriation, close-out netting, set-off

JEL Classification: K10, K11, K12, K19, K20, K22, K29, K30, K33, K39, K40, K49