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Collateral

Collateral provides a safety net if there are problems between counterparties. Financial collateral is an asset (financial instrument, cash or credit claim) that is given to the counterparty to secure an obligation (e.g. a loan).

The Financial Collateral Directive has created a harmonised EU regime for the receipt and enforcement of financial collateral. Firstly, it facilitated the taking of financial collateral by largely abolishing formal requirements (e.g. the need to register the collateral). Secondly, it also facilitated enforcement (e.g. if the borrower defaults on its obligation to the lender, the lender can immediately realise the collateral, in or outside insolvency proceedings). Thirdly, it enhanced legal certainty as to which law applies to book-entry securities collateral in cross-border situations.

The Financial Collateral Directive is a critical foundation for the EU's financial system. A clear, pan-EU legal framework for the use of financial collateral contributes to the greater integration and cost-efficiency of European financial markets. Harmonised collateral rules lower credit losses and encourage cross-border business and competitiveness.

Report from the Commission to the European Parliament and Council on the appropriateness of Article 3(1) of the Financial Collateral Directive

29.06.2016
Commission publishes report on the appropriateness of Article 3(1) of Directive 2002/47/EC on financial collateral arrangements.

Directive 2009/44/EC amending the Settlement Finality Directive and the Financial Collateral Directive

10.06.2009
Publication of Directive 2009/44/EC of the European Parliament and of the Council of 6 May 2009 amending Directive 98/26/EC on settlement finality in payment and securities settlement systems and Directive 2002/47/EC on financial collateral arrangements as regards linked systems and credit claims
24.04.2008
The Commission has adopted a proposal to amend the Settlement Finality Directive and the Financial Collateral Directive in order to bring both Directives in line with market and regulatory developments in the post-trading area.

Commission evaluation of the Financial Collateral Directive

20.12.2006
Commission publishes evaluation report of the Financial Collateral Directive (2002/47/EC)
26.01.2006
The Commission invites Member States and industry to evaluate the implementation of the Financial Collateral Directive (2002/47/EC)(consultation closed)

Directive 2002/47/EC

27.06.2002
Publication of the Financial Collateral Directive (2002/47/EC)
15.05.2002
Commission welcomes European Parliament's approval of Financial Collateral Directive
05.03.2002
Commission welcomes Council’s Common Position on Financial Collateral Directive
30.03.2001
Commission proposes simplified EU legal framework for Financial Collateral