The aim of the Collateral Directive (2002/47/EC) is to create a uniform EU legal framework to limit credit risk in financial transactions through the provision of securities and cash as collateral. Collateral is the property (such as securities) provided by a borrower to a lender to minimise the risk of financial loss to the lender in the event of the borrower failing to meet comprehensively their financial obligations to the lender. The Directive reduces the formal collateral requirements and harmonise and clarify the collateral process at minimum level.
Creation of a clear, uniform pan-EU legal framework for the use of collateral contributes to the greater integration and cost-efficiency of European financial markets. Harmonised collateral rules will lower credit losses, encourage cross-border business and competitiveness.
European Commission Presentation on Financial Collateral Arrangements
In December 2006, the Commission presented an Evaluation Report on the application of the Financial Collateral Arrangements Directive to the European Parliament and the Council. The report concludes that, overall, Member States have adequately implemented the Directive.
Directive 2009/44/EC amending the Settlement Finality Directive and the Financial Collateral Arrangements 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 Arrangements 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 Arrangements Directive