The EU financial collateral directive: the distinguishing features of a security financial collateral arrangement?

Abstract

Abstract The first part of this article considers whether a system-neutral meaning of a title transfer financial collateral arrangement (TTFSA) can be identified in the EU Collateral Directive. This part looks at a similar issue—it considers whether system-neutral meaning of a security financial collateral arrangement (SFCA) can be identified in the Financial Collateral Arrangement Directive. It is argued that the definition of a SFCA in the Directive is based on the assumption that there is a specific organizing principle or concept that makes it easy to clearly identify, and demarcate, SFCAs from other types of security arrangements (particularly TTFCAs). While this assumption fits well within the model of Civil law systems, which may have a clear concept of ‘security right’, it does not fit in well within the common law. The arguments in this article call for a careful approach in the system-neutral definition of a SFCA in the Directive.