European Communities (Financial Collateral Arrangements) Regulations 2010
Source: Iris Oifigiúl 2010-12-28 01943-01943

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paragraphs: (1) These Regulations may be cited as the European Communities (Financial Collateral Arrangements) Regulations 2010.
(2) These Regulations come into operation on 30 June 2011.
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paragraphs: (1) In these Regulations—
(a) a provision of a financial collateral arrangement, or an arrangement of which a financial collateral arrangement forms part, or
(b) a rule of law,
(i) either or both of the following apply:
(I) the obligations of the parties—
(A) are accelerated so as to be immediately due and are expressed as an obligation to pay an amount representing the estimated current value of the obligations, or
(B) are terminated and replaced by an obligation to pay such an amount;
(II) an account is taken of what is due from each party to the other in respect of those obligations and the party from which the larger amount is due is required to pay to the other party a net amount equal to the balance of the account;
(a) the collateral taker is entitled to realise or appropriate financial collateral, or
(b) a close-out netting provision takes effect;
(a) in relation to collateral that is cash, a payment of the same amount and in the same currency, and
(b) in relation to collateral that is a financial instrument—
(i) another financial instrument of the same issuer or debtor that is part of the same issue or class, and is of the same nominal amount, currency and description, as the first-mentioned instrument, or
(ii) if the relevant financial collateral arrangement provides for the transfer of other assets following the occurrence of an event relating to or affecting a financial instrument provided as financial collateral, those other assets;
(a) to own means of production that are essential for the collateral provider’s business, or
(b) to own real property;
(a) shares in companies;
(b) securities equivalent to shares in companies;
(c) bonds and other forms of debt instruments if negotiable on the capital market;
(d) any securities (other than instruments referred to in subparagraphs (a) to (c)) that are normally dealt in and give the right to acquire any such shares, bonds or other securities by subscription, purchase or exchange;
(e) any securities (other than instruments referred to in subparagraphs (a) to (c) and instruments of payment) that give rise to a cash settlement;
(f) units in collective investment undertakings;
(g) money market instruments;
(h) claims relating to, or rights in or in respect of, shares, securities, bonds, and instruments of a kind referred to in subparagraphs (a) to (d);
(a) a local government body,
(b) a public sector body of a Member State that is charged with responsibility for, or is involved in, the management of public debt, and
(c) a public sector body of a Member State that is authorised to hold accounts for customers;
(a) an obligation arising under a master agreement or similar arrangement,
(b) an obligation owed to a collateral taker by a person other than the collateral provider, and
(c) an obligation of any class or kind arising from time to time specified in the arrangement or, if the arrangement is varied, the arrangement as varied;
(a) is intended to preserve or restore the financial situation of the person, and
(b) affects pre-existing rights of third parties (including but not limited to a measure involving a suspension of payments, suspension of an enforcement measure or a reduction of claims);
(2) For the purposes of these Regulations, financial collateral is provided when financial collateral that is or is to be delivered, transferred, held, registered or otherwise designated so as to be in the possession or under the control of a collateral taker or a person acting on a collateral taker’s behalf is so delivered, transferred, held, registered or otherwise designated.
(3) Financial collateral has been provided to a collateral taker for the purposes of these Regulations if paragraph (2) has been complied with in relation to that collateral even if there exists a right of substitution of the financial collateral, a right to withdraw excess financial collateral in favour of the collateral provider or, in the case of a credit claim that is financial collateral, a right to collect the proceeds of the claim until further notice.
(4) A reference in these Regulations to writing includes a reference to any other method of recording information that is legally equivalent to writing, and in particular includes recording by electronic means (such as a computer) or in or by any other durable medium.
(5) A word or expression used in these Regulations and in Directive 2002/47/EC of the European Parliament and of the Council of 6 June 20025 , but not defined in paragraph (1), has, unless the contrary intention appears, the same meaning in these Regulations as it has in that Directive.
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paragraphs: (1) These Regulations apply to a financial collateral arrangement and to financial collateral only if the arrangement and collateral comply with this Regulation.
(2) The collateral taker and the collateral provider who are the parties to the financial collateral arrangement must each be one of the following:
(a) a public authority (excluding a publicly guaranteed undertaking unless it is covered by one or more of paragraphs (b) to (l));
(b) a central bank, the European Central Bank, the Bank for International Settlements, a multilateral development bank, the International Monetary Fund or the European Investment Bank;
(c) a credit institution (as defined in Article 4(1) of the Recast Credit Institutions Directive, but including the institutions listed in Article 2 of that Directive);
(d) an investment firm (as defined in Article 4(1)(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 20046 );
(e) a financial institution (as defined in Article 4(5) of the Recast Credit Institutions Directive);
(f) an insurance undertaking (as defined in Article 1(a) of Council Directive 92/49/EEC7 );
(g) an assurance undertaking (as defined in Article 1(1)(a) of Directive 2002/83/EC of the European Parliament and of the Council of 5 November 20028 );
(h) a management company (as defined in Article 1a(2) of Council Directive 85/611/EEC9 );
(i) an undertaking for collective investment in transferable securities (UCITS) as defined in Article 1(2) of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS);
(j) a central counterparty, settlement agent or clearing house, or any similar entity that is operating in the futures, options or derivatives markets in a way not covered by the Settlement Finality Directive, provided the entity is regulated under the law of the State or of another country;
(k) a person (other than a natural person) who acts as a trustee, or in a representative capacity, on behalf of—
(i) any one or more persons of whom at least one is a bondholder or the holder of any other form of securitised debt, or
(ii) an authority, bank, institution or other entity referred to in any of paragraphs (a) to (d);
(l) any other person or group (other than a natural person), but only if the other party to the arrangement is an authority, bank, institution or other entity of a kind specified in any of paragraphs (a) to (k).
(3) In paragraph (2)(j) “central counterparty”, “clearing house” and “settlement agent” have the respective meanings given by Article 2 of the Settlement Finality Directive.
(4) For these Regulations to apply to a financial collateral arrangement, there must be evidence in writing of the arrangement.
(5) For these Regulations to apply to financial collateral, there must be evidence in writing of the provision of that collateral. The evidence must identify the financial collateral concerned. For that purpose, it is sufficient to prove—
(a) in the case of book entry securities collateral, that that collateral has been credited to, or forms a credit in, the relevant account, and
(b) in the case of cash collateral, that that collateral has been credited to, or forms part of, a designated account.
(6) The inclusion of a credit claim in a list of claims submitted in writing to a collateral taker—
(a) is sufficient to identify the credit claim and to evidence the provision of the claim as financial collateral between the parties, and
(b) is also sufficient for those purposes against the debtor or third parties.
(7) In this Regulation “Settlement Finality Directive” means Directive 98/26/EC of the European Parliament and of the Council of 19 May 199810 .
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paragraphs: (1) Subject to paragraphs (2) and (3), the creation, validity, perfection, enforceability or admissibility in evidence of a financial collateral arrangement, or the provision of financial collateral under such an arrangement, does not depend on the performance of a formal act such as registration or notice to the debtor.
(2) In the case of financial collateral that is or includes a credit claim, if, pursuant to the law of the State, the laws of another state would be applied to determine any of the matters referred to in paragraph (1) and, pursuant to the laws of that other state, that matter depends on the performance of a formal act such as registration or the giving of notice to the debtor, paragraph (1) does not affect the continued application of that requirement.
(3) Paragraph (1) does not prejudice the application of these Regulations to financial collateral once that collateral has been provided if—
(a) that provision is capable of being evidenced in writing, and
(b) the relevant financial collateral arrangement is also capable of being evidenced in writing.
(4) Subject to paragraph (5), a debtor in relation to a credit claim that has been provided as financial collateral can waive, in writing—
(a) the debtor’s rights of set-off against the creditor in relation to the credit claim and any person to whom the claim is assigned, pledged or otherwise mobilised as collateral; and
(b) the debtor’s rights arising from banking secrecy rules that would otherwise prevent or restrict the ability of the creditor to provide, for the purposes of using the credit claim as collateral, information on the credit claim or the debtor.
(5) Paragraph (4) does not apply to a debtor entitled to the benefit of any law of the State that gives effect to Council Directive 93/13/EEC of 5 April 199311 or any other law of the State concerning unfair contract terms.
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paragraphs: Nothing in Parts 2, 3 and 4 limits any requirement imposed by any other law of the State requiring the realisation or valuation of financial collateral and the calculation of the relevant financial obligations to be carried out in a commercially reasonable manner.
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paragraphs: (1) On the occurrence of an enforcement event relating to a security financial collateral arrangement, the collateral taker under the arrangement has a right to realise financial collateral provided under the arrangement—
(a) in the case of financial collateral in the form of a financial instrument, by sale or (subject to paragraph (2)) by appropriation and by setting off the instrument’s value against, or applying that value in discharge of, the relevant financial obligations,
(b) in the case of financial collateral in the form of cash, by setting off the amount of cash against, or applying it, in discharge of the relevant financial obligations, and
(c) in the case of financial collateral in the form of credit claims, by sale or (subject to paragraph (2)) by appropriation and by setting off their value against, or applying their value in discharge of, the relevant financial obligations.
(2) For the purpose of this Regulation, a collateral taker may appropriate a financial instrument or credit claim only if the relevant security financial collateral arrangement—
(a) allows appropriation, and
(b) provides for the valuation of the financial instrument or credit claim.
(3) Financial collateral may, subject to the terms of the relevant security financial collateral arrangement, be realised under this Regulation without—
(a) giving notice of intention to realise the financial collateral,
(b) the approval of the terms of realisation by a court, public authority or person, or
(c) any additional period of time having elapsed.
(4) There is no rule of law requiring financial collateral to be realised by public auction or any other means by which an insolvent person’s assets may be lawfully realised. However, a security financial collateral arrangement may provide for the realisation of the relevant financial collateral.
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paragraphs: A financial collateral arrangement has effect in accordance with its terms despite the commencement or continuation of winding-up proceedings or reorganisation measures in relation to the collateral provider or collateral taker concerned.
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paragraphs: (1) If and to the extent that the terms of a security financial collateral arrangement so provide, the collateral taker under the arrangement has a right to use and dispose of financial collateral provided under the arrangement.
(2) Subject to paragraph (3), a collateral taker under a security financial collateral arrangement who exercises such a right is required to transfer equivalent collateral to replace the original financial collateral not later than the due date for the performance of the relevant financial obligations covered by the arrangement.
(3) Instead of complying with paragraph (2), the collateral taker may, on the due date for the performance of the relevant financial obligations, either—
(a) transfer equivalent collateral, or
(b) if and to the extent that the terms of the arrangement so provide, set off the value of the equivalent collateral against, or apply it in discharge of, the relevant financial obligations.
(4) Equivalent collateral transferred in accordance with paragraph (2) or (3) is subject to the same security financial collateral agreement as that to which the original financial collateral was subject and is to be taken to have been provided under the security financial collateral arrangement at the same time as the original financial collateral was first provided.
(5) This Regulation does not apply to credit claims.
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paragraphs: The use of financial collateral by a collateral taker in accordance with Regulation 8 does not render invalid or unenforceable the rights of the collateral taker under the security financial collateral arrangement concerned in relation to financial collateral transferred in discharge of an obligation referred to in paragraph (2) of that Regulation.
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paragraphs: If an enforcement event occurs when an obligation referred to in Regulation 8(2) has not been complied with, the obligation can be the subject of a close-out netting provision.
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paragraphs: (1) A title transfer financial collateral arrangement has effect in accordance with its terms.
(2) If an enforcement event occurs when an obligation of the collateral taker to transfer equivalent collateral under a title transfer financial collateral arrangement remains outstanding, the obligation can be the subject of a close-out netting provision.
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paragraphs: (1) A close-out netting provision has effect in accordance with its terms irrespective of whether—
(a) winding-up proceedings or reorganisation measures have been commenced, or are continuing, in relation to the collateral provider or collateral taker concerned, or
(b) rights arising in respect of the relevant financial collateral purport to have been assigned or attached as a result of judicial or other process or any other disposition.
(2) The operation of a close-out netting provision is subject to a requirement to do any of the things referred to in paragraphs (a) to (c) of Regulation 6(3), or to realise any collateral in any particular way, only if the relevant financial collateral arrangement so provides. Without limiting the generality of the foregoing, Regulation 6(4) applies to the operation of a close-out netting provision.
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paragraphs: For the purposes of this Part—
(a) winding-up proceedings commence on the making of a winding-up order by the court; and
(b) reorganisation measures commence on the appointment of an administrator, whether by a court or otherwise.
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paragraphs: Neither a financial collateral arrangement, nor financial collateral provided under such an arrangement, may be invalidated or declared void or reversed only because the arrangement was created, or the financial collateral was provided—
(a) on the day on which relevant winding-up proceedings or reorganisation measures commenced, but before the commencement of those proceedings or measures, or
(b) during a period before, and defined by reference to, the commencement of those proceedings or measures, or by reference to the making of any court order or the taking of any other action, or the occurrence of any other event, during those proceedings or measures.
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paragraphs: Any financial collateral arrangement or relevant financial obligation created, or any financial collateral provided, on the day on which, but after the moment at which, winding-up proceedings or reorganisation measures were commenced, is binding on third parties if the collateral taker concerned is able to prove that that collateral taker was not aware, and had no reason to believe, that the proceedings or measures had commenced.
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paragraphs: (1) If a financial collateral arrangement contains an obligation to provide financial collateral, or additional financial collateral, in order to take account of changes in the value of the financial collateral, or in the amount of the relevant financial obligations, the provision of financial collateral or additional, substituted or replacement financial collateral under such an obligation may not be invalidated or declared void or reversed only because—
(a) the provision was made on the day on which winding-up proceedings or reorganisation measures commenced, but before the commencement of those proceedings or measures, or during a period before, and defined by reference to—
(i) the commencement of winding-up proceedings or reorganisation measures, or
(ii) the making of a court order, or the taking of any other action, or the occurrence of any other event, during the course of those proceedings or measures, or
(b) the relevant financial obligations were incurred before the date on which the financial collateral, or the additional, substituted or replacement financial collateral, was provided.
(2) If a financial collateral arrangement contains a right to withdraw financial collateral on providing, by way of substitution or exchange, financial collateral of substantially the same value, the provision of financial collateral or additional, substituted or replacement financial collateral under such a right may not be invalidated or declared void or reversed only because—
(a) the provision was made on the day on which winding-up proceedings or reorganisation measures commenced, but before the commencement of those proceedings or measures, or during a period before, and defined by reference to—
(i) the commencement of the winding-up proceedings or reorganisation measures, or
(ii) the making of a court order, or the taking of any other action, or the occurrence of any other event, during the course of those proceedings or measures, or
(b) the relevant financial obligations were incurred before the date on which the financial collateral or additional, substituted or replacement financial collateral was provided.
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paragraphs: Except as provided by this Part, nothing in these Regulations affects the operation of the laws of the State relating to insolvency with respect to the voiding of transactions during the period referred to in Regulation 14(b) or paragraph (1)(a) or (2)(a) of Regulation 16.
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paragraphs: (1) Any question with respect to any of the matters specified in paragraph (2) arising in relation to book entry securities collateral is to be governed by the domestic law of the country in which the relevant account is maintained, irrespective of any law of that country that provides for the law of another country to be referred to in deciding the question.
(2) The matters referred to in paragraph (1) are the following:
(a) the legal nature and proprietary effects of the book entry securities collateral concerned;
(b) the requirements for perfecting a financial collateral arrangement relating to that collateral and the provision of that collateral under such an arrangement and, more generally, the completion of steps necessary to render such an arrangement and provision effective against third parties;
(c) whether a person’s title to, or interest in, that collateral is overridden by, or subordinated to, a competing title or interest;
(d) whether a person has in good faith acquired title to, or an interest in, that collateral;
(e) the steps required for the realisation of that collateral following the occurrence of an enforcement event.
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paragraphs: Nothing in these Regulations affects the operation of any law of the State that gives effect to the Consumer Credit Directive.
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paragraphs: The following statutory instruments are revoked:
(a) the European Communities (Financial Collateral Arrangements) Regulations 2004 ( S.I. No. 1 of 2004 );
(b) the European Communities (Financial Collateral Arrangements) (Amendment) Regulations 2004 ( S.I. No. 89 of 2004 ).