Financial collateral

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In general, in banking , financial collateral is understood to mean certain loan collateral that can be made available on the European financial market for the granting of loans and, especially in the financial sector , a security deposit that is to be provided by the investor in certain securities transactions or contracts for commodities to credit institutions , securities service companies or brokers .

General

The regulations on financial collateral are part of the EU action plan of May 1999 to create a single market for financial services and to provide legal certainty as support for cross-border clearing and securities trading .

Certain goals have already been attempted through the Finality Directive (Finality Directive, 98/26 / EC): According to Art. 3 Para. 1, the Finality Directive provides for the finality and irrevocability of transfer orders in the event of insolvency, but according to Art the ordered collateral can be used without restriction and special rules for offsetting (netting) are also determined. This is intended to lower costs and in turn strengthen the competitiveness of European financial institutions. As a major shortcoming of the Settlement Finality was recognized that no uniform rules exist regarding the order, available and realization of collateral (financial collateral), the national provisions do not promote an in-depth cooperation and thereby to further strengthen the capital within the EEA - the single market is prevented.

The Financial Collateral Guideline 2002/47 / EC is part of a comprehensive legal framework with which the European financial center is to be strengthened. The directive is intended to contribute to the further integration of the financial market and to the stability of the financial system in the Community and thereby promote the free movement of services and capital in the internal financial market. The directive aims to achieve this goal through a Community-wide regulation for the provision of securities and cash balances as collateral. The aim of the Financial Collateral Directive is to create a uniform set of rules for the European Union in order to limit credit risks in financial transactions in which bank balances, shares or bonds are provided as loan collateral. By § 1 , para. 17 KWG financial security policy is part of German law.

Legal issues

Directive 2002/47 / EC establishes the same minimum cross-border requirements for the civil and insolvency law treatment of loan collateral that is used in capital market transactions . The Commission's report to the European Parliament and the Council stated: “The aim of the directive was to achieve greater integration and cost efficiency of the European financial markets by simplifying the process of creating collateral, improving legal certainty in the use of financial collateral and the To reduce the risks for market participants. "

General provisions of national civil, company and commercial law take a back seat to the special provisions relating to financial collateral. The national legislature can go beyond the minimum requirements of Directive 2002/47 / EC, provided that the principles of the Directive are not changed in essence. The aim of regulating financial collateral at European level is also to create uniform minimum legal regulations to limit the credit risk in financial transactions.

The overriding goal, which will continue to be pursued in the future, is to create a deepened European financial market and thereby guarantee the smooth functioning of the common monetary policy in the European Economic and Monetary Union .

The minimum harmonized EU legal framework is intended to limit the credit risk in financial contracts by ordering securities and bank balances as collateral.

Financial security is to be understood as the security granted by a security seller to a security buyer in the form of a limited security interest in rem or by way of a transfer of full rights (e.g. to shares, debt instruments, etc., but not in cash). This right is provided as security so that in the event of the borrower's illiquidity, the lender can offset the financial risk .

Regarding the two forms of financial security, it should be noted:

  • Real security : In the sense of the 9th recital of Directive 98/26 / EC of the European Parliament and of the Council of May 19, 1998 on the effectiveness of settlement in payment, securities delivery and securities settlement systems (Finality Directive, OJ L 166/45) Real collateral “all legal security means with which a participant secures rights and obligations arising from the system towards other participants in the payment system and / or securities delivery and settlement system; this includes u. a. Repurchase agreements (repurchase agreements) statutory liens and fiduciary security interests. Provisions of individual law on the type of security in rem that can be provided are not affected by the definition of security in rem in this directive. ”According to Art. 2 lit. m) of this guideline, real collateral is a realizable asset "(including credit balances), which is used to secure rights and liabilities that may arise in connection with a system, as a pledge, as part of a repurchase agreement (repurchase agreement), a comparable agreement or in made available in another form or made available to the central bank of a Member State or the future European Central Bank. "
  • Transfer of full rights: including repo transactions ) in securities and cash balances .

Financial collateral is a very important market within the European Economic Area (EEA) for which uniform guidelines have become necessary. The total value of the outstanding securities repurchase agreements ( repurchase agreements , also known as "repos") was estimated in 2002 at around EUR 2 trillion. In securities repurchase agreements, securities are transferred under full law and at the same time an agreement is concluded that securities of equal value are transferred back later or at a precisely specified time at a certain price. According to The International Capital Market Association (ICMA) "European repo market survey", March 2006, the repo market of the European Union is one of the largest financial markets in the world and has been expanding rapidly in recent years. The legal qualification of the securities repurchase agreements has not been finally clarified. In some cases, these are assessed as a purchase contract with a repurchase agreement, in some cases as a loan agreement with transfer of ownership, etc.

For many years, the harmonization of personal guarantees "and the rem is at European level movable collateral tries. The basic form of personal security is the guarantee, which in practice is one of the most important credit security rights in all EEA member states. The harmonization of mortgage liens, on the other hand, which have widely differing legal regulations at national level, is particularly difficult due to the close connection between real estate law and the register systems and, in comparison to the much more important property security rights in cross-border practice, less urgent.

definition

The Directive on financial collateral 2002/47 / EC “creates a uniform EU legal framework for the (cross-border) use of financial collateral and thus abolishes most of the formal requirements that financial collateral traditionally had to comply with. Financial collateral is an asset that a borrower makes available to his lender in order to minimize the risk of financial loss to the lender in the event that the borrower fails to meet its financial obligations to him. Collateral is increasingly used in all types of transactions, including in the capital markets, bank finance and finance management, payment and clearing systems, and general bank lending. In most cases the security will be provided in the form of cash or securities ”. According to Art. 1 Para. 4 lit. a and para. 5 of Directive 2002/47 / EC, cash collateral or financial instruments tied to possession, "for which the provision of possession must be in writing and the order in writing" or in a legally equivalent form "evidenced". Section 1 d KWG defines: “Financial collateral within the meaning of this law is cash balances, amounts of money, securities, money market instruments and other promissory notes, including any rights or claims associated with them”.

species

The term only covers certain real certainties , but not personal certainties . Financial collateral is cash collateral ( bank balances or comparable money claims such as money market sight deposits; Art. 2 Para. 1d Financial Collateral Directive) or financial instruments ( shares , bonds or other debt instruments traded on the capital market ; Art. 2 Para. 1e Financial Collateral Directive). As a contract only parties using financial collateral coming to Art. 1 para. 2 Collateral Directive legal persons not eligible, individuals .

Financial collateral includes, in particular, the so-called margins , which the buyer and seller must deposit as collateral in the case of derivatives such as contracts for differences , options , swap transactions or futures contracts . Under Art. 11 para. 3 Market Infrastructure Regulation transactions must in derivatives that are not the clearing obligation subject to the EU member states are secured. Initial margin and variation margin are provided as collateral instruments . They cover the risk of default by buyers or sellers that counterparties (credit institutions, investment services companies or brokers) assume.

Further development of the financial collateral guideline

The practical application of Directive 2002/47 / EC in recent years has resulted in a revision of the changed framework conditions and experiences in the directive.

This applies in particular to the inclusion of credit claims as part of the financial collateral. In the future, the following three forms are to be understood under financial collateral:

  • Cash security,
  • Financial instruments,
  • Credit claims.

According to Art. 2 Para. 1 lit. o RL 2009/44 / EC “Claims arising from an agreement on the basis of which a credit institution within the meaning of Article 4 No. 1 of Directive 2006/48 / EC, including the institutions referred to in Article 2 of that Directive, grants a credit in the form of a loan. “The Member States can exclude from the scope of this directive credit claims“ in which the debtor is a consumer within the meaning of Article 3 letter a of Directive 2008/48 / EC of the European Parliament and of the Council of April 23, 2008 on consumer credit agreements or a micro-enterprise or small company within the meaning of Article 1 and Article 2 Paragraphs 2 and 3 of the Annex to Commission Recommendation 2003/361 / EC of 6 May 2003 on the definition of micro, small and medium-sized enterprises , provided it is the buyer of protection or the guarantor of these credit claims is not an institution as defined in Article 1 paragraph 2 letter b he directive acts "(Art. 1 para. 4 lit. c RL 2009/44 / EG).

Pursuant to Article 11 (1) of Directive 2009/44 / EC, the member states have to enact and publish the necessary legal, regulatory and administrative provisions “by December 30, 2010 at the latest” in order to comply with this directive.

Editorial quality of the financial collateral policy

The editorial quality of legal acts of the European Union is described in the “Joint Guide of the European Parliament , the Council and the Commission ” from 2003 as “an essential prerequisite for a better understanding and correct application of Community law”, “thus Citizens and economic operators recognize their rights and obligations, the courts ensure their enforcement and the Member States , insofar as they are obliged to do so, can implement Community law properly and on time ”. To this end, "the legal acts of the Community institutions must be formulated in a comprehensible and coherent manner and follow uniform principles in terms of form and structure".

At the meeting of the European Council in Edinburgh (1992) was recognized in principle that the acts of the Community clearer and simpler need. This should be done taking into account certain legislative principles.

The Council and the Commission have taken various measures and carried out preparatory work and provided publications.

In addition, Declaration No. 39 in the Final Act of the Amsterdam Treaty (on the drafting quality of Community legislation) reaffirmed this principle of clear and simple design of legal acts (closeness to the citizen).

The result of these efforts was the conclusion of an Interinstitutional Agreement of 22 December 1998 with common guidelines for the drafting quality of Community legislation.

However, this postulate was by no means fulfilled with regard to Directive 2002/47 / EC (financial collateral) and the linguistic and editorial quality was also not met in the subsequent directive with which Directive 2002/47 / EC was amended (Directive 2009/44 / EC) much improved.

Therefore, the recitals in the Financial Collateral Directive are of particular importance. The recitals of this directive are to be used both for the interpretation of the directive and for the interpretation of the national implementation.

Banking regulatory regulation

Financial collateral occurs in particular with the loan types Lombard loan , securities repurchase agreement and securities lending . According to Art. 207 Para. 1 Capital Adequacy Ordinance (CRR), financial collateral and gold can be recognized as loan collateral if the requirements mentioned herein are met:

  • The creditworthiness of the debtor of the financial security must not correlate significantly positively with the lending value of the financial security (Art. 207 (2) CRR);
  • the security must be legally enforceable (Art. 207 (3) CRR) and
  • According to Art. 207 (4) CRR, the protection- taking banks still have to meet a number of operational requirements.

What is important is the positive correlation that exists, for example, with a loan to a stock corporation that offers its own shares as collateral .

literature

Web links

Individual evidence

  1. ↑ Action plan for the single financial market of May 11, 1999 and several documents and strategies based on it. See also the 2nd recital of Directive 2002/47 / EC. For a template for this implementation at European level, see reports by the Giovanni Group and the Political Group for Financial Services (FSPG) chaired by the EU Commission.
  2. ↑ The incomplete conflict-of-law rule in Art. 9 Paragraph 2 Finality Directive (RL 98/26 / EC) only relates to real collateral for securities that are used in a payment system.
  3. ↑ BT-Drs. 15/1853 of October 29, 2003, draft of a law implementing Directive 2002/47 / EC of June 6, 2002 on financial collateral and amending the Mortgage Bank Act and other laws , p. 1
  4. ↑ Report from the Commission to the European Parliament and the Council Evaluation report on the Directive on Financial Collateral (2002/47 / EC) (COM / 2006/0833 final) margin no.2.
  5. ^ Opinion of the European Central Bank of 13 June 2001 at the request of the Council of the European Union on a proposal for a directive of the European Parliament and of the Council on financial collateral (CON / 2001/13), margin no.2.
  6. ↑ a b Cf. 3rd recital of Directive 2002/47 / EC.
  7. ↑ Communication from the Commission of 5 March 2002 (IP / 02/361) “ Financial services : Commission welcomes Council common position on the Directive on financial collateral”. According to the report by the Commission to the European Parliament and the Council (assessment report) on the Financial Collateral Directive (2002/47 / EC) (COM / 2006/0833 final) margin no. 3.1, the total repo value was around 1.9 in June 2001 Billion euros, in December 2003 around 3.8 billion euros and in December 2005 around 5.9 billion euros ([Link: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/02/361&format = HTML & aged = 1 & language = DE & guiLanguage = en ]).
  8. ↑ Report from the Commission to the European Parliament and the Council Evaluation report on the Financial Collateral Directive (2002/47 / EC) (COM / 2006/0833 final), 1st introduction, first paragraph.
  9. ↑ Directive 2009/44 / EC of the European Parliament and of the Council of 6 May 2009 amending Directive 98/26 / EC on the effectiveness of settlement in payment and securities delivery and settlement systems and Directive 2002/47 / EC on Financial collateral for related systems and credit claims
  10. ↑ OJ. L 133 of May 22, 2008, p. 66.
  11. ↑ OJ. L 124 of May 20, 2003, p. 36.
  12. ↑ Joint guidelines of the European Parliament, the Council and the Commission for persons involved in the drafting of legal texts in the Community institutions ( ISBN 92-894-4061-9 ).
  13. ^ Council: Resolution of 8 June 1993 on the drafting quality of Community legislation (OJ C 166 of 17 June 1993, p. 1). Commission: General Guidelines for Legislative Policy, SEC (95) 2255/7 of 18 January 1996.
  14. ↑ Between the European Parliament, the Council and the Commission.
  15. ↑ Interinstitutional Agreement of 22 December 1998: Common guidelines for the drafting quality of Community legislation (OJ C 73 of 17 March 1999, p. 1).