Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Financial collateral definition

What does Financial collateral mean? In practice, financial collateral is the cash, securities and certain bank loan receivables that parties post as security under a financial collateral arrangement, typically in derivatives, repo, securities lending and loan financing. In the UK, it is defined in regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (SI 2003/3226), as amended, as cash, financial instruments (for example, shares, bonds and fund units) or credit claims (pecuniary claims arising from loans made by credit institutions). In Ireland, the equivalent definition appears in the European Communities (Financial Collateral Arrangements) Regulations 2010 (S.I. No. 195/2010), as amended. Key features:...

Financial Collateral Arrangements (No 2) Regulations 2003 (UK): scope, control/possession, enforcement and insolvency disapplications, registration exemptions, cross-border rules, BRRD overrides and FSMA 2023 reforms

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

FORTHCOMING DEVELOPMENT :

The Financial Services and Markets Act 2023 (FSMA 2023) delivers the outcomes of the Future Regulatory Framework Review by revoking retained EU financial services law listed in FSMA 2023, Sch 1 and replacing it with regulation tailored to the UK. Among the instruments named in FSMA 2023, Sch 1 are the Financial collateral Arrangements (No 2) Regulations 2003, SI 2003/3226 (Schedule 1, Part 2, Subordinate legislation), and the EC Financial Collateral Directive, Directive 2002/47/EC (Schedule 1, Part 3, EU tertiary legislation). The revocation of these two measures is not yet in effect. It is expected that the repeal of retained EU financial services law will proceed over a number of years, and the nature of any successor regime for financial collateral remains unknown. For further details on FSMA 2023, see Practice Note: The Financial Services and Markets Act 2023—essentials.

Introduction to the legislation

The Financial Collateral Arrangements (No 2) Regulations 2003 (FCARs), SI 2003/3226 have applied in the UK since 26 December 2003 and are intended to streamline how security over shares and cash is:

created
enforced...

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Web page updated on 21/05/2026

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