09 January 2007

Commission proposes wider scope for Financial Collateral Directive

The Commission issued its evaluation report on the Financial Collateral Arrangements Directive proposing an extension of the scope of the directive to include certain credit claims thatwill be eligible as collateral for Eurosystem credit operations as of 1 January 2007.

As of 1 January 2007, the European Central Bank will introduce certain credit claims as an eligible type of collateral for Eurosystem credit operations. The Commission is therefore open to extending the material scope of the Directive. The report also addresses the three opt-out provisions contained in the Directive and the need to improve the provisions on close-out netting and conflicts of law.

the Commission considers to propose the following steps:

Amending to extend the FCD depending on the progress made in respect to the technical issues relating to the use of credit claims as collateral.

Maintain the opt-out provisions on the scope.

Delete Article 4(3), opt-out provision on appropriation, at the next revision of the FCD.

Explore the possibility to improve the general EU framework for netting.

Amend Article 9 FCD (as well as Article 9 (2) SFD and Article 24 Winding-up Directive), either as a consequence of a Council Decision to sign the Hague Securities Convention or (in case the latter would not occur) in order to specify the exact criteria for determining the location of account.

Press release
Report
Annex

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