What are title transfer collateral arrangements?

The FCA Handbook provides that a TTCA is: “an arrangement by which a client transfers full ownership of [money or safe custody assets] to a firm for the purpose of securing or otherwise covering present or future, actual, contingent or prospective obligations”. CASS deals with the handling of client asset and cash.

What are collateral arrangements?

A collateral arrangement whereby, instead of instigating a pledge or security interest of some kind, a debtor provides cash or financial collateral to its creditor by means of title transfer against a contingent obligation on the creditor to return an equivalent security should the exposure be resolved.

What is a financial collateral agreement?

A security financial collateral arrangement, under which security over financial collateral is provided to a creditor. The holder of the security must have possession or control of the financial collateral in order for the FCA Regulations to apply to the arrangement.

Are shares financial collateral?

Security is “Collateral”; a “Financial Collateral Arrangement” means the provision of security over cash or financial instruments given by a collateral-provider to a collateral-taker; “Financial Instruments” include shares in companies, bonds and other tradeable debt instruments.

What is Client assets Sourcebook?

The FCA’s Client Assets Sourcebook (CASS) provides rules for firms to follow whenever the firm holds or controls client money or safe custody assets. CASS helps ensure the safety of client money and assets if a firm fails and leaves the market. CASS has many recordkeeping requirements listed throughout.

What is the collateral security?

an ASSET which a BORROWER is required to deposit with, or pledge to, a LENDER as a condition of obtaining a LOAN, which can be sold off if the loan is not repaid.

What is Share appropriation?

Shares can be appropriated when a borrower is in administration. Regulation 8 disapplies those provisions of the Insolvency Act 1986 that prevent lenders from enforcing charges when a borrower enters a reorganisation procedure (e.g. administration, a voluntary arrangement).

What is the difference between holding and controlling client money?

Holding client money is quite straightforward and common. It is receiving premiums from the client, refunds, or claims payments from the insurer, and holding in a separate designated trust account. Controlling client money is less common, although it is equally as common for firms to have this permission.

What is the purpose of a monthly cmar?

The CMAR gives us an overview of your firm’s client money and safe custody assets (client assets) positions and holdings, as well as a view of the trends in the industry. This enables us to make regulatory interventions in relation to client assets on a timely, firm-specific or thematic basis.

Can collateral be used as a down payment?

A: In principle, any collateral acceptable to the lender could serve as a substitute for a down payment. The only such substitute found in the U.S. is securities, which must be posted as collateral with an investment bank that also makes mortgage loans.

Why is collateral needed?

Before a lender issues you a loan, it wants to know that you have the ability to repay it. That’s why many of them require some form of security. This security is called collateral which minimizes the risk for lenders. It helps to ensure that the borrower keeps up with their financial obligation.

What is an example of appropriation?

An example of an appropriation is a state budget fund that is earmarked for education. An example of an appropriation is a certain amount of profits that a company may decide to make available for a capital expenditure, such as a new building. A thing appropriated; esp., money set aside for a specific use.

How does a title transfer financial collateral arrangement work?

A title transfer financial collateral arrangement, under which legal and beneficial title to financial collateral is transferred on terms that title to equivalent financial collateral will be transferred back to the collateral-provider when it discharges its obligations to the collateral-taker.

What are two types of Financial Collateral arrangements?

Two types of financial collateral arrangements are defined in Articles 2 (1) (b) and 2 (1) (c). The first one is “title transfer financial collateral arrangement” in which a collateral provider transfers full ownership of the collateral to the collateral taker (this includes repos and securities lending arrangements).

Who is the holder of the financial collateral?

A security financial collateral arrangement, under which security over financial collateral is provided to a creditor. The holder of the security must have possession or control of the financial collateral in order for the FCA Regulations to apply to the arrangement.

How is collateralisation defined in the EU directive?

If the collateral giver defaults, the collateral taker retains the collateral to cover the potential losses. Collateralisation in the EU is defined in the Directive on financial collateral arrangements (FCD). Two types of financial collateral arrangements are defined in Articles 2 (1) (b) and 2 (1) (c).