Financial Collateral Directive (FCD)

The EU Financial Collateral Directive (FCD) introduces a harmonised framework for the use of financial collateral to secure transactions, and thereby enhances the use of cross-border collateral. The FCD protects collateral takers by ensuring that financial collateral arrangements can be mobilised and realisable without delay, due to national formalities; providing for close-out netting provisions to be enforceable, in accordance with their terms and ring-fencing the operation of financial collateral arrangements, should one of the parties become insolvent.

The EU FCD regulation is expected to be reviewed under the upcoming legislature, as indicated in the European Commission summary report from June 2023, which took stock of the responses received to its review consultation.