Important Changes To The Financial Collateral Act

Since the entry into force of the Financial Collateral Act of 15 December 2004 (the "Collateral Act") implementing Directive 2002/47/EC on financial collateral arrangements as regards linked systems and credit claims (the "Collateral Directive"), financial collateral arrangements have benefitted from increased flexibility and legal certainty in Belgium. In particular, the Collateral Act sets forth simplified rules for the enforcement of collateral arrangements and acknowledges the validity and enforceability of substitutions and margin calls, transfers of title for security purposes, repo transactions and (close-out) netting arrangements, even in the event of insolvency.

Nevertheless, further harmonisation and an extension of the scope of the Collateral Directive were deemed necessary, leading to Directive 2009/44/EC amending Directive 98/26/EC on settlement finality in payment and securities settlement systems and the Collateral Directive. The Act of 26 September