Known for the needs of the Financial Guarantees Directive as a property transfer agreement. But it`s the same among us, the lawyer of the freaks finance, and sharp opposite of a financial security guarantee agreement that is a whole other thing. This has profound consequences – perhaps a little charitable for some – if we consider the 2015/2365/CE (EUR Lex) (also known, rigidly, the regulation on the transparency of securities and reuse financing transactions, rather incidentally than the rules on securities financing transactions, and willingly like SFTR) which, in article 15, have something to say about this and what you have to say about your counterparty. The broken rules affect the security of the sale of securities, although tangential: strictly, a property guarantee agreement is not a customer money agreement. but it is like an « agreement by which a client transfers full ownership of the money to a company to secure or otherwise cover current or future, actual, or prospective obligations. » This is very much like a client`s money or on behalf of a client, in relation to (etc) his MiFID business – except that you subtly change it into contractual liability (no participation in regulated deposits) by its clever design as a collateral agreement for the sale of securities, and not into a kind of lease on which the rules of the client`s money are bitten. Reluctantly, CASS 7 rules give professional brokers a passport, but prohibit ownership transfer agreements with private clients. 2. When reviewing and documenting the appropriate use of ownership transfer guarantee contracts, investment firms take into account all the following factors: (a) whether there is a very weak link between the client`s obligation to the business and the use of security contracts relating to the transfer of securities: including whether the likelihood of the client`s liability to the company is negligible; (b) if the amount of money from clients or financial instruments subject to a guarantee contract relating to transfers of ownership far exceeds the client`s obligation, or is unlimited, if the client is obliged; and (c) if the financial instruments or funds of all clients are subject to security agreements relating to the transfer of securities, regardless of each client`s commitment to the entity. (7) Evidence of a strong link between the security transferred under a TTCA and the client`s liability should not exclude the existence of an appropriate guarantee against the client`s obligation. Investment firms could therefore continue to demand sufficient warranty, if necessary through a TTCA. This obligation should not prevent compliance with the requirements of regulation (EU) 648/2012 of the European Parliament and the Council and should not prohibit the appropriate use of the TTCA in the context of possible liabilities or deposits for non-clients. (6) The 2014/65/EU Directive requires investment firms to protect their clients` assets.
Article 16, paragraph 10 of the 2014/65/EU Directive prohibits companies from entering into guarantee contracts with private clients relating to the transfer of securities (TTCA) in order to guarantee or cover current or future obligations, effective or possible or prospective. However, it is not forbidden for investment firms to enter into TTCA with non-residential clients. As a result, investment firms may use the TTCA more often than reasonably to deal with non-residential clients, compromising the general client asset protection regime.