With effect from 11 May 2011, the Dutch rules on financial collateral arrangements (FCAs) have been amended. The amendment act, which implements Directive 2009/44/EC (the Amending Directive) in Dutch law, allows so-called "credit claims" to be used as collateral under an FCA. This newsletter discusses the most important changes.

General introduction on FCAs

An FCA is an agreement under which a collateral provider provides financial collateral to a collateral taker as security for the performance of one or more obligations. This can either be through the creation of a pledge on or through an outright transfer of title to the financial collateral. By law, a collateral taker under an FCA enjoys a number of advantages that are not available to a "traditional" collateral taker. However, these advantages only apply if the FCA is concluded between certain categories of parties. In addition, prior to the amendment of the Dutch rules on FCAs, only cash (i.e. monies credited to an account or deposit) and securities could constitute "financial collateral".

Extension of scope of statutory rules on FCAs

As a result of the amendment act, it is now also possible for so-called "credit claims" to be used as "financial collateral" under an FCA. The Dutch FCA rules are based on Directive 2002/47/EC (the Collateral Directive), which was amended by the Amending Directive. One of the reasons behind the Amending Directive is that, with effect from 1 January 2007, the European Central Bank decided to introduce credit claims as an eligible type of collateral for Eurosystem credit operations. The amendments under the Amending Directive are intended to maximise the economic impact of the use of credit claims and to contribute to a level playing field among credit institutions in all EU member states.

Definition of credit claims

Credit claims are defined in the Dutch FCA rules as pecuniary claims arising out of an agreement whereby a credit institution, as defined in Section 1:1 of the Dutch Financial Supervision Act (e.g. a bank), grants credit in the form of a loan. Where the debtor is a consumer, a claim will only constitute a credit claim within the meaning of the Dutch FCA rules if the collateral taker or the collateral provider is a central bank (or a comparable supranational institution such as the European Central Bank). In enacting this restriction, the Dutch legislature chose to utilise an opt-out option under the Amending Directive.

Credit claims as collateral under an FCA


The creation of a pledge on or the outright transfer of title to a credit claim pursuant to an FCA is subject to the regular Dutch statutory rules on pledges and transfers of ownership. The transfer of a credit claim pursuant to an FCA does, however, benefit from Section 7:55 of the Dutch Civil Code, which states that such a transfer will not constitute a fiduciary transfer of ownership as prohibited by Section 3:84(3) of the Dutch Civil Code.

Use and sale

Where a pledge pursuant to an FCA has been created on cash or securities, such collateral may be used or sold by the collateral taker (provided that this is permitted under the terms of the FCA). In such a case, the collateral taker must transfer equivalent collateral to the collateral provider to replace the original collateral. Under the amendment act, however, it is not possible to use or sell collateral consisting of credit claims. The reason for this is that (according to the legislative history of the amendment act) credit claims are not fungible, and consequently no equivalent collateral could be transferred by the collateral taker. Where title to credit claims has been transferred pursuant to an FCA, the collateral taker can use or sell the credit claims by virtue of its ownership rights.


Upon the occurrence of an enforcement event, credit claims pledged pursuant to an FCA can be sold and the proceeds thereof can be set off by the collateral taker against the obligation(s) secured by the FCA. This is in addition to the powers to collect pledged claims granted to a "traditional" pledgee. In case of a title transfer FCA, the collateral taker is, by virtue of its ownership rights, entitled to sell and collect the credit claims as well.

Other changes

The amendment contains a number of changes other than those related to the introduction of credit claims as a form of financial collateral. The following are the most notable:

  • Where a pledge has been created pursuant to an FCA, the collateral provider now has a preferential right in respect of its claim against the collateral taker for equivalent collateral following the use or sale of the original collateral. The aim of this change is to strengthen the collateral provider's position in the event of the collateral taker's bankruptcy.
  • The amendment act contains changes regarding settlement finality in payment and securities settlement systems. These changes implement the amendments to Directive 98/26/EC (the Settlement Finality Directive) laid down in the Amending Directive.