Praxishandbuch Repos und Wertpapierdarlehen

Financial Market Lex Mercatoria and Its Influence on the Financial Collateral Directive

“…SFTs Regulation is a part of the ongoing European Commission efforts to tackle the risks related to 'shadow banking', a system of credit intermediation that involves entities and activities outside the regular banking system. Though it is commonly stated that the term 'repo' is an abbreviation of 'repurchase transaction' or of 'repurchase agreement', 17 the term 'repo' more probably comes from a superseded expression 'repurchase option'. 18 The term "repo" is used in the European repo market jargon as the generic term for two similar types of financial transactions: repurchase transaction, and sell/buy-back transaction.…”

“…The Subchapter 3.5 briefly explores the main differences between repurchase transactions and the two types of comparable transactions: sell/buy-back transactions and securities lending transactions. 17 See e. g. Benjamin …”

The Risk of Re-Characterization of Title Transfer Financial Collateral Arrangements

“…28 Despite being legally structured on the basis of the agreement of sale of securities, the underlying economics of cash-driven repurchase transactions is that of a secured loan of cash. 29 Prior to the adoption of the FCD, the discrepancy between the legal structure and underlying economics of a repurchase transaction had led to legal uncertainty regarding the enforceability of a TTFCA on which repurchase transaction relies. The risk of recharacterisation of a TTFCA as arrangement creating a security interest in collateral was present in several European jurisdictions.…”