| Popis: |
This chapter explores funded credit protection in the form of netting and financial collateral. It looks at the relationship between the specific credit risk mitigation (CRM) rules discussed in Chapter Eight and the legal or private law concepts that form the background of the CRM rules for netting and financial collateral. All CRM rules assume that under the relevant private law(s), the ‘credit protection arrangement’ that is envisaged to result in ‘credit risk mitigation’, be ‘legally effective and enforceable’. Where the Capital Requirements Regulation (CRR) requires CRM arrangements to be ‘legally effective and enforceable’, an important issue is whether netting can be effectuated when need be, i.e. in the event of a default by the counterparty of the relevant institution. Especially applicable insolvency laws may limit this ability. The chapter then considers how there is a strong fragmentation of the rules for netting within the CRR framework. |
