Article 77(1) of the EU Bank Recovery and Resolution Directive (“BRRD”)1 requires Member States to ensure that there is “appropriate protection” for title transfer financial collateral arrangements and set-off and netting arrangements from:
- the transfer by a resolution authority of some, but not all, of the rights and liabilities that are protected under a title transfer financial collateral arrangement, a set-off arrangement or a netting arrangement (“protected rights and liabilities”) by exercise of a power contemplated, for example, by Article 63(1)(d) of the BRRD (a “partial property transfer power”)
- the modification or termination by a resolution authority of protected rights or liabilities by exercise of a power contemplated, for example, by Article 64(1)(f) of the BRRD (a “contractual modification power”)
The BRRD does not, however, provide any guidance as to what constitutes “appropriate protection” for this purpose.
This Briefing Note has been prepared by the International Swaps and Derivatives Association, Inc. (“ISDA”)2 to assist EU Member States in implementing this important creditor safeguard under the BRRD.
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