S.L. 459.1 Art. 7Right of use of financial collateral under security financial collateral arrangements.

(1) The collateral taker may exercise a right of use in relation to financial collateral provided under the security financial collateral arrangement if and to the extent that the terms of such arrangement so provide.

(2) Where the collateral taker makes use of the financial collateral provided under a security financial collateral arrangement, he shall:

(a) by due date of performance of the relevant financial obligations, transfer equivalent collateral to replace the original financial collateral. Such equivalent collateral shall be subject to the same security financial collateral agreement to which the original financial collateral was subject and shall be treated as having been provided under the security financial collateral arrangement at the same time as the original financial collateral was first provided; or

(b) on the due date for the performance of the relevant financial obligations, set off the value of the equivalent collateral against or apply it in discharge of the relevant financial obligations, if and to the extent that the terms of a security financial collateral arrangement so provide.

(3) When, following the use of financial collateral, equivalent collateral is transferred in terms of sub-regulation (2)(a), the rights of the collateral taker shall remain valid and enforceable in relation to such equivalent collateral.

(4) Upon the occurrence of a specified event at a time when the collateral taker has not as yet transferred equivalent collateral in terms of sub-regulation (2)(a), the obligation to transfer such financial collateral may be the subject of a close-out netting provision.

(5) The provisions of this regulation do not apply to credit claims.