With regulatory reform in the banking and finance sector focussing on the need to collateralise and secure exposures, there is renewed interest in collateral agreements. Many different derivatives, securities and financing transactions have collateral mechanisms built into the legal documentation which is used. This article aims to break down the main collateral agreements and give a brief overview of the mechanisms provided for securing the exposures and obligations intrinsi

There are various different ways in which an asset may be transferred under South African law. Pledge: A pledge creates a real right over tangible movable property. The asset is placed in the possession of the pledge holder or secured party. In the case of cash, the pledge giver sets up a custody account in the name of the pledge holder. The pledge holder must retain possession of the asset, and is unable to use the asset or fruits of the asset. The pledged assets must also b