Collateral Management Agreement Template for Germany

The Collateral Management Agreement (CMA) is essential for financial institutions operating in Germany who engage in transactions requiring collateral exchange. This document becomes necessary when parties need to establish a formal framework for managing collateral in various financial transactions, including derivatives, securities lending, and repo transactions. The agreement must comply with German legal requirements, including the German Civil Code (BGB), German Banking Act (KWG), and implemented EU regulations. It typically includes detailed provisions for collateral eligibility, valuation methodologies, transfer mechanisms, and enforcement rights. The CMA is particularly important in the context of risk management and regulatory compliance, especially given the increased focus on collateral management following financial market reforms and enhanced prudential requirements in Germany and the broader EU.

1. Parties: Identification of the contracting parties, including their legal names, registration details, and addresses

2. Background: Context of the agreement, relationship between parties, and purpose of the collateral arrangement

3. Definitions and Interpretation: Comprehensive list of defined terms and interpretation rules used throughout the agreement

4. Scope and Purpose: Detailed description of the collateral arrangement's scope and the obligations being secured

5. Collateral Eligibility: Criteria for acceptable collateral assets and any applicable haircuts or concentration limits

6. Posting and Return of Collateral: Procedures and timing for delivering and returning collateral

7. Valuation and Calculations: Methods for valuing collateral and calculating exposure, margin calls, and required collateral amounts

8. Substitution Rights: Terms under which collateral may be substituted and the process for substitution

9. Income and Interest: Treatment of income on collateral and any interest payable on cash collateral

10. Events of Default: Definition of events of default and their consequences

11. Enforcement Rights: Rights and procedures for enforcing security interests in collateral upon default

12. Representations and Warranties: Standard and specific representations and warranties made by each party

13. Dispute Resolution: Procedures for resolving disputes regarding valuations or other matters

14. Governing Law and Jurisdiction: Specification of German law as governing law and jurisdiction for disputes

15. Notices: Communication requirements and contact details for operational matters

16. Term and Termination: Duration of the agreement and circumstances allowing termination