Brussels, 06/03/2002 (Agence Europe) - On Tuesday adopted, without discussion, its common position on the draft directive on collateral. Presented in the framework of the Financial Services Action Plan, this directive clarifies the regulatory framework governing the use of cross-border collateral (property - such as securities - provided by a borrower to a lender) on wholesale financial markets. Among other things, it creates a Community system for constituting collateral, lays down the principles determining the place where securities are reputedly located and reduces the formalities necessary for the conclusion and execution of collateral arrangements. The European Parliament adopted its position last December on first reading on the basis of the Perez Royo Report (see EUROPE of 9 December). The Commissioner for financial services, Frits Bolkestein welcomed the Council's decision, stressing that "the lack of a clear framework of rules for collateral has been a major disincentive to cross-border transactions. The directive will contribute to the greater integration and cost-efficiency of European financial markets by determining which law governs cross-border collateral arrangements in the same manner throughout the EU". "The collateral market represents some 2 trillion euro", he added.