The importance of security interests in the commercial world need not be understated. As Sir Roy Goode (2009) explains, enterprises live (and sometimes die) by credit. Security interests help reduce this credit risk and protect the priority of the security-holder over other creditors in the event of the debtor’s bankruptcy.
I will argue that traditional security interests under English law such as the equitable charge, coupled with freedom of contract, are adequately flexible for the needs of the financial market. Nevertheless, I will argue that incorporation of financial collateral arrangements through the Financial Collateral Directive (FCD) 2002/47, allows English law to remain competitive and attractive to financial institutions. This article will first examine the current flexibility of traditional security interests under English law, and then briefly discuss the advantages offered by financial collateral arrangements.