A collateral pledge agreement is an agreement between a creditor and a debtor in which the debtor grants the creditor a security interest in certain property to secure the debt or other obligation to the creditor. Often the collateral is held in trust by a third party. In this case, the CSD acts as the Central Counter party to the transaction.
Securities in the Central Securities Depository that have been pledged as collateral shall not be traded until the pledge is discharged and the security redeemed, except with the prior written consent of the pledgee.All proceeds and entitlements of pledged securities belong to the pledgor, without prejudice to the right of the pledgor to pledge such proceeds and entitlements.
Promptly upon the termination of the pledge for reasons of payment and performance of the principal obligation or other reason or consideration, the pledgee DP shall enter the appropriate instructions to the Central Securities Depository to release the securities from the pledgor’s pledge account and record them in the pledgor’s securities account. All charge documents shall be in the format approved by the Central Securities Depository from time to time.
