# Article 19 — Collateral management and segregation **Commission Delegated Regulation (EU) 2016/2251 · binding · OJ L 340, 15.12.2016 · dated 4 Oct 2016 [in force]** *In force · Consolidated version of 14 February 2023 · Checked against EUR-Lex on 20 Oct 2026 · [Official source](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02016R2251-20230214)* 1. The procedures referred to in Article 2(2)(c) shall include the following: **(a)** a daily valuation of the collateral held in accordance with Section 6; **(b)** the legal arrangements and a collateral holding structure that allow access to the received collateral where it is being held by a third party; **(c)** where initial margin is held by the collateral provider, that the collateral is held in insolvency-remote custody accounts; **(d)** that non-cash initial margin is maintained in accordance with paragraphs 3 and 4; **(e)** that cash collected as initial margin is maintained in cash accounts at central banks or credit institutions which fulfil all of the following conditions: **(i)** they are authorised in accordance with Directive 2013/36/EU or are authorised in a third country whose supervisory and regulatory arrangements have been found to be equivalent in accordance with Article 142(2) of Regulation (EU) No 575/2013; **(ii)** they are neither the posting nor the collecting counterparties, nor part of the same group as either of the counterparties; **(f)** the availability of unused collateral to the liquidator or other insolvency official of the defaulting counterparty; **(g)** the initial margin is freely transferable to the posting counterparty in a timely manner in case of the default of the collecting counterparty; **(h)** that non-cash collateral is transferable without any regulatory or legal constraints or third-party claims, including those of the liquidator of the collecting counterparty or third-party custodian, other than liens for fees and expenses incurred in providing the custodial accounts and other than liens routinely imposed on all securities in a clearing system in which such collateral may be held; **(i)** that any unused collateral is returned to the posting counterparty in full, excluding costs and expenses incurred for the process of collecting and holding the collateral. 2. Any collateral posted as initial or variation margin may be substituted by alternative collateral where all of the following conditions are met: **(a)** the substitution is made in accordance with the terms of the agreement between the counterparties referred to in Article 3; **(b)** the alternative collateral is eligible in accordance with Section 2; **(c)** the value of the alternative collateral is sufficient to meet all margin requirements after applying any relevant haircut. 3. Initial margin shall be protected from the default or insolvency of the collecting counterparty by segregating it in either or both of the following ways: **(a)** on the books and records of a third-party holder or custodian; **(b)** via other legally binding arrangements; 4. Counterparties shall ensure that non-cash collateral exchanged as initial margin is segregated as follows: **(a)** where collateral is held by the collecting counterparty on a proprietary basis, it shall be segregated from the rest of the proprietary assets of the collecting counterparty; **(b)** where collateral is held by the posting counterparty on a non-proprietary basis, it shall be segregated from the rest of the proprietary assets of the posting counterparty; **(c)** where collateral is held on the books and records of a custodian or other third-party holder, it shall be segregated from the proprietary assets of that third-party holder or custodian. 5. Where non-cash collateral is held by the collecting party or by a third-party holder or custodian, the collecting counterparty shall always provide the posting counterparty with the option to segregate its collateral from the assets of other posting counterparties. 6. Counterparties shall perform an independent legal review in order to verify that the segregation arrangements meet the requirements referred to in paragraph 1(g) and paragraphs 3, 4 and 5. That legal review may be conducted by an independent internal unit, or by an independent third party. 7. Counterparties shall provide evidence to their competent authorities of compliance with paragraph 6 in relation to each relevant jurisdiction and, upon request by a competent authority, shall establish policies ensuring the continuous assessment of compliance. 8. For the purposes of paragraph 1(e), the counterparties shall assess the credit quality of the credit institution referred to therein by using a methodology that does not solely or mechanistically rely on external credit quality assessments.