An Authorised Person must ensure that the following requirements are complied with before it recognises the effects of CRM of any Collateral:
(a) the legal mechanism by which Collateral is pledged, assigned or transferred must confer on the Authorised Person the right to liquidate or take legal possession of the Collateral, in a timely manner, in the event of the default, insolvency or bankruptcy (or one or more otherwise-defined credit events set out in the transaction documentation) of the Counterparty (and, where applicable, of the custodian holding the Collateral);
(b) the Authorised Person has taken all steps necessary to fulfil those requirements under the law applicable to the Authorised Person's interest in the Collateral for obtaining and maintaining an enforceable security interest by registering it with a registrar or for exercising a right to net or set off in relation to title transfer Collateral;
(c) the credit quality of the Counterparty and the value of the Collateral do not have a material positive correlation;
(d) Securities issued by the Counterparty or any Closely Related Counterparty are not eligible;
(e) the Authorised Person has implemented procedures for the timely liquidation of Collateral to ensure that any legal conditions required for declaring default of Counterparty and liquidating the Collateral are observed, and that the Collateral can be liquidated promptly; and
(f) where the Collateral is held by a custodian, the Authorised Person has taken reasonable steps to ensure that the custodian segregates the Collateral from its own assets.