In secured financing transactions, cash is a popular and useful form of collateral. It is fully liquid, readily available and transferrable, and its value is always known. A debtor holding cash in a deposit account may wish or be required to use it as collateral for obligations such as loans, repurchases and derivative transactions. In order to maintain a perfected security interest in this cash collateral, a lender or agent will need to adhere to the applicable methods of perfection as set forth under the applicable provincial personal property security legislation (the “PPSA”). For the reasons outlined below, cash collateral can at times create uncertainty when it comes to perfection.
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