(1) If and to the extent that the terms of a security financial collateral arrangement so provide, the collateral taker under the arrangement has a right to use and dispose of financial collateral provided under the arrangement.

(2) Subject to paragraph (3), a collateral taker under a security financial collateral arrangement who exercises such a right is required to transfer equivalent collateral to replace the original financial collateral not later than the due date for the performance of the relevant financial obligations covered by the arrangement.

(3) Instead of complying with paragraph (2), the collateral taker may, on the due date for the performance of the relevant financial obligations, either -

(a) transfer equivalent collateral, or

(b) if and to the extent that the terms of the arrangement so provide, set off the value of the equivalent collateral against, or apply it in discharge of, the relevant financial obligations.