Increasing use of securities and collaterals in transactions brings the legal ambiguity in todayâ€™s financialmarkets which are trying to globalise. It should have been noted that without legal certainty an achievement cannot be obtained in a complete manner. To solve this legal ambiguity in financial markets, reform movements havebeen started through out the world from different groups, institutions and communities involving both jurists andpractitioners., The Directive on settlement finality in payment and securities settlement systems and the Directiveon financial collateral arrangements were adopted. These two directives are both supplementary legislations for theDirective of the Parliament and of the Council on the reorganisation and winding up of credit institutions dated 4April 2001. All of these directives are the circles of a chain that aim the proper functioning of the internal financialmarket in European Union. In this study, mainly the Collateral Directive will be taken into account. Firstly, thenecessity of a harmonised collateral law and the aims of the Collateral Directive will be handled. Following, themain provisions of the directive will be analysed in details. While analysing in details, the differentimplementations of the directive in member states will be mentioned. Finally, the conflict of laws clause and theconsequences of the directive will be explained.