Tag: Collateralization
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Collateral
Collateral Provider He or she is the party that is required, pursuant to the terms of the applicable credit support arrangement, to provide collateral in respect of its obligations. A Collateral Provider is refer to the transferor of collateral (under a title transfer document) or the party […]
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Collateral
Collateral Provider He or she is the party that is required, pursuant to the terms of the applicable credit support arrangement, to provide collateral in respect of its obligations. A Collateral Provider is refer to the transferor of collateral (under a title transfer document) or the party […]
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Prime Brokerage
Prime Brokerage Prime brokerage is a colloquial term for a number of different relationships between large securities dealers and banks and their clients. There are two main ways in which derivatives trading is relevant to prime brokerage and both typically have different collateral management arrangements. (1) Derivatives Prime Brokerage Derivatives prime brokerage describes an arrangement…
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Prime Brokerage
Prime Brokerage Prime brokerage is a colloquial term for a number of different relationships between large securities dealers and banks and their clients. There are two main ways in which derivatives trading is relevant to prime brokerage and both typically have different collateral management arrangements. (1) Derivatives Prime Brokerage Derivatives prime brokerage describes an arrangement…
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Credit Risk
Credit Risk Credit Risk and Collateralization Credit risk is the danger that a firm will not receive an amount of money it is owed because the party that owes the firm the money is unable to pay or otherwise defaults on its obligation. Credit risk exists whenever a firm has a relationship where a counterparty…
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Collateral Asset
Collateral Asset Trends According to the International Swaps and Derivatives Association: As the use of collateral assets for credit enhancement in the derivatives market has grown over the past decade, collateral practitioners have witnessed increasing convergence of market practice in relation to the assets that are commonly given and accepted as eligible collateral. At one…
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Collateral Dispute
Collateral Dispute Dispute Collateral Call After the margin call notice has been sent, the counterparty will generally want to confirm its agreement to the margin call. There are three options for responding to a margin call: full agreement, partial agreement (where, for example, a party agrees to five million of a ten million call), and…
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Threshold
In Collateralization The underlying commercial reason for Thresholds is that often parties will be willing to take a certain amount of credit risk to each other (equal to the Threshold) before requiring collateral to cover any additional risk. Banks, in particular, are in the business of […]
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Non-Collateralization
Non-Collateralization Collateralization of credit exposures generated by bilateral OTC Derivatives is a key risk mitigant broadly used in the market. The benefits are broadly acknowledged and affect dealers and end users, as well as the financial system generally. However, it is worth noting that in the very early stages of their development, the OTC derivative…
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Credit Support
Credit Support Credit Support Deed and English and New York Credit Support Annexes Collateral is commonly provided in respect of parties’ exposures to one another under an ISDA Master Agreement pursuant to the 1994 ISDA Credit Support Annex under New York law (the New York CSA), the 1995 ISDA Credit Support Annex under English law…