Template:M summ 2016 NY VM CSA Eligible Collateral (VM): Difference between revisions

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[[Eligible Collateral (VM) - NY VM CSA Provision|The]] kinds of collateral that you may exchange under a {{nyvmcsa}}. It looks like you can choose what you like, right, but CFTC rules in practice restrict it to cash in certain currencies. This is broadly analogous to what happens in Europe under [[EMIR]] and the other major regulatory regimes imposing margin requirements. You may wonder why regulatory VM is cash and regulatory IM is not, and premium subscribers can find out.
====Initial  margin====
For reasons best known to themselves there are curious rules in the US relating to initial margin which lead counterparties to use different ISDA CSA forms on different occasions. The details and variegation at play here — are you an SBSD counterparty? Are you subject to EMIR too? Is the AANA threshold met? — are all too ghastly for the JC to presently get into, other than to say the tiny peripheral benefits you get from gaming the fractal edges of the system of rules are most likely not worth it and it is probably better to have a single, maximally conservative, theory of the game: all that being well and good, of course, if your counterparties have a different view of the world, or a different idea what is the maximally conservative theory of the game.


This is what happens if you try to standardise and centralise a market that was designed to be unstandardised and decentralised, but still.
====The dark side of margin====
On the subject of pained exegeses which no-one will heed, the JC also has an impassioned [[When variation margin attacks|essay]] about why ''bilateral'' variation margin may have a ''destabilising'' effect on the broader financial system, potentially weakening swap dealers’ liquidity and risk positions — a risk which was admirably demonstrated during the [[Archegos]] fiasco.
But no-one listens to the [[JC]], so you should treat this as extended universe fan fiction only.

Latest revision as of 13:27, 26 June 2024

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