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Template:Deliveryandreturnamounts: Difference between revisions
→What about in-flight collateral deliveries?
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===={{csaprov|Return Amount}}==== | ===={{csaprov|Return Amount}}==== | ||
Basically the converse of a {{csaprov|Delivery Amount}}. In this case you deduct the {{csaprov|Credit Support Amount}} from the {{csaprov|Credit Support Balance}}. | Basically the converse of a {{csaprov|Delivery Amount}}. In this case you deduct the {{csaprov|Credit Support Amount}} from the {{csaprov|Credit Support Balance}}. | ||
====What about in-flight | ====What about in-flight {{csaprov|Credit Support}} deliveries?==== | ||
So yesterday you met a margin call by delivering a [[bond]] the standard [[settlement cycle]] for which means it won’t arrive till the day after tomorrow. How is that “in-flight collateral” treated for the purpose of today’s margin call? It's treated as having already been made. However, if the counterparty fails in the meantime and the bond hasn’t settled (and ultimately never does), it would count as an {{isdaprov|Unpaid Amount}} which would factor into your closeout calculation. | So yesterday you met a margin call by delivering a [[bond]] the standard [[settlement cycle]] for which means it won’t arrive till the day after tomorrow. How is that “in-flight collateral” treated for the purpose of today’s margin call? It's treated as having already been made. However, if the counterparty fails in the meantime and the bond hasn’t settled (and ultimately never does), it would count as an {{isdaprov|Unpaid Amount}} which would factor into your closeout calculation. | ||
At first blush this seems an odd result, but the risk is a time value risk which one accepts when one agrees to {{csaprov|Eligible Credit Support}} with a long a [[settlement cycle]]. If you don't want the risk, require cash only. | At first blush this seems an odd result, but the risk is a time value risk which one accepts when one agrees to {{csaprov|Eligible Credit Support}} with a long a [[settlement cycle]]. If you don't want the risk, require cash only. | ||
====Picturesque speech==== | ====Picturesque speech==== | ||
''Bonus learning for free: In a subtraction, the sum being subtracted is the [[subtrahend]] and the sum it is being subtracted from is the [[minuend]].'' <br> | ''Bonus learning for free: In a subtraction, the sum being subtracted is the [[subtrahend]] and the sum it is being subtracted from is the [[minuend]].'' <br> | ||