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Template:Deliveryandreturnamounts: Difference between revisions
→What about in-flight {{csaprov|Credit Support}} deliveries?
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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 {{csaprov|Credit Support}} deliveries?==== | ====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 | 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 this “in-flight collateral” treated for the purpose of today’s [[margin call]]? It’s treated as having already been made. However, if your [[counterparty]] fails in the meantime (before the [[bond]] has settled, and assuming ultimately it never does), it would count as an {{isdaprov|Unpaid Amount}} which would factor into your [[Close-out Amount - ISDA Provision|close-out calculation]]. | ||
At first blush this seems an odd result, but the risk is a time value risk | At first blush this seems an odd result, but the risk is a time value risk associated with the collateral, not a counterparty risk per se. You accepted it when you agreed to {{csaprov|Eligible Credit Support}} with a long a [[settlement cycle]] in the first place. If you don't want that time-value risk, don’t agree to collateral with a long [[settlement cycle]]. | ||
====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> | ||