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| {{csasnap|Equivalent Credit Support}} | | {{csaanat|Equivalent Credit Support|1995}} |
| | | '''{{t|Trick for young players}}''': “{{csaprov|Equivalent Credit Support}}” is meant only to capture assets which are [[fungible]] with assets forming part of posted {{csaprov|Credit Support Balance}} (exactly the same ISIN) – the point of “equivalence” is to buttress the {{csa}}’s [[title transfer]] analysis by allowing return of a security which isn’t the exact security that was delivered in the first place, but another one from the same issue. |
| ====Commentary====
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| '''Tricks for the young players''': “{{csaprov|Equivalent Credit Support}}” in meant only to capture assets which are [[fungible]] with assets forming part of posted {{csaprov|Credit Support Balance}} (exactly the same ISIN) – the point of “equivalence” is to buttress the {{csa}}’s [[title transfer]] analysis by allowing return of a security which isn’t the exact security that was delivered in the first place, but another one from the same issue. | |
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| If you had to redeliver the same one, the “transfer of title” is in danger of being [[recharacterised]] into a [[pledge]]/[[loan]], which has a bunch of unwanted knock-on effects. | | If you had to redeliver the same one, the “transfer of title” is in danger of being [[recharacterised]] into a [[pledge]]/[[loan]], which has a bunch of unwanted knock-on effects. |
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| I have come across a couple of instances (in {{tag|OTC Clearing}}/{{tag|CCP}} space) where the {{tag|CSA}} definition of “{{csaprov|Equivalent Credit Support}}” has been modified to capture not just fungible securities of the same Series/[[ISIN]], but “similar ones” – same issuer but different maturity, and under a different ISIN etc.
| | {{equivalent vs similar}} |
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| This may have been based on a misapprehension that “Equivalent Credit Support” is already intended to allow redelivery of non-fungible securities of a similar type, and the modification is only clarificatory.
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| There may be a need for the “similar securities” concept in the [[OTC to CCP]] space, but we should call it something else – perhaps “Similar Credit Support” – to differentiate it from “Equivalent Credit Support” which is still needed in the CSA to support the title transfer analysis.
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| {{csaanatomy}}
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