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===Example=== | ===Example=== | ||
Let’s say: | |||
*a swap is struck with an initial {{eqderivprov|Equity Notional Amount}} of £10m | *a swap is struck with an initial {{eqderivprov|Equity Notional Amount}} of £10m | ||
*the swap is now out of the money to Party A by £1mm. | *the swap is now out of the money to Party A by £1mm. | ||
Line 11: | Line 11: | ||
*The return of credit support would be netted off against the exchange amount due, meaning no cashflow would take place. | *The return of credit support would be netted off against the exchange amount due, meaning no cashflow would take place. | ||
'''Result''': instead of the swap being out of the money by £1mm and collaterased by that amount, the restruck swap has a MTM of 0 and neither party holds any collateral. | '''Result''': instead of the swap being out of the money by £1mm and collaterased by that amount, the restruck swap has a MTM of 0 and neither party holds any collateral. | ||
===Cash Settlement mechanics generally=== | ===Cash Settlement mechanics generally=== |